plcsf20140808_def14a.htm

DEFM14A 1 plcsf20140809_defm14a.htm FORM DEFM14A plcsf20140808_def14a.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

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 Pursuant to § 240.14a-12

PLC SYSTEMS INC.

(Name of Registrant as Specified In Its Charter)

Not applicable

(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:

		Common stock, no par value, of PLC Systems Inc.

	(2)	Aggregate number of securities to which transaction applies:

		471,800,900 shares of common stock, no par value, of PLC Systems Inc.

	(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):

			Solely for the purpose of calculating the filing fee, the maximum aggregate value of the transaction was calculated as 471,800,900 shares of common stock of PLC Systems Inc. (on a pre-split basis), multiplied by $0.028 per share (the last sale reported on the OTCQB tier of the OTC Markets Group Inc. on May 12, 2014). In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying 0.0001288 by the maximum aggregate value of the transaction.

		(4)	Proposed maximum aggregate value of transaction:

			$13,210,425

		(5)	Total fee paid:

			$1,702

☒	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:

PLC SYSTEMS INC.
459 Fortune Boulevard
Milford, Massachusetts 01757

Dear PLC Systems Inc. Shareholders:

You are cordially invited to attend the annual and special meeting of the shareholders of PLC Systems Inc., which we refer to as “PLC”, the “Company,” “we,” “our” or “us,” at 10:30 a.m., Eastern time on September 18, 2014, at Doubletree Hotel, 11 Beaver Street, Milford, Massachusetts 01757.

At the annual and special meeting, you will be asked to consider and vote upon proposals to approve (i) the sale of the Company’s RenalGuard business to GCP IV LLC, a Delaware limited liability company, pursuant to a reorganization agreement, which we refer to as the “RenalGuard Reorganization Agreement,” to be entered into at the closing by and between the Company, RenalGuard Solutions, Inc., certain subsidiaries of RenalGuard Solutions, Inc., and GCP IV LLC in exchange for the cancellation or transfer of 95% of our outstanding 5% Senior Secured Convertible Debentures, which we refer to as “Debentures,” a release of liens on substantially all of our assets and the cancellation of warrants to purchase 39,122,807 shares of common stock of the Company, which we refer to as the “GCP Warrants,” which transaction we refer to as the “RenalGuard Spin-Off,” which we refer to as the “Spin-Off Proposal,” and (ii) an agreement and plan of merger and reorganization, as amended, providing for the acquisition by us of Viveve, Inc., which we refer to as “Viveve,” and which acquisition we refer to as the “Viveve Merger,” and the related change of control of PLC which will result from the Viveve Merger, which we refer to as the “Merger Proposal.” Pursuant to the agreement and plan of merger and reorganization, as amended, which we refer to as the “Viveve Merger Agreement,” a wholly owned subsidiary of the Company will merge with and into Viveve, with Viveve surviving the merger, as a result of which, Viveve’s equity holders will be entitled to receive an aggregate of approximately 4,655,023 shares of common stock of the Company (on a post-reverse split basis as described below) and a de minimus cash amount at the closing. Immediately prior to the closing of the Viveve Merger, in connection with the RenalGuard Spin-Off, we will transfer certain assets and liabilities and all of the outstanding shares of RenalGuard Solutions, Inc. in exchange for the cancellation or transfer of 95% of our outstanding Debentures, a release of liens by GCP IV LLC on substantially all of our assets, and the GCP Warrants which will result in RenalGuard Solutions, Inc. being a private company wholly-owned by GCP IV LLC. We refer to the Viveve Merger and the RenalGuard Spin-Off collectively herein as the “Proposed Transaction.” The holders of the remaining 5% of our outstanding Debentures will exchange the Debentures for shares of our common stock prior to the closing of the Proposed Transaction. A copy of the Viveve Merger Agreement and the form of RenalGuard Reorganization Agreement are attached to the accompanying proxy statement as Annexes A and B, respectively.

