SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 1)*
Guidance Software, Inc.
(Name of Issuer)
Common Stock, par value $0.001 per share
(Title of Class of Securities)
401692 10 8
(CUSIP Number)
Shawn McCreight and Jennifer McCreight
c/o Murray A. Indick
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Telephone: 415-268-7096
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
February 25, 2016
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box x.
Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent.
| * | The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. |
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes.)
| CUSIP No. 401692 10 8 |
| 1. | Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
Shawn H. McCreight and Jennifer Lynn McCreight as Trustees of the Shawn H. McCreight & Jennifer Lynn McCreight TTEES McCreight Living Trust U/A DTD March 31, 2006. | |||||
| 2. | Check the Appropriate Box if a Member of a Group (See Instructions) (a) ¨ (b) ¨
| |||||
| 3. | SEC Use Only
| |||||
| 4. | Source of Funds
OO | |||||
| 5. | Check Box if Disclosure of Legal Proceeding is Required Pursuant to Items 2(d) or 2(e)
¨ | |||||
| 6. | Citizenship or Place of Organization
United States | |||||
| Number of Shares Beneficially owned by Each Reporting Person With:
|
7. | Sole Voting Power
9,086,384 | ||||
| 8. | Shared Voting Power
0 | |||||
| 9. | Sole Dispositive Power
9,086,384 | |||||
| 10. | Shared Dispositive Power
9,086,384 | |||||
| 11. |
Aggregate Amount Beneficially Owned by Each Reporting Person
9,086,384* | |||||
| 12. | Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)
¨ | |||||
| 13. | Percent of Class Represented by Amount in Row (9)
29.7% | |||||
| 14. | Type of Reporting Person (See Instructions)
IN | |||||
*The registered owner of the 9,086,384 shares of common stock of Guidance Software, Inc. is the Shawn H. McCreight & Jennifer Lynn McCreight TTEES McCreight Living Trust U/A DTD March 31, 2006 (the “McCreight Living Trust”).
EXPLANATORY NOTE
This Amendment No. 1 to Schedule 13D (the “Amendment”) is being filed with respect to the beneficial ownership of Shawn H. McCreight and Jennifer Lynn McCreight (the “Reporting Persons”). This Amendment supplements the Schedule 13D as previously filed on February 11, 2016 (as amended, the “Schedule 13D”). Each Item below amends and supplements the information disclosed under the corresponding Item of Schedule 13D. Unless otherwise indicated herein, capitalized terms used but not defined in this Amendment shall have the same meaning herein as are ascribed to such terms in Schedule 13D.
ITEM 4. Purpose of Transaction
Item 4 is hereby amended and restated in its entirety as follows:
The Reporting Persons purchased the Shares based on the Reporting Persons’ belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.
On February 10, 2016, Mr. McCreight delivered a Stockholder Nomination and Proposal Letter (the “Letter”) to the Issuer submitting (i) a stockholder proposal to amend the Issuer’s bylaws to permit holders of at least 15% of the Issuer’s Shares to request a special meeting of stockholders, in order to improve the Issuer’s direct accountability to stockholders and (ii) stockholder nominations of five persons for election to the Board at the Issuer’s 2016 annual meeting of the stockholders. In the Letter, Mr. McCreight indicates that in the event that the Board declines to include such director nominees on the slate of recommended nominees in the Issuer’s proxy statement for its 2016 annual meeting of stockholders and/ or declines to propose such stockholder proposal, he intends to deliver a proxy statement and form of proxy to the Issuer’s stockholders and solicit proxies from the Issuer’s stockholders in support of the stockholder nominees and stockholder proposal set forth in the Letter. The full text of the Letter is attached hereto as Exhibit 1 and is incorporated herein by reference in its entirety.
A copy of the press release issued on February 11, 2016 relating to the proposal and nominations is attached hereto as Exhibit 2 and incorporated herein by reference in its entirety.
On February 25, 2016, Mr. McCreight issued a press release regarding the Issuer. A copy of this press release is attached hereto as Exhibit 3 and incorporated herein by reference in its entirety.
The Reporting Persons intend to continue to closely monitor actions by the Board as well as the Issuer’s operations, prospects, business development, management, competitive and strategic matters, capital structure, and prevailing market conditions, as well as other investment considerations, and will consider taking further action to protect their interests and the interests of shareholders, which actions may involve plans or proposals of the type described in Item 4(a) through (j) of Item 4 of Schedule 13D or the acquisition of additional shares or disposition of shares beneficially owned by them, in the public market or privately negotiated transactions. The Reporting Persons may at any time reconsider and change their plans or proposals relating to the foregoing.
ITEM 5. Interest in Securities of the Issuer
Item 5 subsections (a) and (b) are hereby amended and restated in their entity as follows:
The Reporting Persons beneficially own 9,086,384 Shares, representing 29.7% of all of the outstanding shares of common stock of the Issuer. The Reporting Persons have the sole power to vote or direct the vote of and to dispose or direct the disposition of the 9,086,384 Shares reported herein.
The percentages set forth in this response are based on the 30,611,000 shares of common stock of the Issuer outstanding as of February 22, 2016, as reported by the Issuer in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015 as filed with the SEC on February 25, 2016.
