Form DEF 14A AMERICAN BIO MEDICA CORP For: Jun 21
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment
No. )
Filed by the
Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐
Preliminary Proxy
Statement
☐
Confidential, for
Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
☒
Definitive Proxy
Statement
☐
Definitive
Additional Materials
☐
Soliciting Material
under §240.14a-12
American Bio Medica
Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
☐
No fee
required.
☐
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1)
Title of each class
of securities to which transaction applies:
________________________________________
(2)
Aggregate number of
securities to which transaction applies:
________________________________________
(3)
Per unit price or
other underlying value of transaction computed pursuant to Exchange
Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________
(4)
Proposed maximum
aggregate value of transaction:
________________________________________
(5)
Total fee paid:_____________________________
☐
Fee
paid previously with preliminary materials.
☐
Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
(1)
Amount Previously
Paid:
________________________________________
(2)
Form, Schedule or
Registration Statement No.:
________________________________________
(3)
Filing Party:
________________________________________
(4)
Date
Filed:
________________________________________
122 Smith Road
Kinderhook, New York 12106
April
20, 2018
Dear
Shareholder:
You are
cordially invited to attend the 2018 Annual Meeting of Shareholders
of American Bio Medica Corporation (the “Company”) on
Thursday, June 21, 2018, at 10:00 a.m. at the Company’s
corporate offices located at 122 Smith Road, Kinderhook, New York
12106 (the “Annual Meeting”).
In
addition to the formal items of business to be conducted at the
Annual Meeting, management will report on the operations and
activities of the Company and you will have an opportunity to ask
questions. Directors and officers of the Company will be present to
respond to any questions you may have.
This
booklet includes the Notice of Annual Meeting, Notice of Internet
Availability of Proxy Materials and Proxy Statement. The Proxy
Statement describes the business we will conduct at the Annual
Meeting and provides information about the Company that you should
consider when you vote your shares.
It is
important that your stock be represented at the meeting. Whether or
not you plan to attend the meeting in person, we hope that you will
vote on matters to be considered. You may vote your proxy via the
Internet or by telephone. If you received a printed copy of your
proxy materials, you may also vote by mail by signing, dating and
returning your proxy card in the envelope provided.
On
behalf of the Board of Directors and the employees of American Bio
Medica Corporation, I thank you for your continued support and look
forward to seeing you at the Annual Meeting.
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Sincerely
yours,
Melissa
A. Waterhouse
Chief
Executive Officer
Principal
Financial Officer
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122 Smith Road
Kinderhook, New York 12106
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS & NOTICE OF INTERNET
AVAILABILITY OF PROXY MATERIALS
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Date:
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June 21, 2018
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Time:
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10:00 a.m., Eastern Standard Time
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Place:
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Company’s Corporate Offices
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122 Smith Road
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Kinderhook, New York 12106
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At our 2018 Annual Meeting, we will ask you to:
1. Elect Two (2) “Class III” directors for three (3)
year terms commencing upon their election and until their successor
shall be elected and duly qualified (the terms of office of the
other directors do not expire until 2019 or 2020). The following
directors are being nominated:
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Melissa
A. Waterhouse
Peter
Jerome
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2. Ratify the selection by the Company’s Audit Committee of
UHY, LLP as the Company’s independent registered public
accounting firm for the year ending December 31, 2018.
3. Transact any other business as may properly come before the
Annual Meeting.
You may vote at the Annual Meeting if you were a shareholder of
American Bio Medica Corporation at the close of business on April
20, 2018 (the “Record Date”).
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By
Order of the Board of Directors
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Kinderhook,
New York
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Melissa
A. Waterhouse
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April
20, 2018
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Chief
Executive Officer
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Principal
Financial Officer
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You are cordially invited to attend the Annual Meeting. Our Board
strongly encourages you to exercise your right to vote. Your vote
is important. Voting early helps ensure that we receive a quorum of
shares necessary to hold the annual meeting. Please sign, date and
mark the enclosed proxy card promptly and return it in the enclosed
envelope, or follow the instructions on the proxy card for internet
and telephone voting. Returning the proxy card will not prevent you
from voting in person if you attend the Annual
Meeting.
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE SHAREHOLDER MEETING TO BE HELD ON JUNE 21, 2018
Our
financial and other information is contained in our Annual Report
on Form 10-K for the year ended December 31, 2017. Pursuant to
rules promulgated by the United States Securities and Exchange
Commission, we have elected to provide access by notifying you of
the availability of our proxy materials on the Internet. This proxy
statement and our Form 10-K for the year ended December 31, 2017,
are available at our web site at http://www.abmc.com/investor/proxy2018.html.
122 Smith Road
Kinderhook, New York 12106
PROXY STATEMENT
General
American Bio Medica
Corporation is a New York corporation (the “Company”).
The term “Annual Meeting”, as used in this Proxy
Statement, includes any adjournment or postponement of such
meeting.
We have sent you this Proxy Statement and
enclosed proxy card because the Board of Directors is soliciting
your proxy to vote at the Annual Meeting. This Proxy
Statement summarizes the information you will need to know to cast
an informed vote at the Annual Meeting. You do not need to attend
the Annual Meeting to vote your shares. You may simply complete,
sign and return the enclosed proxy card to vote, or you may cast
your vote via telephone or the Internet. This process is described
below in the section titled “Voting”.
We
began mailing this Proxy Statement, the Notice of Annual Meeting
and the enclosed proxy card on or about May 11, 2018 to all
shareholders entitled to vote. In this mailing, we are also
including our Annual Report on Form 10-K for the year ended
December 31, 2017; however, the Annual Report is not part of the
proxy solicitation material.
Shareholders entitled to vote; Record Date
If you
owned common stock of the Company at the close of business on April
20, 2018, (the “Record Date”), you are entitled to vote
at the Annual Meeting, or any adjournments thereof. On the Record
Date, the Company had one class of voting shares outstanding
– common shares, $.01 par value per share (“common
shares”) and there were 29,932,770 shares of common stock
outstanding and no shares of preferred stock
outstanding.
Procedure for Submitting Shareholder Proposals
In
order to be included in the Company’s proxy statement for the
2019 Annual Meeting, shareholder nominations for directors and/or
shareholder proposals for the next Annual Meeting of Shareholders
must be received (in writing) by the Company’s Corporate
Secretary at its Corporate Offices located at 122 Smith Road,
Kinderhook, New York 12106, on or before December 28, 2018, must
not exceed 500 words, and must otherwise comply with the
requirements of Rule 14a-8 adopted pursuant to the Securities
Exchange Act of 1934 (the “Exchange Act”).
With
respect to shareholder proposals and director nominations submitted
for the 2019 Annual Meeting of Shareholders that are outside the
process of Rule 14a-8, these proposals must be received by the
Company at its Corporate Offices no earlier than January 27, 2019
and no later than March 14, 2019.
Shareholder
proposals received outside of these time frames will be considered
untimely for consideration at the 2019 Annual Meeting.
The
Company has not received any shareholder proposals or shareholder
nominations for directors for this Annual Meeting.
Voting
You are
entitled to one vote at the Annual Meeting for each common share of
the Company that you owned as of the Record Date. The number of
shares you own (and may vote) is listed on your proxy card. You can
vote your shares using one of the following methods:
1
Voting by attending the meeting. A
shareholder may vote his or her shares in person at the Annual
Meeting. A shareholder planning to attend the meeting should bring
proof of identification for entrance to the meeting. If your shares
are not registered in your own name, you will need appropriate
documentation to confirm your ownership to vote at the Annual
Meeting. Examples of such documentation include a broker’s
statement, letter or other document that will confirm your
ownership of shares of the Company.
Voting by proxy card. All shares
entitled to vote and represented by properly executed proxy cards
received prior to the Annual Meeting and not revoked, will be voted
at the Annual Meeting in accordance with the instructions indicated
on those proxy cards. If no instructions are indicated on a
properly executed proxy card, the shares represented by that proxy
card will be voted as recommended by the Board of Directors. If any
other matters are properly presented for consideration at the
Annual Meeting, including, among other things, consideration of a
motion to adjourn the Annual Meeting to another time or place
(including, without limitation, for the purpose of soliciting
additional proxies), the persons named in the enclosed proxy card
and acting thereunder generally will have discretion to vote on
those matters in accordance with their best judgment. The Company
does not currently anticipate that any other matters will be raised
at the Annual Meeting.