It is anticipated that, upon the closing of the RenalGuard Spin-Off and the Viveve Merger (without giving effect to the private placement transaction described below), current PLC equity holders will own approximately 37.2%, and the former equity holders of Viveve and their designees will own approximately 62.8% of our issued and outstanding common stock on a fully diluted basis. As contemplated by the Viveve Merger Agreement, immediately following the closing of the Proposed Transaction, PLC will complete a private placement transaction, which we refer to as the “Offering,” pursuant to the sale of approximately $6,000,000 worth of shares of PLC common stock at a per share price of $0.53, which we refer to as PLC Shares, to certain accredited investors and warrants to purchase PLC Shares to certain of the accredited investors. After the closing of the Offering, it is anticipated that the current PLC shareholders will own 14.7%, the former equity holders of Viveve will own 24.9% and the investors participating in the Offering will own 60.4% of the 18,738,339 issued and outstanding shares of our capital stock after the Offering.

You will also be asked to consider and vote upon proposals (a) to approve and adopt an amendment to our articles of continuance to change the name of the Company to Viveve Medical, Inc., a copy of which is attached as Annex C to the accompanying proxy statement, which we refer to as the “Name Change Proposal,” (b) to approve and adopt an amendment to our articles of continuance, a copy of which is attached as Annex C to the accompanying proxy statement, and to confirm and ratify the amendment to our bylaws, to declassify the Company’s Board of Directors, which we refer to as the “Board Declassification Proposal”, (c) to elect five (5) directors to serve on our Board of Directors, subject to the closing of the Proposed Transaction, which we refer to as the “Director Election Proposal,” (d) to approve and adopt an amendment to the Company’s 2013 Stock Option and Incentive Plan, a copy of which is attached to the accompanying proxy statement as Annex E, which we refer to as the “Incentive Plan Proposal,” (e) to approve and adopt an amendment to our articles of continuance to effect a share consolidation (a reverse stock split) of the issued and outstanding PLC Shares on the basis of one post-consolidation PLC Share for every one hundred (100) PLC Shares outstanding immediately prior to the Share Consolidation, which we refer to as the “Share Consolidation Proposal,” a copy of which is attached to the accompanying proxy statement as Annex C, (f) to approve the selection by the audit committee of our Board of Directors of Burr Pilger Mayer, Inc., which we refer to as “BPM”, as our independent registered public accounting firm for the fiscal year ending December 31, 2014, and to authorize the audit committee to fix the remuneration to be paid to BPM, which we refer to as the “Auditor Proposal,” and (g) to approve a proposal to adjourn the annual and special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the annual and special meeting, there are not sufficient votes to approve one or more proposals presented to shareholders for vote, which we refer to as the “Adjournment Proposal”.

Each of these proposals is more fully described in the accompanying proxy statement.

Our common stock is traded on the OTCQB tier of the OTC Markets Group Inc. under the symbol “PLCSF”. On August 7, 2014, the last sale price of our common stock was $0.01 per share.

We are providing this proxy statement and accompanying proxy card to our shareholders in connection with the solicitation of proxies to be voted at the annual and special meeting and at any adjournments or postponements of the annual and special meeting. Whether or not you plan to attend the annual and special meeting, we urge you to read this proxy statement (and any documents incorporated into this proxy statement by reference) carefully. Please pay particular attention to the section entitled “Risk Factors” beginning on page 21.

Our Board of Directors has unanimously approved and adopted the Spin-Off Proposal, the Merger Proposal, the Name Change Proposal, the Board Declassification Proposal, the Director Election Proposal, the Incentive Plan Proposal, the Share Consolidation Proposal, the Auditor Proposal and the Adjournment Proposal, and unanimously recommends that our shareholders vote FOR all of the proposals presented to our shareholders. When you consider the Board recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Proposed Transaction that may conflict with your interests as a shareholder. See the section entitled “Proposal Nos. 1 and 2 — Approval of the Merger and Approval of the Spin-Off— Certain Benefits of PLC’s Directors and Officers and Others in the Proposed Transaction” beginning on page 50.

Approval of the Spin-Off Proposal, the Merger Proposal, the Name Change Proposal, the Board Declassification Proposal and the Share Consolidation Proposal requires the affirmative vote of holders of not less than two-thirds of the shares of common stock voting on the matter. Approval of the Incentive Plan Proposal, the Auditor Proposal, the Director Election Proposal and the Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of common stock voting on the matter. The board of directors and shareholders of Viveve have approved the Viveve Merger.

