Legal
Proceedings
During the past ten years, none of our
directors, executive officers, promoters, control persons, or nominees has been:
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the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
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convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
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subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or any Federal or State authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
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found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law.
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the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (a) any Federal or State securities or commodities law or regulation; (b) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
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the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
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Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct
and Ethics that applies to our principal executive, financial and accounting officers (or persons performing similar functions),
a copy of which is filed as Exhibit 14.1 to the Company’s Form 10 Registration Statement filed with the SEC on July 6, 2016.
Board Composition and Election of
Directors
Our Board of Directors is currently comprised
of three members. Pursuant to our Articles of Incorporation and Bylaws, Directors shall hold office until the next annual meeting
of the stockholders and until his or her successor shall be elected and qualified. Directors may be removed, with or without cause
and from time to time, as provided by Chapter 78 of the Nevada Revised Statues then in effect. Our Nominating Committee reviews
director candidates and proposes director nominees.
Indemnification of Directors and
Officers
Our Officers and Directors are indemnified
as provided by the Nevada Revised Statutes (“NRS”) and our Bylaws. Under the NRS, unless modified by a corporation’s
Articles of Incorporation, a Director is not liable to a corporation, its stockholders, or creditors for damages unless the Director’s
action or failure constituted a breach of fiduciary duty and such breach involved intentional misconduct, fraud, or a knowing violation
of law. Our bylaws provide that we will indemnify our Directors and Officers to the fullest extent permissible under Nevada law
if such person acted in good faith and in a manner which such person reasonably believed to be in, or not opposed to, the best
interests of the Company and, with respect to any criminal action, had no reasonable cause to believe such conduct was unlawful.
The Company has entered into Indemnification Agreements with each of its Directors, a copy of which is filed as Exhibit 10.07 of
the Company’s Form 10 Registration Statement filed with the SEC on July 6, 2016.
The Company may purchase and maintain Directors
and Officers liability insurance or make other financial arrangements on behalf of any individual entitled to indemnity. Our Bylaws
also provide that we will advance all expenses incurred to any person entitled to indemnity upon receipt of an undertaking by,
or on behalf of, such person to repay said amounts should it be ultimately determined that the person was not entitled to indemnification.
Audit Committee, Compensation Committee
and Nominating Committee
As of December 31, 2017, we have formed
formal Audit, Compensation and Nominating Committees.
Audit Committee
The Audit Committee currently consists
of two independent directors, Kent J. George, who serves as the committee chairperson, and Michael Neitzel, as well as one non-independent
director, William Rosellini. Effective October 31, 2017 and November 6, 2017, Ron Conquest and Mark Bates, respectively, formally
resigned from their positions as Vice-President of Finance and Chief Innovation Officer, respectively, and as members of the Board
of Directors and the Audit Committee. Our Audit Committee met one time during 2017. All then current members were present.
The director independence rules of the
NASDAQ Capital Market require listed companies to have an Audit Committee of at least three members, each of whom (in addition
to satisfying other conditions) is an independent director. The Company’s Audit Committee currently has one non-independent
member and, therefore, would not meet this NASDAQ Capital Market requirement.
We have determined that the Company does
not have a member of its Board of Directors that qualifies as an “audit committee financial expert” as defined in Item
407(d)(5)(ii) of Regulation S-K. We also currently do not have a formal audit committee charter in compliance with, and as required
by, Rule 5605(c)(1) of the NASDAQ Capital Market.
Compensation Committee
The Compensation Committee consists of
two independent directors, Michael Neitzel, who serves as the committee chairperson, and Kent J. George. The compensation committee
determines, or recommends to the full Board for determination, the compensation of the chief executive officer and all other executive
officers. Effective October 31, 2017 and November 6, 2017, Ron Conquest and Mark Bates, respectively, formally resigned from their
positions as Vice-President of Finance and Chief Innovation Officer, respectively, and as members of the Board of Directors and
Compensation Committee. Our Compensation Committee met one time during 2017. All then current members were present.
We also currently do not have a formal
compensation committee charter in compliance with, and as required by, Rule 5605(d)(1) of the NASDAQ Capital Market.
Nominating Committee
The Nominating Committee consists of two
independent directors, Michael Neitzel, who serves as the committee chairperson, and Kent J. George. The Nominating Committee selects
or recommends nominees for directors. The director independence rules of the NASDAQ Capital Market require listed companies independent
directors to select or recommend nominees for directors. Independent directors serving on our nominating committee provides recommendations
for directors, therefore, the Company meets this NASDAQ Capital Market requirement. Our Nominating Committee met three times during
2017.
Director Independence
As of December 31, 2017, our Board of Directors
is currently composed of three members, two of whom, Kent J. George and Michael Neitzel, qualify as independent directors in accordance
with the published listing requirements of the NASDAQ Capital Market. The NASDAQ Capital Market independence definition includes
a series of objective tests, such as that the Directors are not, and have not been for at least three years, one of our employees
and that neither the Directors, nor any of their family members, have engaged in various types of business dealings with us.