Submitting Proxies Via the Internet or by
Telephone. Many shareholders who hold their shares through a
broker or bank may have the option to submit their proxies or
voting instructions via the Internet or by telephone. If your
shares are held in “street name”, you should check the
voting instruction card that has been provided to you by your
broker and follow the instructions that have been provided for
Internet or telephone voting on that card.
You are
invited to attend the meeting; however, to ensure your
representation at the meeting, you are urged to vote via the
Internet or telephone, or mark, sign, date and return the enclosed
proxy card as promptly as possible in the postage-prepaid envelope
enclosed for that purpose. Any shareholder of record attending the
meeting may vote in person even if he or she has voted via the
Internet or telephone, or returned a proxy card. By voting in
person, you automatically revoke any prior proxy given by Internet,
telephone or proxy card.
For the
election of directors, the nominees who receive the most votes will
be elected to the two (2) available seats on the Board (i.e. by a
plurality of votes cast). If you return a signed proxy form
indicating your abstention or attend the Annual Meeting but choose
to abstain from voting on any proposal (revoking your proxy), you
will be considered present at the Annual Meeting and not voting in
favor of the proposal. Since most proposals pass only if they
receive favorable votes from a majority of votes present at the
Annual Meeting, the fact that you are abstaining and not voting in
favor of a proposal will have the same effect as if you had voted
against the proposal.
Holders
of common shares are not entitled to cumulative voting
rights.
Effect of Broker Non-Votes
Certain
shareholder nominees (such as brokers, banks and other nominees)
have the discretion to vote on routine matters, such as the
ratification of the selection of our independent registered public
accounting firm, unless you instruct otherwise; but they do not
have authority to vote on non-routine matters, such as the election
of directors.
A
“broker non-vote” occurs when your broker submits a
proxy for your shares but does not indicate a vote for a particular
proposal because the broker does not have authority to vote on that
proposal and has not received voting instructions from you.
“Broker non-votes” are not counted as votes for or
against the proposal in question or as abstentions, and are not
counted to determine the number of votes present for the particular
proposal.
If
your broker holds shares in your name and delivers this proxy
statement to you, the broker is entitled to vote your shares on
Proposal 2; Ratification of Independent Registered Public
Accounting Firm, even if the broker does not receive voting
instructions from you. Without your instructions, the broker is not
entitled to vote your shares on Proposal 1: Election of Directors.
We encourage you to provide instructions to your broker, bank or
other nominee. This ensures your shares will be voted at the
meeting.
2
A
broker non-vote would have no effect on the outcome of Proposal 1
because only a plurality of votes cast is required to elect a
director.
Quorum
A
quorum of shareholders is necessary to hold a valid meeting. If the
holders of at least a majority of the total number of the
outstanding shares of common stock entitled to vote are represented
in person or by proxy at the Annual Meeting, a quorum will exist.
Abstentions and broker non-votes will be considered present for
purposes of determining the presence of a quorum.
Revocability of Proxy/Dissenter’s Right of
Appraisal
Any
proxy card given pursuant to this solicitation may be revoked by
the person giving it at any time before it is voted. A proxy card
may be revoked (1) by filing with the Corporate Secretary of the
Company, at or before the taking of the vote at the Annual Meeting,
a written notice of revocation or a duly executed proxy card, in
either case dated no later than the prior proxy card relating to
the same shares, or (2) by attending the Annual Meeting and voting
or abstaining in person (although attendance at the Annual Meeting
will not of itself revoke a proxy). Any written notice of
revocation or subsequent proxy card must be received by the
Corporate Secretary of the Company prior to the taking of the vote
at the Annual Meeting. Such written notice of revocation or
subsequent proxy card should be hand delivered to the Corporate
Secretary of the Company or should be sent so as to be delivered to
American Bio Medica Corporation, 122 Smith Road, Kinderhook, New
York 12106, Attention: Corporate Secretary.
The
Board is not proposing any action for which the laws of the State
of New York, our Certificate of Incorporation and/or our Bylaws, as
amended from time to time, provide a right of a shareholder to
obtain appraisal of or payment for such shareholder’s
shares.
Solicitation of Proxies
The
Company will pay the costs of soliciting proxies from its
shareholders. Directors, officers or employees of the Company may
solicit proxies by mail, telephone, and other electronic forms of
communication or in person without additional
compensation.
The
Company will also reimburse banks, brokers, nominees and other
fiduciaries for the expenses they incur in forwarding the proxy
materials to you. Arrangements may also be made with brokerage
firms or other custodians, nominees or fiduciaries for the
forwarding of soliciting material to the beneficial owners of
common shares of the Company held of record by such persons; and
the Company will reimburse such respective banks, brokers,
custodians, nominees and fiduciaries for the reasonable
out-of-pocket expenses incurred by them. Broadridge Financial
Solutions, Inc. has been retained to assist in soliciting proxies
at a fee of approximately $4,000 including distribution costs and
other costs and expenses.
Householding of Proxy Materials
Some
banks, brokers, and other intermediaries may participate in the
practice of “householding” proxy statements, annual
reports and related notices. This rule allows us to send a single
copy of this proxy statement to any household at which two (2) or
more of our shareholders reside, if we believe that the
shareholders are members of the same family. This rule benefits
both the Company and its shareholders as it reduces the volume of
duplicate information received at a shareholder’s house and
helps reduce our expenses. Each shareholder, however, will continue
to receive individual proxy cards or voting instructions forms.
Shareholders that have previously received a single set of
disclosure documents may request their own copy by contacting their
bank, broker or other intermediary. We will also deliver a separate
copy of this proxy statement to any shareholder upon written
request to American Bio Medica Corporation, Attn: Corporate
Secretary, 122 Smith Road, Kinderhook, New York 12106.
3
DISCUSSION OF PROPOSALS RECOMMENDED BY BOARD
Proposal No. 1
Election of Directors
General
The
current bylaws of the Company allow for a classified or staggered
board. The Company’s Board of Directors is divided into three
classes serving staggered terms. During the year ended December 31,
2017, the Company’s Board of Directors was fixed at five (5)
members.
The
directors with terms expiring at this Annual Meeting are Melissa A.
Waterhouse (our Chief Executive Officer/Principal Financial
Officer) and Peter Jerome; both Class III directors. On April 6,
2017 Richard P. Koskey (a Class III director) and Carl A. Florio (a
Class I director) resigned from their positions on the Board of
Directors. Mr. Chaim Davis was appointed to the Board of Directors
on June 26, 2017 to fill the vacancy created by the resignation of
Mr. Florio and, Mr. Peter Jerome was appointed to the Board of
Directors on January 5, 2018 to fill the vacancy created by the
resignation of Mr. Koskey. As of the date of this report, the other
members of the Board of Directors are Jean Neff (a Class II
director with her term expiring in June 2020) and Diane J. Generous
(a Class II director with her term expiring in June 2020). On March
20, 2018, Mr. Davis was appointed as Chairman of the Board of
Directors.
The
Board of Directors, upon the recommendation of the Nominating
Committee has nominated Melissa A. Waterhouse and Peter Jerome to
serve as directors until the 2021 Annual Meeting of Shareholders
and until their successors have been duly elected and qualified. It
is the intention of the persons named as proxies in the
accompanying proxy, unless instructed otherwise, to vote for
Melissa A. Waterhouse and Peter Jerome. If either Melissa A.
Waterhouse or Peter Jerome should become unavailable to serve, the
proxy may be voted for the election of a substitute nominee as may
be designated by the Board of Directors. The Board of Directors has
no reason to believe that either Melissa A. Waterhouse or Peter
Jerome will be unable to serve if elected.
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Name
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Age
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Term
Expires
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Position(s) held
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Director Since
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Melissa A.
Waterhouse
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47
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2017
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Chief Executive
Officer, Principal Financial Officer and Director
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2014
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Peter
Jerome
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49
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2017
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Director
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2018
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The
principal occupation and business experience of Melissa A.
Waterhouse and Peter Jerome during at least the last five (5) years
is set forth below.
Melissa A.
Waterhouse joined the Company in 1997. Since that time she
has held various management positions in Investor Relations,
Marketing, Public Relations and Corporate Compliance. She served as
our Corporate Secretary from September 2003 until her interim
appointment as Chief Executive Officer and Chief Financial Officer
in October 2013. In June 2014, Ms. Waterhouse was appointed as
Chief Executive Officer, Principal Financial Officer and was
appointed to the Board of Directors.
Peter
Jerome was appointed to our
Board of Directors in January 2018. Since February 2016, Mr.