Your vote is very important. If you are a registered shareholder, please complete your proxy as soon as possible using one of the following methods to ensure that your vote is counted, regardless of whether you expect to attend the annual and special meeting in person: (1) call the toll-free number specified on the enclosed proxy card and follow the instructions when prompted, (2) access the Internet website specified on the enclosed proxy card and follow the instructions provided to you, or (3) complete, sign, date and return the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your proxy is counted or that your shares are represented and voted at the annual and special meeting.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of each of the proposals presented at the annual and special meeting. If you fail to return your proxy card or fail to submit your proxy by telephone or over the internet, or fail to instruct your bank, broker or other nominee how to vote, and do not attend the annual and special meeting in person, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the annual and special meeting and, if a quorum is present, will not be voted in favor of any particular matter described in this proxy statement and will also not be counted as votes cast or shares voting on such matter.

Any proxy may be revoked by a shareholder of record at any time before it is exercised by delivering to our Secretary a duly executed proxy bearing a later date than the proxy being revoked or by voting in person at the annual and special meeting. If you are a shareholder of record and you attend the annual and special meeting and wish to vote in person, you may withdraw your proxy and vote in person. Attendance at the annual and special meeting will not itself be deemed to revoke a proxy unless the shareholder of record gives affirmative notice at the annual and special meeting that the shareholder intends to revoke the proxy and vote in person. Each shareholder may appoint an individual other than the individuals named in the enclosed proxy card as his or her proxy to attend and act on the shareholder’s behalf at the annual and special meeting by crossing out the names of the proxies that are currently listed and inserting the name of the replacement proxy in the blank space provided on the enclosed proxy card or by executing a proxy card similar to the enclosed form.

On behalf of our Board of Directors, I thank you for your support and look forward to the successful completion of the Proposed Transaction.

	Sincerely,

	/s/ Mark R. Tauscher

August 11, 2014	Mark R. Tauscher
	President, Chief Executive Officer
	and Chairman of the Board

This proxy statement is dated August 11, 2014, and is first being mailed to shareholders of the Company on or about August 14, 2014.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT OR ANY OF THE SECURITIES TO BE ISSUED IN THE PROPOSED TRANSACTION OR RELATED TRANSACTIONS, PASSED UPON THE MERITS OR FAIRNESS OF THE PROPOSED TRANSACTION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

PLC SYSTEMS INC.
459 Fortune Boulevard
Milford, Massachusetts 01757

NOTICE OF THE 2014 ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON SEPTEMBER 18, 2014

To the Shareholders of PLC Systems Inc.:

NOTICE IS HEREBY GIVEN that an annual and special meeting of the shareholders (the “annual meeting”) of PLC Systems Inc., a Yukon Territory corporation (“PLC”, the “Company,” “we,” “our” or “us,”), will be held at 10:30 a.m. Eastern time, on September 18, 2014, at Doubletree Hotel, 11 Beaver Street, Milford, Massachusetts 01757. You are cordially invited to attend the annual meeting for the following purposes:

(1) The Merger Proposal — to consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger and Reorganization, dated as of May 9, 2014, as it may be amended, by and among the Company, PLC Systems Acquisition Corporation, a Delaware corporation, and Viveve, Inc., a Delaware corporation (the “Viveve Merger Agreement”), the transactions contemplated thereby and the related change of control of PLC which will result from the Viveve merger (this proposal is referred to herein as the “Merger Proposal”);

(2) The Spin-Off Proposal — to consider and vote upon a proposal to approve the sale of the Company’s RenalGuard business to GCP IV LLC, a Delaware limited liability company, pursuant to a reorganization agreement to be entered into at the closing by and between the Company, RenalGuard Solutions, Inc., certain subsidiaries of RenalGuard Solutions, Inc., and GCP IV LLC (the “RenalGuard Reorganization Agreement”) and the transactions contemplated thereby (the “RenalGuard Spin-off”) (this proposal is referred to herein as the “Spin-Off Proposal”);

(3) The Name Change Proposal — to consider and vote upon a proposal to approve and adopt an amendment to the Company’s articles of continuance to change the name of the Company to Viveve Medical, Inc. (this proposal is referred to herein as the “Name Change Proposal”);

(4) The Board Declassification Proposal — to consider and vote upon an amendment to our articles of continuance, and to confirm and ratify an amendment to our bylaws, to declassify the Company’s Board of Directors (the “Board Declassification Proposal”);