Conflicts of Interest
We did not have an Audit or Compensation
Committee until January 1, 2017, thus, providing for a potential conflict of interest in that our Directors had the authority to
determine issues concerning management compensation, nominations, and audit issues that may affect management decisions prior to
the creation of such committees.
RS is a company wholly-owned by Mr. Rosellini
which acquires interests in other companies such as Nexeon in exchange for RS assets. RS will not acquire any such properties in
the future that are not first offered to Nexeon and voted on by its Board of Directors with Mr. Rosellini abstaining. There has
been no conflict of interest between Nexeon and Nuviant because Nexeon’s patents were acquired from NXDE, a company with
which Mr. Rosellini had no affiliation and because the majority of Nuviant’s assets were acquired from a European company
with which Mr. Rosellini had no affiliation prior to the acquisition of the assets by Nuviant
RS functions as the personal holding company
of Mr. Rosellini. In addition, RS has been the source of private funding as well as Federal and State Grants all of which benefit
the Company. Mr. Rosellini’s work week averages 60 to 70 hours per week and approximately 10%, or 6 to 7 hours a week, are
devoted to the business of RS. Regardless, Mr. Rosellini is devoting, at a minimum, in excess of 40 hours a week to the Company.
Mr. Rosellini is fully aware of his fiduciary responsibilities and to the principles of the Corporate Opportunity Doctrine as they
relate to the Company. There can be no assurance that a material conflict of interest will not occur in the future. In the event
a potential conflict should occur, it will be fully disclosed to the Company’s Board of Directors for a determination by
the Board as to the relevance and/or solution in order to avoid such potential conflict. As of the date of this filing, Mr. Rosellini,
to the best of his knowledge and belief, is unaware of any material conflicts.
All potential or actual conflicts of interest
for all of the Company’s officers and directors have been approved by the Board of Directors (with abstention by the conflicted
Director) pursuant to our Code of Business Conduct and Ethics. Such Board approval for conflict of interest transactions is consistent
with Nevada corporate law statutes.
Family Relationships
As of April 5, 2018, there are no family
relationships of any kind among our Executive Officers, Directors or persons nominated or chosen by us to become Executive Officers
or Directors.
Emily Hamilton, MD serves as the Director
of Emerging Therapy for NXPROC. Dr. Hamilton is the wife of our CEO, William Rosellini.
Board Leadership Structure and Role
in Risk Oversight
Although we have not adopted a formal policy
on whether the Chairman and Chief Executive Officer positions should be separate or combined, we have traditionally determined
that it is in the best interests of the Company and its shareholders to combine these roles. Due to the small size
and early stage of the Company, we believe it is currently most effective to have the Chairman and Chief Executive Officer positions
combined. In addition, having one person serve as both Chairman and Chief Executive Officer eliminates potential for confusion
and provides clear leadership for the Company, with a single person setting the tone and managing our operations. The Board oversees
specific risks, including, but not limited to:
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appointing, retaining and overseeing the work of the independent auditors, including resolving disagreements between the management and the independent auditors relating to financial reporting;
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approving all auditing and non-auditing services permitted to be performed by the independent auditors;
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reviewing annually the independence and quality control procedures of the independent auditors;
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reviewing, approving, and overseeing risks arising from proposed related party transactions;
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discussing the annual audited financial statements with the management;
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meeting separately with the independent auditors to discuss critical accounting policies, management letters, recommendations on internal controls, the auditor’s engagement letter and independence letter and other material written communications between the independent auditors and the management; and
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monitoring the risks associated with management resources, structure, succession planning, development and selection processes, including evaluating the effect the compensation structure may have on risk decisions.
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Board of Directors Meetings and Attendance
We have no formal policy
regarding director attendance at the annual meeting of stockholders. The Board of Directors held nine meetings in 2017. All
Board members were present at all of the meetings with the exception of one meeting. During that meeting, the board member’s
consent was provided.
Compliance with Section 16(a) of
the Exchange Act
Section 16(a) of the Exchange Act, requires
the Company’s officers and directors and persons who own more than 10% of a registered class of the Company’s equity
securities to file reports of ownership and changes of ownership with the SEC. Officers, directors and beneficial owners of more
than 10% of the Company's common stock are required by SEC regulations to furnish the Company with copies of all reports that they
file with the SEC pursuant to Section 16(a) of the Exchange Act. Based solely on a review of the copies of such forms furnished
to the Company and representations received by us from reporting persons, and without conducting any independent investigation
of our own, in 2017, there were the following untimely filing of a Form 3, 4 and/or 5: Christopher Miller (nine Form 4s); Brian
Blischak (six Form 4s); Daniel Powell (one Form 4); Kent J. George (one Form 4); Michael Neitzel (one Form 4); and Rosellini Scientific,
LLC (three Form 4s).