Jerome has been the Senior Director, Finance of Taconic
Biosciences, Inc., a company that develops and produces animal
research models for pharmaceutical and biotechnology companies
worldwide. Prior to his position with Taconic Biosciences, Inc.,
Mr. Jerome served as the Chief Financial Officer for CMP Pharma,
Inc., a niche pharmaceutical company and Chief Financial Officer
for Tyratech, Inc., a life science company. Mr. Jerome received his
B.S in accounting and computer information systems from Manhattan
College and has been a certified public accountant since
2004.
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The Board of Directors unanimously recommends a vote
“FOR” the nominees for election as
directors.
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4
INFORMATION ABOUT THE BOARD OF DIRECTORS
Directors that are not nominees
The
Company’s Board of Directors currently consists of five (5)
members. Two (2) members are being nominated for election at this
Annual Meeting, and the principal occupation and business
experience during at least the last five (5) years of the nominees
are presented above.
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Name
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Age
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Term Expires
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Position(s) held
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Director Since
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Chaim
Davis
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40
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2019
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Director and
Chairman of the Board
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2017
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Jean
Neff
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75
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2020
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Director and
Corporate Secretary
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2008
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Diane
Generous
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58
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2020
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Director
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2014
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The
principal occupation and business experience during at least the
last (five) 5 years of these directors is set forth
below.
Chaim
Davis was appointed to our
Board of Director in June 2017. Since July 2005, Mr. Davis
has been the Managing Member of Revach Group, LLC, the general
partner of Revach Fund L.P. (“Revach”), a
sector-specific life science fund focusing on micro to mid cap
companies, which he founded in 2005. He has also served as a
consultant to other hedge funds including Gem Partners, KOM Capital
Management and Maot Group. From 2010 to 2014, he served as a
director and a member of the audit and compensation committees of
AtheroNova Inc. (OTCBQ: AHRO). Since April 2013, Mr. Davis has also
served on the Board of Directors of Entera Bio, a clinical stage
biopharmaceutical company. Mr. Davis received his B.A. from
Columbia University.
Jean Neff was
appointed to our Board of Directors in February 2008 and, until her
retirement in early 2014, she was the Sr. Vice President
Mid-Atlantic Region of Solstas Lab Partners. She served as the Sr.
Vice President of New Business Development of the Occupational
Testing Services division of Laboratory Corporation of America,
from 1991 until 2007. She received her B.S. in Biology from Mercer
University. Ms. Neff provides decades of experience in
administration, sales and management making her well qualified as a
member of the Board.
Diane J. Generous
was appointed to our Board of Directors in December 2014. Ms.
Generous is the daughter of Edmund Jaskiewicz, our President and
Chairman Emeritus. Ms. Generous is an attorney with over 25 years
in strategic fundraising, development and advocacy communications.
She received her JD from George Washington University and her BA in
Economics from Duke University. Since January 2005, she has been a
principal of Generous Associates, a consulting firm that provides
political and non-profit strategies and fundraising
services.
Chairman Emeritus
Edmund M. Jaskiewicz
served as one of our directors from 1992 until his resignation in
December 2014 and he continues to serve as President of our
corporation. Mr. Jaskiewicz is a lawyer-engineer. He has practiced
international patent and corporate law as a sole practitioner since
1963. He received his J.D. from George Washington University Law
School and his B.S. in Engineering from the University of
Connecticut.
5
Information Related to Non-Employee Director Stock Options
Outstanding as of December 31, 2017
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Name
|
Number of Securities Underlying Unexercised Options (#)
Exercisable(1)
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Option
Exercise Price($)
|
Option Expiration Date
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Diane J.
Generous
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20,000
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0
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$0.12
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06/19/25
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|
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20,000
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0
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$0.15
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06/24/26
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|
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20,000
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0
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$0.13
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06/15/27
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Jean
Neff
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20,000
|
0
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$0.12
|
06/19/24
|
|
|
20,000
|
0
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$0.12
|
06/19/25
|
|
|
20,000
|
0
|
$0.15
|
06/24/26
|
|
|
20,000
|
0
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$0.13
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06/15/27
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Chaim
Davis
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50,000(2)
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0
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$0.18
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04/23/23
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|
Richard P. Koskey(3)
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20,000
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0
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$0.12
|
06/19/24
|
|
|
20,000
|
0
|
$0.12
|
06/19/25
|
|
|
20,000
|
0
|
$0.15
|
06/24/26
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|
Carl A. Florio(3)
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20,000
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0
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$0.12
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06/19/24
|
|
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20,000
|
0
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$0.12
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06/19/25
|
|
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20,000
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0
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$0.15
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06/24/26
|
1)
Includes options
exercisable within 60 days of April 20, 2018.
2)
The option grant
issued to Mr. Davis was granted prior to his appointment to the
Board of Directors on April 26, 2013 in connection with consulting
services provided to the Company. The option vested over 2 years in
equal installments and was fully vested as of April 26,
2015.
3)
On April 6, 2017
Richard P. Koskey and Carl A. Florio resigned from their positions
on the Board of Directors. However, information is being provided
for the year ended December 31, 2017 since they served on the Board
of Directors for part of the fiscal year. In accordance with the
option agreements, their option grants continued to vest as if
their resignation did not occur and the option expiration dates do
not change; provided neither Mr. Koskey nor Mr. Florio engage in
any activity that would be considered detrimental to the
Company.
NOTE:
Peter Jerome was not appointed to the Board of Directors until
January 2018; therefore he did not receive any stock option grants
from the Company in the year ended December 31, 2017. In addition,
Peter Jerome did not receive any stock option grants from the
Company prior to joining the Company’s Board of
Directors.
6
COMPENSATION OF DIRECTORS
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DIRECTOR COMPENSATION(1)
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||||
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Name
|
Fees Earned or
Paid in Cash
($)(2)
|
Option Awards
($)
|
All Other Compensation ($)
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Total
($)
|
|
Diane J.
Generous
|
$10,000(3)
|
$2,200(4)
|
$0
|
$12,200
|
|
Jean
Neff
|
$5,000(5)
|
$2,200(4)
|
$0
|
$7,200
|
|
Chaim
Davis
|
$5,000(6)
|
$0
|
$0
|
$5,000
|
|
Richard P.
Koskey
|
$2,500(7)
|
$0
|
$0
|
$2,500
|
|
Carl A.
Florio
|
$2,500(7)
|
$0
|
$0
|
$2,500
|
1)
There were no Stock
Awards, Non-Equity Incentive Plan Compensation, or Non-Qualified
Deferred Compensation Earnings issued or earned by members of the
Board of Directors in the year ended December 31, 2017. These
columns have been omitted.
2)
This figure does
not include any reimbursed out-of-pocket expenses related to a
Director’s attendance at a meeting of the Board of Directors
or committee of the Board of Directors.
3)
Includes fees
actually paid in the amount of $10,000 for attendance of four (4)
regularly scheduled, in person meetings of the Board of
Directors.
4)
The aggregate grant
date fair value of the options, computed in accordance with
Financial Accounting Standards Board (“FASB”) ASC Topic
718 was $0.11, and the value of the options totaled $2,200. The
fair value of the stock option grant issued was estimated utilizing
the Black-Scholes option-pricing model using the following weighted
average assumptions: dividend yield of 0%; risk-free interest rate
of 2.16%; expected life of 10 years; and stock price volatility of
81.2%.
5)
Includes fees
actually paid in the amount of $5,000 for telephonic attendance of
four (4) regularly scheduled, in person meetings of the Board of
Directors.
6)
Includes fees
actually paid in the amount of $5,000 for attendance of two (2)
regularly scheduled, in person meetings of the Board of
Directors.
7)
On April 6, 2017
Richard P. Koskey and Carl A. Florio resigned from their positions
on the Board of Directors. The fees indicated are for their
attendance at one (1) regularly scheduled, in person meeting of the
Board of Directors.
NOTE:
Peter Jerome was not appointed to the Board of Directors until
January 2018; therefore he did not receive any amounts from the
Company in the year ended December 31, 2017. Melissa A. Waterhouse
does not receive any compensation for her services as a member of
the Board of Directors, or her attendance at meetings of the Board
of Directors. Chairman Emeritus & President Edmund M.
Jaskiewicz may attend meetings at the invitation of the Board of
Directors but does not receive any compensation for his attendance
at board meetings and he is not reimbursed for any out-of-pocket
expenses related to his attendance at board meetings.