(5) The Director Election Proposal — to consider and vote upon a proposal to elect five (5) directors to serve on PLC’s Board of Directors upon consummation of the Proposed Transaction (the “Director Election Proposal”);

(6) The Incentive Plan Proposal — to consider and vote upon an amendment to the Company’s 2013 Stock Option and Incentive Plan (the “Incentive Plan Proposal”);

(7) The Share Consolidation Proposal — to consider and vote upon a proposal to file an amendment to the Company’s articles of continuance to effect a share consolidation (reverse stock split) (the “Share Consolidation”) of outstanding PLC shares on the basis of one post-consolidation PLC Share for every 100 PLC Shares outstanding immediately prior to the Share Consolidation (the “Share Consolidation Proposal”);

(8) The Auditor Proposal — to approve the selection by the audit committee of our Board of Directors of Burr Pilger Mayer, Inc., which we refer to as “BPM”, as our independent registered public accounting firm for the fiscal year ending December 31, 2014, and to authorize the audit committee to fix the remuneration to be paid to BPM (the “Auditor Proposal”);

(9) The Adjournment Proposal — to consider and vote upon a proposal to adjourn the annual meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the annual meeting, there are not sufficient votes to approve one or more proposals presented to shareholders for vote (the “Adjournment Proposal”); and

(10) to consider and transact such other procedural matters as may properly come before the annual meeting or any adjournment or postponement thereof.

At the annual meeting, the shareholders will also have the opportunity to consider and ask questions regarding the financial statements of the Company for the fiscal year ended December 31, 2013 and the auditors' report therein.

Only holders of record of our common stock at the close of business on August 11, 2014 (the “Record Date”) are entitled to notice of the annual meeting of shareholders and to vote at the annual meeting and any adjournments or postponements of the annual meeting. However, to the extent that any shareholder has transferred any of his shares after the Record Date and the transferee, upon producing properly endorsed certificates evidencing such shares or otherwise establishing ownership of such shares, demands not later than ten (10) days before the annual meeting that his name be included in the list of shareholders of record entitled to vote at the annual meeting, the transferee alone shall be entitled to vote the transferred shares at the annual meeting. A complete list of our shareholders of record entitled to vote at the annual meeting will be available beginning ten days after the Record Date through the date of the annual meeting at our principal executive offices for inspection by shareholders during ordinary business hours for any purpose germane to the annual meeting.

The transactions contemplated by the Viveve Merger Agreement and the RenalGuard Spin-Off will be consummated only if (i) the holders of not less than two-thirds of the shares of common stock voting on such proposals are voted in favor of both the Merger Proposal and Spin-Off Proposal, and (ii) the other proposals to be voted upon at the annual meeting (other than the Adjournment Proposal) are approved. Approval of the Incentive Plan Proposal, the Auditor Proposal, the Director Election Proposal and the Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of common stock voting on such proposals. Approval of the Name Change Proposal, the Board Declassification Proposal and the Share Consolidation Proposal requires the affirmative vote of holders of not less than two-thirds of the shares of common stock voting on such proposal.

The PLC Board of Directors has determined that the Proposed Transaction and the transactions contemplated thereby, including the corresponding RenalGuard Spin-Off and change of control of PLC, are fair to, advisable and in the best interests of PLC and its shareholders. The PLC Board of Directors recommends that PLC shareholders vote “FOR” the approval of the Merger Proposal, “FOR” the approval of the Spin-Off Proposal, “FOR” the approval of the Name Change Proposal, “FOR” the approval of the Board Declassification Proposal, “FOR” the approval of the Director Election Proposal, “FOR” the approval of the Incentive Plan Proposal, “FOR” the approval of the Share Consolidation Proposal, “FOR” the approval of the Auditor Proposal and “FOR” the approval of the Adjournment Proposal.

Your vote is important. Whether or not you expect to attend the annual meeting, please sign and return the enclosed proxy card promptly in the envelope provided or promptly submit your proxy by telephone or over the Internet following the instructions on the proxy card. You may revoke your proxy and vote in person at the annual meeting if you desire. All shareholders are cordially invited to attend the annual meeting.