ITEM 7. Material to be Filed as Exhibits.
Item 7 is hereby amended to add the following:
| Exhibit 2 | Press Release dated February 11, 2016 (filed herewith) |
| Exhibit 3 | Press Release dated February 25, 2016 (filed herewith) |
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.
Dated: February 25, 2016
| By: | /s/ Shawn McCreight | |
| Name: | Shawn McCreight | |
| By: | /s/ Jennifer McCreight | |
| Name: | Jennifer McCreight | |
EXHIBIT INDEX
| Exhibit |
Document | |
| 1. | Stockholder Nomination and Proposal Letter dated February 10, 2016* | |
| 2. | Press Release dated February 11, 2016 (filed herewith) | |
| 3. | Press Release dated February 25, 2016 (filed herewith) | |
*Previously filed
Exhibit 2
Founder Nominates Directors and Highlights Need for Change at Guidance Software, Inc.
PASADENA, CA --(Marketwired - February 11, 2016) - On February 10, 2016, Shawn H. McCreight, the founder and largest shareholder of Guidance Software, Inc. (the “Company”), delivered a Stockholder Nomination and Proposal Letter (the “Letter”) to the Company submitting (i) stockholder nominations of five persons for election to the Board of Directors of the Company (the “Board”) at the Company’s 2016 annual meeting of the stockholders and (ii) a stockholder proposal to amend the Company’s bylaws to permit holders of at least 15% of the Company’s shares to request a special meeting of stockholders. In the Letter, Mr. McCreight indicated that, if the Board declines to include such director nominees on the slate of recommended nominees in the Company’s proxy statement for its 2016 annual meeting of stockholders, or declines to propose such stockholder proposal, he intends to deliver a proxy statement and form of proxy to the Company’s stockholders and solicit proxies from the Company’s stockholders in support of the stockholder nominees and stockholder proposal set forth in the Letter. In connection with the Letter, Mr. McCreight is also sending an open letter to the stockholders of the Company, a full text of which follows.
OPEN LETTER TO STOCKHOLDERS OF GUIDANCE SOFTWARE, INC.
Dear Fellow Shareholders,
I founded Guidance Software, Inc. (“Guidance” or the “Company”) in 1997 with the goal of creating new technologies to help forensic and cyber-security investigators work with unprecedented power and speed. Thanks to the employees of Guidance and the tireless efforts of law enforcement, we and our children are all safer as a result. Guidance’s enterprise products now reach over 25 million endpoints, and our software and methods are the gold standard for forensic, cyber-security and eDiscovery investigations worldwide.
I currently am Guidance’s largest shareholder, owning approximately 30% of the shares outstanding. As the Company’s founder and largest shareholder, I am greatly concerned with the recent shift in the Company’s focus away from cyber-security, the execution missteps of the CEO and ongoing oversight and governance failures by the Company’s Board of Directors (the “Board”). The stock value has been cut nearly in half during the 10-month tenure of the current CEO and has significantly under-performed its peer group. It is clear to me that the public markets and stockholders have lost trust and confidence in the Company’s leadership, strategy and governance policies and practices. It is my belief that the current Board and management team do not have the experience, skill set, commitment and economic alignment to restore shareholder value.
The stockholders of Guidance need to send a message demanding significant change, without which shareholders will likely experience further declines in the value of their investment.
Accordingly, I have proposed a new slate of highly qualified directors -- myself, John P. Colbert, Jonathan R. Mather, Michael J. McConnell and Roberto Medrano -- for election at the Company’s upcoming 2016 annual meeting of stockholders. The director nominees, together, have the industry knowledge, requisite skill set and commitment to effect fundamental changes to strategy, execution and governance.
Specifically, the nominees, if elected, will quickly re-focus the Company and its employees on bringing the Company’s new advanced cyber-security technology to market. Thereafter, the Board will commit to best practices for corporate governance and consider all strategic alternatives for the Company to maximize stockholder value. We believe a Board that will look out for all stockholders and find a way to unlock the value of the Company’s huge investment in advanced technology and world class standing in the cyber-security, forensic and eDiscovery markets is in the best interests of all stockholders. I have also proposed an amendment to Guidance’s bylaws to make the Company more responsive to stockholder concerns.
My goal is to increase stockholder value by guiding the Company to achieve its greatest potential and profitability. Should the Company view our nominations and proposal as a threat, dismiss our concerns and suggestions, or take some other defensive action, I believe that stockholders can only interpret such a response as self-preservation and entrenchment. I, therefore, trust that the current Board and management will give serious consideration to our stockholder nominations and proposal and include them in the director slate and agenda for the 2016 annual meeting of the stockholders.
Thank you.
Sincerely,
Shawn H. McCreight
Shawn H. McCreight is the founder of Guidance Software and inventor of the EnCase® Brand and related software. Mr. McCreight served as Chief Executive Officer, Chief Technology Officer and Chairman of the Board during his 19 year tenure with the Company. He currently serves on the Board of Directors and is the Company’s largest shareholder.