7
Narrative to Director Compensation Table
Throughout the year
ended December 31, 2017, directors who are not employees
(“Non-Employee Directors”) of the Company received a
fee of $2,500 per meeting for attending meetings of the Board of
Directors in person were reimbursed for out-of-pocket expenses
submitted in connection with attending such meetings. Members who
attended in person meetings of the Board of Directors
telephonically received 50% of this compensation, or $1,250. Four
(4) regular in-person meetings and one (1) telephonic meeting of
the Board of Directors were held during the year ended December 31,
2017.
Non-Employee board
members are not paid for their attendance at Committee meetings of
the Board of Directors; however, Non-Employee Directors are
reimbursed for any out of pocket expenses they may incur in
attending telephonic meetings of the Board of Directors or meetings
of the Committees of the Board of Directors.
On
March 22, 2018, the Non-Employee Directors agreed, and the Board of
Directors therefore resolved, to offer a director compensation
structure for attendance at meetings of the Board of Directors that
would consist of payment in cash only, restricted common shares of
Company stock or a combination of both; solely at the option of the
Non-Employee director.
No
member of the Board of Directors has a compensation arrangement
that differs from those of other members of the Board of
Directors.
8
Proposal No. 2
Ratification of Independent Registered Public Accounting
Firm
On
January 6, 2016, the Company engaged UHY, LLP (“UHY”)
as its independent registered public accounting firm to perform
audit services in connection with the Company’s year ended
December 31, 2015, and UHY has continued as the Company’s
independent registered public accounting firm since that
engagement. On December 31, 2017, the Company re-engaged UHY, LLP
(“UHY”) as its independent registered public accounting
firm to perform audit services for the year ended December 31, 2017
and to conduct reviews of unaudited quarterly financial information
through the quarter ending September 30, 2018. The decision to
engage UHY was approved by the Audit Committee of the Board of
Directors. Prior to UHY’s engagement, the Company did not
consult with UHY and receive either written or oral advice from UHY
that was an important factor considered by the Company in reaching
a decision as to the application of accounting principles to a
specific completed or contemplated transaction, or the type of
audit opinion that might be rendered on the Company’s
financial statements. In addition, the Company had not consulted
with UHY concerning any matter that was the subject of a
disagreement or a reportable event, each as described in Item
304(a)(1)(iv) and Item 304(a)(1)(v) of Regulation S-K.
The Company
is asking its shareholders to ratify the selection of UHY, LLP as
its independent registered public accounting firm. Although
ratification is not required by the Company’s By-laws or
otherwise, the Company’s Board of Directors is submitting the
Audit Committee’s selection of UHY to our shareholders for
ratification as a matter of good corporate practice. Even if the
selection is ratified, the Audit Committee, in its discretion, may
select a different principal 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 its shareholders. If
the appointment of UHY is not ratified, the Audit Committee will
evaluate the basis for the shareholders’ vote when
determining whether to continue the firm’s
engagement.
Representatives of
UHY will attend the Annual Meeting and will have an opportunity to
make a statement and/or to respond to appropriate questions from
shareholders.
Audit Fees
Year Ended December 31, 2017:
The
aggregate fees billed by UHY to the Company for the year ended
December 31, 2017 for the audit of financial statements is $66,000.
(Note: These amounts are being billed to the Company in the year
ending December 31, 2018.)
The
aggregate fees billed by UHY to the Company for the year ended
December 31, 2017 for the review of interim financial information
included in the Company’s Form 10Q’s, or for services
that were normally provided by UHY in connection with statutory or
regulatory filings or engagements was $24,000.
Year Ended December 31, 2016:
The
aggregate fees billed by UHY to the Company for the year ended
December 31, 2016 for the audit of financial statements was
$62,000. (Note: These amounts were billed to the Company in the
year ending December 31, 2017; however, the amounts billed were for
the audit of financial information for the year ended December 31,
2016).
The
aggregate fees billed by UHY to the Company for the year ended
December 31, 2016 for the review of interim financial information
included in the Company’s Form 10Q’s, or for services
that were normally provided by UHY in connection with statutory or
regulatory filings or engagements was $15,000.
Audit Related Fees
There
were no audit related fees billed by UHY to the Company in the year
ended December 31, 2017 or December 31, 2016.
9
Tax Fees
The
aggregate fees billed by UHY to the Company for the tax years ended
December 31, 2017 and December 31, 2016 for professional services
related to tax compliance, tax advice and tax planning are $9,000
for each fiscal year.
All Other Fees
There
were no other fees billed by either UHY to the Company for the
years ended December 31, 2017 or December 31, 2016.
There
were no other fees billed by UHY for services rendered to the
Company other than the services described herein and the Audit
Committee has considered whether the provision of these services is
compatible with maintaining the independence of our public
accountants.
Pursuant to SEC
Rule 210.2-01I(7)(i), the Company’s Audit Committee approved
the engagement of UHY prior to UHY rendering audit or non-audit
services. 100% of the services performed by UHY were also
approved.
|
The Board of Directors unanimously recommends a vote
“FOR” the ratification of our independent registered
public accounting firm for the year ending December 31,
2018.
|
10
EXECUTIVES
Executive Officer
As of
the date of this report and throughout the year ended December 31,
2017, our sole executive officer is Melissa A. Waterhouse. Although
Mr. Jaskiewicz continues to serve as the President of the
corporation, he is not in charge of any principal business unit,
division or function within the company, and he does not perform
any policy making function. Ms. Waterhouse also serves as a member
of our Board of Directors and her biography can be found under
“Information about our Board of
Directors”.
Additional Senior Management
In
addition to Ms. Waterhouse, the following table sets forth the
names, ages, positions/offices held, the term of the
positions/offices held of additional senior
management.
|
Name
|
Age
|
Position(s) held
|
Since
|
|
Douglas
Casterlin
|
70
|
Vice
President, Operations
|
2012
|
|
Scott D. Hutton,
Ph.D.
|
61
|
Vice
President, Sales & Marketing
|
2014
|
Douglas Casterlin has served as our Vice
President, Operations since July 2012. Mr. Casterlin originally
joined the Company in 1997. He left the Company from 2004 until
2008. Mr. Casterlin has over 30 years experience in manufacturing
and production.
Scott D. Hutton, Ph.D. re-joined us in
2014; however, he has over 9 years of service with ABMC. He was
appointed as Director of Sales & Marketing in November 2014 and
as Vice President of Sales and Marketing in November 2016. Dr.
Hutton has 20 years of experience in the drug testing industry, and
has negotiated numerous state contracts as well as contracts with
Fortune 500 Companies. Prior to being in the drug testing industry,
Dr. Hutton had over 15 years of law enforcement and corrections
management experience.
EXECUTIVE COMPENSATION
The
following table sets forth for the years ended December 31, 2017
and December 31, 2016, the compensation paid by the Company to its
principal executive officer (“PEO”) and also the
“Named Executive Officer”. Ms. Waterhouse was the sole
executive officer in both the years ended December 31, 2017 and
December 31, 2016. There were no additional individuals for whom
disclosure would have been provided but for the fact that the
individuals were not serving as executive officers of the Company
at year end December 31, 2017.
11
|
SUMMARY
COMPENSATION TABLE(1)
|
||||||
|
Name and principal position
|
|
Year Ended
|
Salary
($)
|
Option
Awards
($)
|
All
Other Compensation ($)
|
Total
($)
|
|
Melissa A.
Waterhouse
|
|
12/31/17
|
$138,000(2)
|
$0
|
$22,318(3)
|
$160,318
|
|
Chief Executive
Officer (PEO) Principal Financial Officer
|
|
12/31/16
|
$158,000(4)
|
$63,000(5)
|
$19,808(6)
|
$240,808
|
1)
There were no
amounts paid to the named executive officer related to Bonuses,
Stock Awards, Non-Equity Incentive Plan Compensation or
Nonqualified Deferred Compensation Earnings; therefore, these
columns of the table have been omitted.
2)
Ms.
Waterhouse’s salary in the year ended December 31, 2017 was
$160,000 under her employment contract; however in the year ended
December 31, 2017, 20% of Ms. Waterhouse’s salary was
deferred under the Company’s salary deferral program. This
amount includes $10,000 in deferral paybacks made to Ms. Waterhouse
in the year ended December 31, 2017 (against previously deferred
amounts). As of December 31, 2017, the Company owed Ms. Waterhouse
$54,813 in deferred compensation.