Your attention is directed to the proxy statement accompanying this notice (including the annexes thereto) for a more complete description of the Proposed Transaction and related transactions and each of our proposals. The proxy statement accompanying this notice is deemed to be incorporated into and forms part of this notice. We encourage you to read this proxy statement carefully. If you have any questions or need assistance voting your shares, please call our Chief Financial Officer, Gregory Mann at (508) 541-8800 x145.

	By Order of the Board of Directors,

	/s/ Mark R. Tauscher

August 11, 2014	Mark R. Tauscher
	Chairman of the Board

TABLE OF CONTENTS

SUMMARY TERM SHEET	1

FREQUENTLY USED TERMS	3

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR SHAREHOLDERS	4

SUMMARY OF THE PROXY STATEMENT	12

SELECTED FINANCIAL INFORMATION	17

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	19

RISK FACTORS	21

2014 ANNUAL AND SPECIAL MEETING OF PLC SHAREHOLDERS	40

General	40
Date, Time and Place of Annual Meeting	40
Voting Power; Record Date	40
Proxies	40
Quorum and Required Vote for Shareholder Proposals	41
Recommendation to PLC Shareholders	41
Broker Non-Votes and Abstentions	42
Submitting Your Proxy; Voting Your Shares	42
Revoking Your Proxy	42
Other Matters	43
Who Can Answer Your Questions About Voting Your Shares	43
Appraisal Rights	43

PROPOSAL NOS. 1 AND 2 — APPROVAL OF THE MERGER AND APPROVAL OF THE SPIN-OFF	44

Vote Required for Approval	44
Structure of the Proposed Transaction	44
Consideration for RenalGuard Spin-Off and Viveve Merger	44
Background of the Proposed Transaction	44
PLC’s Board of Directors’ Reasons for the Approval of the Proposed Transaction	47
Certain Benefits of PLC’s Directors and Officers and Others in the Proposed Transaction	50
Total PLC Shares to be Issued in the Proposed Transaction	50
Board of Directors of PLC following the Viveve Merger	51
Articles of Continuance; Bylaws	51
Name; Headquarters	51
Appraisal Rights	51
Accounting Treatment	51
Regulatory Matters	51
Recommendation of the Board	51

PROPOSAL NO. 3 — THE NAME CHANGE PROPOSAL	52

PROPOSAL NO. 4 — THE BOARD DECLASSIFICATION PROPOSAL	52

PROPOSAL NO. 5 — ELECTION OF DIRECTORS TO THE BOARD	53

PROPOSAL NO. 6 — THE AMENDMENT TO THE 2013 STOCK OPTION AND INCENTIVE PLAN	55

PROPOSAL NO. 7 — THE SHARE CONSOLIDATION PROPOSAL	64

PROPOSAL NO. 8 — THE AUDITOR PROPOSAL	68

PROPOSAL NO. 9 — THE ADJOURNMENT PROPOSAL	69

THE PROPOSED TRANSACTION AGREEMENTS	70

The Viveve Merger Agreement	70
The RenalGuard Reorganization Agreement	79
Related Agreements to the Proposed Transaction	80

INFORMATION ABOUT VIVEVE	82

VIVEVE MANAGEMENT’S DISCUSSION AND ANALYSIS	105

MANAGEMENT AFTER THE PROPOSED TRANSACTION	109

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS	113

DESCRIPTION OF SECURITIES	121

BENEFICIAL OWNERSHIP OF SECURITIES	123

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	127

PRICE RANGE OF SECURITIES AND DIVIDENDS	129

INDEPENDENT PUBLIC ACCOUNTING FIRMS	130

APPRAISAL RIGHTS	131

DELIVERY OF DOCUMENTS TO SHAREHOLDERS	132

TRANSFER AGENT AND REGISTRAR	132

SHAREHOLDER PROPOSALS	132

WHERE YOU CAN FIND MORE INFORMATION	132

INDEX TO FINANCIAL STATEMENTS	F-1

ANNEX A—Agreement and Plan of Merger

ANNEX B—RenalGuard Reorganization Agreement

ANNEX C—Amendment to Articles of Continuance

ANNEX D—Special Resolutions

ANNEX E—The First Amendment and 2013 Stock Option and Incentive Plan

*	The schedules and exhibits to the Agreement and Plan of Merger and the RenalGuard Reorganization Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. PLC hereby agrees to furnish supplementally a copy of any omitted schedules or exhibits to the staff of the SEC upon request.