CONTACT INFORMATION
| • | Contacts (Investors or Press): |
Please send your name and contact information to
Shawn H. McCreight
shawn.mccreight@gmail.com
Exhibit 3
Founder Raises Questions about Consulting Agreement between Guidance Software, Inc. and Former Director
PASADENA, CA —(Marketwired—February 25, 2016)—On February 10th, 2016, Shawn H. McCreight, the founder and largest shareholder of Guidance Software, Inc. (the “Company”), delivered a stockholder nomination letter to the Company seeking to replace all of the current directors. In that letter, among other issues, Mr. McCreight expressed concerns regarding the oversight and governance failures of an entrenched Board. In connection with that letter, Mr. McCreight is sending an open letter to the stockholders of the Company, a full text of which follows, expressing concerns stemming from a consulting arrangement between the Company and a former director that was orchestrated by the current Board and CEO.
OPEN LETTER TO STOCKHOLDERS OF GUIDANCE SOFTWARE, INC.
Dear Fellow Shareholders,
I founded Guidance Software, Inc. (“Guidance” or the “Company”) in 1997 with the goal of creating new technologies to help forensic and cyber-security investigators work with unprecedented power and speed. Thanks to the employees of Guidance and the tireless efforts of law enforcement, we and our children are all safer as a result. Guidance’s enterprise products now reach over 25 million endpoints, and our software and methods are the gold standard for forensic, cyber-security and eDiscovery investigations worldwide. I am also the Company’s largest shareholder, owning approximately 30% of the outstanding shares.
On February 10th, 2016, I delivered a stockholder nomination letter to the Company seeking to replace all of the current directors. In that letter, among other issues, I expressed concerns regarding the oversight and governance failures of an entrenched Board. My concern stems from a consulting arrangement between the Company and a former director that was orchestrated by this Board and CEO.
In May 2015, a director completed their service to the Board and did not stand for reelection. Several months later, this director, despite a reminder notification from the Company, failed to exercise stock options with a value of $45,000 in capital gains. They then called the lead independent director to complain. Soon thereafter, the compensation committee met with the CEO and approved a “consulting” contract with the director in question in the amount of $45,000 to address the situation described above. There were no minutes kept from that meeting.
When I found out about this contract, I sent an email to the lead director expressing my shock at this attempt to circumvent firmly established compensation rules. I insisted that the full Board vote on this arrangement, even though the money had already been paid. I alone voted against the resolution at the November 2015 Board meeting.
Despite repeated requests for information, I have seen no evidence that supports a bona fide consulting arrangement. I am not aware of any work done by the director in question to justify a payment of $45,000. To date, I have not been provided a proper recording in the minutes of this Board decision. When I raised the issue to external company counsel, I was told that the Board can create a special arrangement if it likes: “This is not a material contract. It is not a big deal.”
Fellow stockholders, it is a big deal. I take seriously my fiduciary duties of loyalty and care. We sell our products to law enforcement agencies worldwide. We sell to enterprises seeking to protect their endpoints from dishonest behavior. Nothing is more important to me than the integrity of a firm I founded almost 20 years ago. One of the reasons I have undertaken this proxy contest is because I do not trust this Board, and neither should you. In the world of business, it is the Board’s job to ensure ethical practices for itself and management, but in our case the Board IS the problem. Any board that would participate in what I have described above cannot be trusted to oversee your investment in Guidance.
No doubt this Board will seek to divert your attention from this matter by attacking me. But no amount of spin can cover up this arrangement. In my opinion the Board circumvented Company policy and accounting regulations with a questionable consulting contract with a former director. Behavior like this ultimately leads to allegations of misconduct, lawsuits, and loss of value to shareholders.
I encourage you to simply ask for the facts, and decide for yourself whether this Board has demonstrated the necessary integrity to run our Company. It is a matter of trust!
Additional Information and Where to Find It
Shawn H. McCreight is the largest stockholder and founder of Guidance Software Inc. (the “Company”). Mr. McCreight, John P. Colbert, Jonathan R. Mather, Michael J. McConnell and Roberto Medrano (together, the “Participants”) intend to file with the Securities and Exchange Commission (the “SEC”) a proxy statement and accompanying form of proxy card to be used in connection with the Participants’ solicitation of proxies from the stockholders of the Company for use at the Company’s 2016 annual meeting of stockholders (the “Proxy Solicitation”). ALL STOCKHOLDERS OF THE COMPANY ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE PROXY SOLICITATION, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING ADDITIONAL INFORMATION RELATED TO THE PARTICIPANTS. The proxy statement and an accompanying proxy card will be, along with other relevant documents, available at no charge on the SEC’s website at http://www.sec.gov/.
Information about the Participants and a description of their direct or indirect interests by security holdings is contained in Exhibit 2 to the Schedule 14A to be filed by the Participants with the SEC on February 25, 2016. This document can be obtained free of charge from the SEC’s website at http://www.sec.gov/.
Contacts (Investors or Press):
Please send your name and contact information to
Shawn H. McCreight
shawn.mccreight@gmail.com
Contacts (Investors or Press):
Please send your name and contact information to
Shawn H. McCreight
shawn.mccreight@gmail.com