3)
Consists of $21,431
for health insurance premiums and $887 for premiums paid, by the
Company for Ms. Waterhouse’s benefit, for long-term
disability and life insurance, both of which are provided to all
employees of the Company.
4)
Ms.
Waterhouse’s salary in the year ended December 31, 2016 was
$160,000 under her employment contract; however in the year ended
December 31, 2016, 20% of Ms. Waterhouse’s salary was
deferred under the Company’s salary deferral program. This
amount includes $30,000 in deferral paybacks made to Ms. Waterhouse
in the year ended December 31, 2016 (against previously owed
deferral amounts). As of December 31, 2016, the Company owed Ms.
Waterhouse $32,813 in deferred compensation.
5)
On January 29,
2016, Ms. Waterhouse was issued a stock option grant to purchase
750,000 shares of common stock under our 2001 Option Plan at an
exercise price of $0.11, the closing price of our common shares on
January 29 2016. The grant vests in equal installments over 2
years. The fair value of the grant was $63,000 and was estimated
using the Black-Scholes pricing model using the following weighted
average assumptions: dividend yield of 0%; risk-free interest rate
of 1.84%; expected life of 10 years; and stock price volatility of
62.2%.
6)
Consists of:
$19,024 for health insurance premiums and $784 for premiums paid,
by the Company for Ms. Waterhouse’s benefit, for long-term
disability and life insurance, both of which are provided to all
employees of the Company.
12
Narrative Disclosure Related to Summary Compensation
Melissa A. Waterhouse, Chief Executive Officer (PEO)/Principal
Financial Officer
Ms.
Waterhouse entered into an employment agreement with the Company on
June 19, 2014 providing for an annual salary of $160,000, health
and dental benefits and participation in any management bonus
program adopted by the Company. Ms. Waterhouse’s employment
agreement has severance and change in control provisions. Under the
agreement, termination from the Company for any reason other than
cause results in severance being paid to Ms. Waterhouse. Such
severance equals twelve (12) months of Ms. Waterhouse’s base
salary at the time of separation, with continuation of all medical
benefits during the twelve-month period at the Company’s
expense. Additionally, under the employment agreement, Ms.
Waterhouse may resign her position and elect to exercise the
severance provision at her option under the following
circumstances:
1)
If she
is required to relocate by the Company or its Board of Directors
more than 50 miles from the Company’s New York corporate
facility as a condition of continued employment; or
2)
If
there is a substantial change in the responsibilities normally
assumed by a Chief Executive Officer or Principal Financial Officer
at the direction of the Board of Directors.
In
addition, the Company provides Ms. Waterhouse with the same
benefits offered to other employees, including long-term disability
and life insurance, at the Company’s expense. Ms.
Waterhouse’s employment agreement also contains change in
control provisions which gives Ms. Waterhouse the option to resign
and receive a lump sum severance payment equal to two (2) times her
annual base salary at the time of the change in control, which
option must be exercised within ten (10) days following the change
in control.
Outstanding Equity Awards at Fiscal Year-End
The
following table sets forth information concerning the outstanding
equity awards of the Named Executive Officer at year-end December
31, 2017:
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
||||
|
OPTION
AWARDS(1)
|
||||
|
Name
|
Number of Securities
Underlying Unexercised
Options
(#) Exercisable(2)
|
Number of Securities
Underlying Unexercised
Options
(#) Unexercisable
|
Option Exercise Price
($)
|
Option
Expiration Date
|
|
Melissa A.
Waterhouse
|
25,000
|
0
|
$0.09
|
12/31/20
|
|
Chief Executive
Officer
|
25,000
|
0
|
$0.26
|
02/21/23
|
|
(PEO)
|
200,000
|
0
|
$0.14
|
06/25/23
|
|
Principal
Financial Officer
|
165,000
|
85,000
|
$0.12
|
06/29/25
|
|
|
750,000
|
0
|
$0.11
|
01/29/26
|
1)
No Stock Awards
were outstanding for any of the Named Executive Officers in the
year ended December 31, 2017, and therefore the Stock Awards
portion of the table has been omitted. Furthermore, because there
were no Equity Incentive Plan Awards outstanding for the Named
Executive Officer, this column was omitted as well.
2)
Includes options
that are exercisable within 60 days of April 20, 2018.
13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The
Company, through its Board of Directors, attempts to review all
related party transactions to ensure fairness to the Company and
proper disclosure under SEC rules. Additionally, the Board of
Directors conducts annual reviews of each director to determine
such director’s independence. We also require our executive
officers and directors to complete a questionnaire that is intended
to identify transactions or potential transactions that require
disclosure under SEC rules or create a potential conflict of
interest. Furthermore, our Code of Ethics contains provisions
related to actual or apparent conflicts of interest between
personal and professional relationships. A copy of the
Company’s Code of Ethics can be found on its website located
at www.abmc.com as
noted under “Code of Ethics”.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of
April 20, 2017 there were 29,932,770 common shares outstanding of
which 29,932,770 common shares are entitled to vote at the Annual
Meeting. The following table sets forth, as of April 20, 2018, the
beneficial ownership of the Company's common shares by (i) each
director, (ii) each nominee for director, (iii) each of the Named
Executive Officers, (iv) all directors and executive officers of
the Company as a group, and (v) each shareholder, known to
management of the Company, to beneficially own more than five
percent (5%) of the outstanding common shares.
The
number and percentage of shares beneficially owned is determined
under the rules of the United States Securities and Exchange
Commission (“SEC”), and the information is not
necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares
as to which the individual has sole or shared voting power or
investment power and also any shares which the individual has the
right to acquire within sixty (60) days after April 20, 2018
through the exercise of any stock option, exchange of exchangeable
shares or other right. Unless otherwise indicated, each person has
sole voting and investment power (or shares such powers with his or
her spouse) with respect to the shares shown as beneficially owned.
Unless otherwise noted, the address of each person is c/o American
Bio Medica Corporation, 122 Smith Road, Kinderhook, New York
12106.
|
Title of Class
|
|
Name and Address
of Beneficial Owner
|
Amount and Nature
of Beneficial Ownership *
|
Percent of Class
|
|
Common
|
|
Chaim
Davis
|
2,024,638(1)
|
6.75%
|
|
Common
|
|
Melissa A.
Waterhouse
|
1,165,000(2)
|
3.75%
|
|
Common
|
|
Jean
Neff
|
80,000(3)
|
**
|
|
Common
|
|
Diane J.
Generous
|
102,600(4)
|
**
|
|
Common
|
|
Directors and
Executive Officers as a group (5
persons)
|
3,372,238(5)
|
10.78%
|
|
Common
|
|
MP Biomedicals
LLC
|
4,738,601(6)
|
15.83%
|
|
Common
|
|
John J.
Moroney
|
4,331,628(7)
|
13.56%
|
|
Common
|
|
Edmund M.
Jaskiewicz
|
3,433,420(8)
|
11.35%
|
*
Unless otherwise
noted, the number of shares noted for each individual is based upon
information obtained from their Section 16(a) or Rule 13d filings
with the SEC.
**
Less than one
percent (1%).
(1)
Includes 1,949,915
shares in the name of Revach Fund, LP. Chaim Davis is a managing
member of Revach Group, LLC which operates as the general partner
of the Revach Fund, LP. Also includes 50,000 common shares subject
to stock options exercisable within 60 days of April 20,
2018.
(2)
Includes 1,165,000
common shares subject to stock options exercisable within 60 days
of April 20, 2018.
14
(3)
Includes 80,000
common shares subject to stock options exercisable within 60 days
of April 20, 2018.
(4)
Includes 60,000
common shares subject to stock options exercisable within 60 days
of April 20, 2018.
(5)
Includes an
aggregate of 1,355,000 common shares subject to stock options
exercisable within 60 days of April 20, 2018.
(6)
Information based
on the last Section 16(a) filing made by MP Biomedicals LLC on
December 22, 2015. The address for MP
Biomedical LLC is 3 Hutton Centre Drive, Suite 100, Santa Ana,
California 92707.
(7)
Information based
on last Section 16(a) filing made by John J. Moroney, a principal
of Landmark Pegasus, Inc. The address for Mr. Moroney is 118
Pegasus Drive, Jupiter, FL 33477. Includes 2,000,000 common shares
subject to warrants exercisable within 60 days of April 20,
2018.
