Psychemedics (PMD) Proxy Filing summary

Executive summary

• Board approved a plan to terminate SEC registration and delist common stock from Nasdaq, pending shareholder approval at the 2024 Annual Meeting expected in fall 2024.

• A reverse stock split (1-for-4,000 to 1-for-6,000) will cash out small shareholders at $2.35 per share, followed by a forward split to maintain holdings for larger shareholders.

• The transaction aims to save over $900,000 annually by eliminating public company costs and to allow management to focus on long-term value.

• Proceeds from a $3.75 million private stock sale to select investors will fund the cash-out and provide $500,000 for working capital.

• The Board may abandon the transaction at any time before completion.

Voting matters and shareholder proposals

• Shareholders will vote on the reverse/forward stock split, the stock purchase agreement, and related amendments at the 2024 Annual Meeting.

• Proxy materials and a Schedule 13E-3 will be filed and distributed before the meeting.

• All shareholders, including those with small holdings, will have the opportunity to vote.

Board of directors and corporate governance

• Two board seats will be reserved for nominees designated by the lead investor (3K Limited Partnership) after the transaction closes, subject to eligibility and board approval.

• Board size will be capped at five directors without investor consent.

• Independent committee of the board retains authority to reject investor nominees if not in the best interests of the company and shareholders.