(8)
Mr. Jaskiewicz
resigned from the Board of Director on December 17, 2014, however
he continues to attend board meetings at the invitation of the
Board of Directors as Chairman Emeritus and is the President of the
corporation. Includes 330,000 common shares subject to stock
options exercisable within 60 days of April 20, 2018.
On
April 6, 2017, Richard P. Koskey and Carl A. Florio resigned from
their positions on the Board of Directors. Given they no longer
have Section 16(a) filing obligations, their current ownership of
the Company’s common stock cannot be verified. The
information related to their current stock option grants is
indicated in the table “Information Related to Non-Employee
Director Stock Options Outstanding as of December 31,
2017”.
CORPORATE GOVERNANCE
General Information related to the Board of Directors &
Attendance at Meetings
The
Board of Directors oversees our business and monitors the
performance of our management. The Board of Directors does not
involve itself in the day-to-day operations of the Company. Our
executive officer and management oversee our day-to-day operations.
Our directors fulfill their duties and responsibilities by
attending regular meetings of the Board, which are currently held
on a quarterly basis. Special meetings may be held from time to
time to consider matters for which approval of the Board of
Directors is desirable or is required by law. Our directors also
discuss business and other matters with our key executive and our
principal external advisors (legal counsel, independent auditors,
and other consultants) when necessary.
The
Board of Directors held four (4) regular meetings during the year
ended December 31, 2017 and one (1) special telephonic meeting.
Each director attended 100% of the meetings of the Board of
Directors in the year ended December 31, 2017. In the case of Chaim
Davis, he attended 100% of the meetings held after he was appointed
to the Board of Directors.
Directors are
expected to prepare themselves for and attend all meetings of the
Board of Directors, Annual Meetings of Shareholders and the
meetings of the committees on which they serve, with the
understanding that on occasion a director may be unable to attend a
meeting. Jean Neff was unable to attend our Annual Meeting of
Shareholders held in June 2017; however, Melissa A. Waterhouse and
Diane J. Generous (the two other members of the Board of Directors
at the time of the Annual Meeting) did attend.
15
Board Leadership Structure and Role in Risk Oversight
Board Leadership Structure
Over
the last several years, the Company has had different individuals
holding the positions of Chairman of the Board and Chief Executive
Officer. The Board of Directors believes this structure is
appropriate for the Company because it provides the Board of
Directors with capable leadership and allows the Chief Executive
Officer to focus on the day-to-day business of running the Company
while the Chairman leads the Board of Directors. The independent
directors meet in executive sessions in connection with regular
meetings of the Board of Directors. Melissa Waterhouse serves as
our Chief Executive Officer, and until his resignation on April 6,
2017, Richard P. Koskey served as our Chairman of the Board. Chaim
Davis was appointed as Chairman of the Board in March
2018.
Role in Risk Oversight
The
role of our Board of Directors in our Company’s risk
oversight process includes receiving regular reports from
management on areas of material risk to our Company, including
operational, financial, legal and regulatory, and strategic risks.
The full Board of Directors (or the appropriate committee in the
case of risks that are under the purview of a particular committee)
receives these reports from either the Chief Executive Officer or
from the member of management responsible for the function from
which the risk arises so that it can understand and assess the
Company’s ongoing risk identification, risk management and
risk mitigation strategies. When a committee receives a report
regarding a previously unidentified risk, the chairman of the
relevant committee reports on the discussion to the full Board of
Directors. This enables the Board of Directors and its committees
to coordinate the risk oversight role and consult with management
about implementation of appropriate risk management and mitigation
measures. Our Board of Directors also administers its risk
oversight function through the required approval by the Board (or a
committee of the Board) of significant transactions and other
material decisions, and regular periodic reports from the
Company’s independent registered public accounting firm and
other outside consultants regarding various areas of potential
risk, including, among others, those relating to our internal
controls and financial reporting.
Independent Directors
Our
common shares are currently trading on the OTC Markets, Inc., under
their OTC Pink Open Marketplace. The OTC Pink Marketplace offers
trading in a wide range of equities through any broker. We are
classified as an OTC Pink company with “current
information”. Companies with this designation follow the
International Reporting Standard and make their filings publicly.
In our case, we are current in all of our reporting requirements.
Although the OTC Pink Marketplace does not have requirements
related to director independence, we use NASDAQ’s listing
standards and SEC rules and regulations to determine the
independence of our directors.
For a
director to be independent under NASDAQ listing standards, the
director must be a person other than an executive officer or
employee of the company or its subsidiaries or any other individual
having a relationship, which, in the opinion of the Company's Board
of Directors, would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. Under
NASDAQ’s listing standards, a “Family Member”
means a person’s spouse, parents, children and siblings,
whether by blood, marriage or adoption, or anyone residing in such
person’s home. The following persons cannot be considered
independent:
●
a director who is,
or at any time during the past three (3) years was, employed by the
Company;
●
a director who
accepted or who has a Family Member who accepted any compensation
from the Company in excess of $120,000 during any period of twelve
(12) consecutive months within the three (3) years preceding the
determination of independence, other than the following: (i)
compensation for board or board committee service; (ii)
compensation paid to a Family Member who is an employee (other than
an executive officer) of the Company; or (iii) benefits under a
tax-qualified retirement plan, or non-discretionary
compensation.
16
In
addition to the requirements stated above, audit committee members
are also subject to additional, more stringent independence
requirements under NASDAQ listing standards and SEC rules, which
disqualify:
●
a director who is a
Family Member of an individual who is, or at any time during the
past three (3) years was, employed by the Company as an executive
officer;
●
a director who is,
or has a Family Member who is, a partner in, or a controlling
shareholder or an executive officer of, any organization to which
the Company made, or from which the Company received, payments for
property or services in the current or any of the past three (3)
fiscal years that exceed 5% of the recipient’s consolidated
gross revenues for that year, or $200,000, whichever is more, other
than the following: (i) payments arising solely from investments in
the Company’s securities; or (ii) payments under
non-discretionary charitable contribution matching
programs;
●
a director of the
Company who is, or has a Family Member who is, employed as an
executive officer of another entity where at any time during the
past three (3) years any of the executive officers of the Company
serve on the compensation committee of such other entity;
or
●
a director who is,
or has a Family Member who is, a current partner of the
Company’s outside auditor, or was a partner or employee of
the Company’s outside auditor who worked on the
Company’s audit at any time during any of the past three (3)
years.
Furthermore, in
addition to the independence requirements discussed above,
independent Audit Committee members may not, other than in their
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 fees
from the Company other than for services as a board member;
or
●
be an affiliated
person of the Company.
On
April 6, 2017, Richard P. Koskey and Carl A. Florio resigned from
their positions on the Board of Directors. The Board of Directors
has determined that Jean Neff, Diane J. Generous, Chaim Davis and
Peter Jerome are independent directors under NASDAQ’s listing
standards. As of the date of this report, the majority of the Board
of Directors is independent as there are currently five (5) members
on the Board of Directors.
In
accordance with NASDAQ’s listing standards, independent
directors meet in executive session when required in conjunction
with regularly scheduled meetings of the Board of Directors,
outside of the presence of non-independent directors.
Code Of Ethics
The
Company has adopted a Code of Ethics that applies to all employees,
including but not limited to the principal executive officer,
principal financial officer, principal accounting officer or
controller, or person performing similar functions. The Board of
Directors will review the Code of Ethics on a regular basis and
propose or adopt additions or amendments to the Code of Ethics as
appropriate. A copy of the Company’s Code of Ethics can be
found on its website located at www.abmc.com,
under the section title “Corporate” and the subsection
titled “Governance”. A copy of the Code of Ethics may
also be obtained free of charge by sending a written request to
American Bio Medica Corporation, Attention: Corporate Secretary,
122 Smith Road, Kinderhook, New York 12106.
17
Committees of the Board of Directors
The
Board of Directors of the Company has established the following
committees:
Nominating Committee
The
Nominating Committee currently consists of three (3) members, all
of which the Board has determined are independent as defined by
NASDAQ listing requirements and SEC rules and regulations. As of
the date of this report, the Nominating Committee consists of three
(3) members, Jean Neff, Diane J. Generous and Chaim Davis. Diane J.
Generous serves as the Chairman of this Committee.
The
Nominating Committee is governed by a charter it has adopted. A
copy of the Nominating Committee charter can be found on the
Company’s website at www.abmc.com, under the
section title “Corporate” and the subsection titled
“Governance”. A copy can also be obtained free of
charge by sending a written request to American Bio Medica
Corporation, Attn: Corporate Secretary, 122 Smith Road, Kinderhook,
New York 12106. There have been no material changes to the
Nominating Committee Charter since it was last filed as an exhibit
to the Company’s Proxy Statement filed on May 12,
2004.
The
purpose of the Nominating Committee is to review, and make
recommendations related to, qualified candidates for election to
the Board of Directors. In carrying out these functions, the
Nominating Committee considers a candidate’s mix of skills,
experience, character, commitment and diversity of background, all
in the context of the requirements of the Board of Directors at
that point in time. Each candidate should be prepared to
participate fully in activities of the Board of Directors,
including attendance at, and active participation in, meetings of
the Board of Directors, and not have other personal or professional
commitments that would, in the Nominating Committee’s
judgment, interfere with or limit such candidate’s ability to
do so.
Additionally, in
determining whether to recommend a director for re-election, the
Nominating Committee considers the director’s record of
attendance at Board of Directors and Committee meetings and
participation in and contributions to the activities of the Board
of Directors. The Nominating Committee has no stated specific,
minimum qualifications that must be met by a candidate for a
position on our Board of Directors. The Nominating Committee does,
however, believe it appropriate for at least one (1) member of the
Board to meet the criteria for an “Audit Committee Financial
Expert” as defined by SEC rules, and for a majority of the
members of the Board to meet the definition of “independent
director” within the meaning of applicable NASDAQ listing
standards, even though such criteria may not be required by OTC
Markets Group.
The
Nominating Committee’s methods for identifying candidates for
election to the Board of Directors (other than those proposed by
the Company’s shareholders, as discussed below) include the
solicitation of ideas for possible candidates from a number of
sources, including: members of the Board of Directors, the
Company’s executives, individuals personally known to the
members of the Board of Directors and other research. The
Nominating Committee also has authority to select and compensate a
third-party search firm to help identify candidates, if it deems it
advisable to do so.
The
Nominating Committee will consider nominees recommended by its
shareholders. Shareholders may submit nominations to the Nominating
Committee in care of Corporate Secretary, American Bio Medica
Corporation, 122 Smith Road, Kinderhook, New York 12106. To be
timely for consideration at our next Annual Meeting of
Shareholders, the Corporate Secretary must receive a
shareholder’s nomination notice at the Company’s
principal executive offices, at the address set forth above, no
later than December 28, 2018. The Nominating Committee will
consider all candidates identified through the processes described
above, whether identified by the committee or by a shareholder, and
will evaluate each of them on the same basis. There have not been
any material changes to the procedures by which shareholders may
recommend nominees to the Company’s board of directors since
our last disclosure related to this issue.
The
Nominating Committee met four (4) times in the year ended December
31, 2017 and the slate of Directors was determined upon the
recommendation of the Board’s non-management directors (other
than the non-management director that is one of the nominees
standing for re-election). All members of the Nominating Committee
attended this meeting.
18
Audit Committee
The OTC Pink Marketplace does not have
requirements related to audit committee composition or audit
committee charters. Subsequent to the resignation of Richard P.
Koskey and Carl A. Florio on April 6, 2017, the Company’s
Audit Committee was comprised of two (2) members, both of which the
Board has determined are independent directors, (as independence is
defined in NASDAQ Rule 5605(a)(2) of the NASDAQ listing standards,
as applicable). In June 2017, Chaim Davis was appointed to the
Board of Directors to fill the vacancy created by the resignation
of Carl A. Florio. Mr. Davis was also appointed to the Audit
Committee in June 2017. In January 2018, Peter Jerome was appointed
to the Board of Directors to fill a vacancy created by the
resignation of Richard P. Koskey. Peter Jerome was also appointed
as Chairman of the Audit Committee in January 2018. As of the date
of this report, the Audit Committee consists of Jean Neff, Diane J.
Generous, Chaim Davis and Peter Jerome.
The
Board of Directors has adopted an Audit Committee charter. A copy
of the Audit Committee Charter can be found on the Company’s
website at www.abmc.com,
under the section title “Corporate” and the subsection
titled “Governance”. A copy can also be obtained free
of charge by sending a written request to American Bio Medica
Corporation, Attn: Corporate Secretary, 122 Smith Road, Kinderhook,
New York 12106. There have been no material changes to the Audit
Committee Charter since it was last filed as an exhibit to the
Company’s Proxy Statement filed on May 12, 2004.
This
Committee makes recommendations to the Board of Directors with
respect to the Company's financial statements and the appointment
of independent auditors, reviews significant audit and accounting
policies and practices, meets with the Company’s independent
public accountants concerning, among other things, the scope of
audits and reports, and reviews the performance of the overall
accounting and financial controls of the Company. The Audit
Committee formally met five (5) times and informally met several
times in the year ended December 31, 2017. The Audit Committee
charter requires four (4) Audit Committee meetings per year. In the
year ended December 31, 2017, Richard P. Koskey and Carl A. Florio
attended 100% of the formal meetings (held when they were members
of the Audit Committee), Jean Neff and Diane J. Generous each
attended 80% of the formal meetings and Chaim Davis attended 100%
of the formal meetings (held when he was a member of the Audit
Committee).
Audit Committee Financial Expert
At
least one (1) member of the Audit Committee must be financially
sophisticated, in that he or she has past employment experience in
finance or accounting, requisite certification in accounting, or
other comparable experience or background which results in the
individual’s financial sophistication, including but not
limited to being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities. The individual must have an understanding of
generally accepted accounting principles and financial statements,
the ability to assess the general application of such principles in
connection with the accounting for estimates, accruals and
reserves, experience in preparing, auditing, analyzing or
evaluating financial statements that present a breadth and level of
complexity of accounting issues comparable to those issues raised
by the Company’s financial statements, an understanding of
internal control over financial reporting, and an understanding of
audit committee functions. Such attributes would be acquired
through education and experience as a principal accounting or
financial officer, controller, public accountant or auditor or
experience actively supervising such positions, or experience
overseeing or assessing the performance of companies or public
accountants with respect to the preparation, auditing, or
evaluation of financial statements. In the year ended December 31,
2017, until their resignations on April 6, 2017, Richard P. Koskey
and Carl A. Florio both met these requirements. In January 2018,
Peter Jerome was appointed to the Board of Directors and the Audit
Committee and he meets the requirements of a financial expert.
Peter Jerome serves as the Chairman of the Audit Committee as of
the date of this report.
19
Audit Committee Report
The
Audit Committee reviews the Company’s financial reporting
process on behalf of the Company’s Board of Directors.
Management has the primary responsibility for the Company’s
financial statements and the reporting process. The Company’s
independent registered public accountants are responsible for
expressing an opinion on the conformity of the Company’s
audited financial statements to generally accepted accounting
principles upon completion of their audit.
In this
context, the Audit Committee reviewed and discussed with management
and the independent public accountants the Company’s audited
financial statements for the year ended December 31, 2017 (the
“Audited Financial Statements”). The Audit Committee
has discussed with the independent registered public accountants
the matters required to be discussed by statement of Auditing
Standards No. 61, as amended (AICPA, Professional Standards, Vol.1.
AU section 380), as adopted by the Public Company Accounting
Oversight Board in Rule 3200T. In addition, the Audit Committee has
received the written disclosures and the letter from the
independent registered public accountants required by applicable
requirements of the Public Company Accounting Oversight Board
regarding the independent registered public accountant’s
communications with the audit committee concerning independence,
and has discussed with the independent registered public accountant
the independent registered public accountant’s
independence.
Based
on reviews and discussions with the independent registered public
accountants, the Audit Committee recommended to the Board of
Directors that the Audited Financial Statements be included in the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2017, for filing with the SEC.
The
Audit Committee members do not serve as professional accountants or
auditors and their functions are not intended to duplicate or to
certify the activities of management and the independent auditors.
The Committee serves a board-level oversight role where it receives
information from, consults with and provides its views and
directions to, management and the independent public accountants on
the basis of the information it receives and the experience of its
members in business, financial and accounting matters.
The
Audit Committee
Peter
Jerome, Chairman
Jean
Neff
Diane
J. Generous
Chaim
Davis
Compensation and Option Committees
The
Compensation Committee makes recommendations to the Board of
Directors relating to salaries, bonuses and other compensation and
benefits of executive officers, and reviews and advises management
regarding benefits and other terms and conditions of compensation
of management. The Compensation Committee is also responsible for
reviewing the outcome of the shareholder advisory vote on executive
compensation. The Company’s Option Committee is a
sub-committee of the Compensation Committee and administers the
Company's stock option plans. The Compensation Committee does not
have a charter. The Compensation and Option Committees met several
times informally throughout the year ended December 31, 2017. The
meeting to discuss executive compensation for the year ending
December 31, 2017 was not held until February 2018. All members
attended the formal meeting.
In the
year ended December 31, 2017, until their resignation from the
Board of Directors on April 6, 2017, Richard P. Koskey and Carl A.
Florio served on the Compensation Committee along with Jean Neff
and Diane J. Generous. In June 2017, Chaim Davis was appointed to
the Board of Directors and the Compensation Committee. As of the
date of this report, the Compensation Committee consists of Jean
Neff, Diane J. Generous and Chaim Davis. Jean Neff serves as the
Chairman of the Compensation Committee.
20
Compensation Committee Interlocks and Insider
Participation
None of
the members of the Compensation Committee during the year ended
December 31, 2017 served as an officer or employee of the Company
or had any relationship requiring disclosure by the Company (except
that Diane J. Generous is the daughter of the former Chairman of
our Board of Directors and President of the Corporation (Edmund
Jaskiewicz).
Compensation Committee Report
The
compensation of the Company’s sole executive officer; its
chief financial officer/principal financial officer, is recommended
for determination to the Board of Directors by the Compensation
Committee. In addition to recommending the executive’s
salaries and bonus arrangements, the Compensation Committee
recommends policies and guidelines for the determination of other
benefits by the Board of Directors.
General. Compensation of the
Company’s executive officers is intended to attract, retain
and reward persons who are essential to the corporate enterprise.
The fundamental policy of the Company's executive compensation
program is to offer competitive compensation to executive officers
that appropriately rewards the individual executive officer’s
contribution to corporate performance. Compensation is determined
primarily by reference to compensation packages for similarly
situated executive officers of companies of similar size or in
comparable lines of business with which the Company expects to
compete for executive officer talent and with reference to the
revenues, gross profits and other financial criteria of the
Company. In establishing base salaries, the Committee also assesses
subjective qualitative factors to discern a particular executive
officer’s relative value to the corporate enterprise. The
Compensation Committee utilizes subjective criteria for evaluation
of individual performance and relies substantially on the executive
officers in doing so. The Committee focuses on two primary
components of the Company’s executive officer compensation
program, each of which is intended to reflect individual and
corporate performance: base salary compensation and bonus program
based upon profitability of the Company.
Cash Compensation. Executive
officers’ base salaries are determined primarily by reference
to compensation packages for similarly situated executive officers
of companies of similar size or in comparable lines of business
with which the Company expects to compete for executive officer
talent and with reference to the revenues, gross profits and other
financial criteria of the Company. In accordance with these
criteria, the salary of the Chief Executive Officer/Principal
Financial Officer was established in her employment agreement. The
employment agreement of the Chief Executive Officer/Principal
Financial Officer was filed as an exhibit to the Current Report on
Form 8-K filed with the SEC on June 24, 2014.
Bonus Programs. The Company does not
currently have any bonus programs in place. In the past, the
Company has implemented bonus programs in which executive officers,
senior management and certain mid-level managers were eligible to
participate. There have not been bonuses paid to anyone in the
Company under any bonus plans, including the named executive
officer for more than 10 years. The Company continues to evaluate
additional bonus programs to compensate its executive officers,
senior management and mid-level managers. Any future bonus programs
are expected to be based upon the Company’s sales and
profitability and/or the market value of the Company’s
securities. The Company may also adopt other ad hoc bonus programs
as appropriate to provide incentives for particular officers or
management employees to meet specific goals.
Stock Options. The Company does utilize
stock options as a form of long-term incentive compensation. The
Company has no plans to widely issue stock options but, will
reserve the issuance of stock options for special
circumstances.
21
In
reviewing and approving the Chief Executive Officer’s
compensation for the year ended December 31, 2017, the Board did
not retain a compensation consultant. The Board of Directors
considered the same criteria detailed herein with respect to
executive officers in general and determined Melissa A.
Waterhouse’s compensation.
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The Compensation
Committee
Jean
Neff, Chair
Chaim
Davis
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Communications with Directors and Committees
Shareholders may
communicate with members of the Company’s Board of Directors
and its Committees by writing to American Bio Medica Corporation,
122 Smith Road, Kinderhook, New York 12106, Attn: Corporate
Secretary. The Corporate Secretary will disseminate the
communication(s) to the appropriate individual(s).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section
16(a) of the Exchange Act requires the Company’s executive
officers and directors, and persons who own more than ten percent
(10%) of a registered class of the Company’s equity
securities (a listing of which can be found in the table above), to
file reports of ownership and changes in ownership with the SEC.
Executive officers, directors and greater than ten percent (10%)
shareholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based
solely on a review of the copies of such forms furnished to the
Company as of the date of this report, all executive officers,
directors and greater than ten percent (10%) beneficial holders
complied with all Section 16(a) requirements during the year ended
December 31, 2017.
OTHER MATTERS
The
Board of Directors is not aware of any matter to be presented for
action at the Annual Meeting other than the matters set forth
herein. Should any other matter requiring a vote of shareholders
arise, the proxies confer upon the person or persons entitled to
vote the shares represented by such proxies the authority to vote
the proxies in their discretion.
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BY
ORDER OF THE BOARD OF DIRECTORS
Melissa
A. Waterhouse
Chief
Executive Officer
Principal Financial
Officer
April
20, 2018
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22
PROXY
ANNUAL MEETING OF SHAREHOLDERS
For the
Year Ended December 31, 2017
AMERICAN BIO MEDICA CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE
CORPORATION
The
undersigned shareholder of American Bio Medica Corporation, having
received the Notice dated April 20, 2018, of the Annual Meeting of
Shareholders, hereby nominates, constitutes, appoints and
authorizes Melissa A. Waterhouse and Jean Neff, and each of them
with full power to act alone, as proxies with full power of
substitution, for me and in my name, place and stead, to vote all
the common shares of said corporation standing in my name on its
books on April 20, 2018, at the Annual Meeting of Shareholders to
be held at 10:00 A.M. on Thursday, June 21, 2018 at the
Company’s corporate offices located at 122 Smith Road,
Kinderhook, New York 12106, or at any adjournments thereof, with
all the power the undersigned would possess if personally present,
as follows:
1.
The election of the nominees listed in the Proxy Statement for the
Annual Meeting, as directors to serve the terms indicated in the
Proxy Statement commencing with the
ensuing year and until their successor(s) shall be elected and duly
qualified.
If you
wish your vote to be cast for the nominees listed below, place an
“X” in this box
☐
If you
wish to withhold your vote for the nominees listed below, place an
“X” in this box ☐
If
you do not wish to vote for all of the nominees, line out the
name(s) of the person(s) for whom you do not wish to
vote.
DIRECTOR:
Peter
Jerome
Melissa
A. Waterhouse
2.
To ratify the selection by the Company’s Audit
Committee of UHY, LLP as the Company’s independent registered
public accounting firm for the year ending December 31,
2018.
☐
FOR ☐ AGAINST ☐ ABSTAIN
THIS PROXY CONFERS AUTHORITY TO VOTE FOR THE NOMINEES LISTED EVEN
THOUGH THE BLOCK IN ITEM 1 IS NOT MARKED UNLESS THE NAME OF THE
PERSON IS LINED OUT.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND THE
COST OF SAME IS BORNE BY THE CORPORATION. THIS PROXY MAY BE
REVOKED BY WRITING TO THE CORPORATE SECRETARY, AMERICAN BIO MEDICA
CORPORATION, 122 SMITH ROAD, KINDERHOOK, NEW YORK 12106 OR IN
PERSON AT THE ANNUAL MEETING OF SHAREHOLDERS AT ANY TIME PRIOR TO
ITS EXERCISE.
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Address:
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(All Shareholders
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NUMBER OF
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DATE:
________________________
IF
SHARES ARE NOT REGISTERED IN YOUR NAME, PLEASE GIVE THE NAME AND
ADDRESS OF THE PERSON OR ENTITY IN WHOSE NAME THEY ARE
REGISTERED.
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Please
date, fill in your complete name and address and sign above exactly
as your name or names appear hereon, and return this proxy promptly
in the enclosed envelope. When signing as attorney, executor,
administrator, trustee or guardian, please give full title. If
there is more than one fiduciary, all should sign. All joint owners
must sign.
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