SUMMARY TERM SHEET

This Summary Term Sheet, together with the sections entitled “Questions and Answers About the Proposals for Shareholders” and “Summary of the Proxy Statement,” summarize certain information contained in this proxy statement, but do not contain all of the information that is important to you. You should read carefully this entire proxy statement, including the attached Annexes, for a more complete understanding of the matters to be considered at the annual and special meeting (the “annual meeting”). In this proxy statement, the terms “we”, “us”, “our”, the “Company” and “PLC” refer to PLC Systems Inc., the term “Merger Sub” refers to PLC Systems Acquisition Corporation, the term “Viveve” refers to Viveve, Inc. and the term “GCP” refers to GCP IV LLC. For purposes of this proxy statement, we have assumed that the Share Consolidation will be approved by the shareholders and, unless stated otherwise, all share amounts herein reflect the 1 for 100 reverse stock split.

•

PLC Systems Inc., a Yukon Territory corporation, was formed in 1987. The Company manufactures and markets its RenalGuard® product, designed to reduce the potentially toxic effects that contrast media can have on the kidneys when it is administered to high-risk patients during certain medical imaging procedures.

•

Viveve, Inc. is a Delaware corporation that was incorporated in 2005 by Jonathon Parmer, MD, an OBGYN physician and Edward Knowlton, the holder of patents covering the use of radiofrequency (“RF”) energy to tighten tissue. Viveve designs, develops, manufactures and markets medical devices for the non-invasive treatment of vaginal introital laxity.

•

GCP IV LLC, a Delaware limited liability company, is managed by Genesis Capital Advisors LLC, a New York based asset management firm. GCP is the holder of, among other things, 95% of the Company’s outstanding 5% Senior Secured Convertible Debentures (the “Debentures”) and warrants to purchase 51,622,805 shares of common stock of the Company (the “GCP Warrants”).

•

Pursuant to the agreement and plan of merger and reorganization, which we refer to as the “Viveve Merger Agreement,” Merger Sub, a wholly owned subsidiary of the Company, will merge with and into Viveve, with Viveve surviving the merger, as a result of which (i) Viveve’s accredited equity holders will be entitled to receive approximately 4,655,023 shares of common stock of the Company (on a post-Share Consolidation basis) and (ii) Viveve’s non-accredited equity holders will be entitled to receive an aggregate cash payment of approximately $35,000, or an amount equal to the product of (A) 0.0080497 and (B) $0.53 for each share of Viveve common stock (the “Cash Merger Consideration”), at the closing. Immediately prior to the closing of the Viveve Merger, pursuant to a reorganization agreement to be entered into at the closing with, RenalGuard Solutions, Inc., certain subsidiaries of RenalGuard Solutions, Inc., and GCP, which we refer to as the “RenalGuard Reorganization Agreement,” we will transfer certain of our assets and liabilities and all of the outstanding shares of RenalGuard Solutions, Inc., our wholly-owned subsidiary which will own the RenalGuard business through acquisition of 100% of the outstanding equity in PLC Medical Systems, Inc. and PLC Systemas Medicos Internacionais, in exchange for the cancellation or transfer of 95% of our outstanding Debentures, a release of liens by GCP on substantially all of our assets, and the cancellation of the GCP Warrants which will result in RenalGuard Solutions, Inc. being a private company wholly-owned by GCP, which transaction we refer to as the “RenalGuard Spin-Off.” We refer to the Viveve Merger and the RenalGuard Spin-Off collectively herein as the “Proposed Transaction.” The holders of the remaining 5% of our outstanding Debentures will exchange the Debentures for PLC Shares prior to the closing of the Proposed Transaction. For more information about the transactions contemplated by the Viveve Merger Agreement and the RenalGuard Reorganization Agreement, see the sections entitled “Proposal Nos. 1 and 2— Approval of the Merger and Approval of the Spin-Off” beginning on page 44, “The Proposed Transaction Agreements” beginning on page 70 and the copies of the Viveve Merger Agreement and the form of RenalGuard Reorganization Agreement attached to this proxy statement as Annexes A and B, respectively.

•

It is anticipated that, upon the closing of the Viveve Merger (without giving effect to the private placement transaction described below), current PLC shareholders and their designees will own approximately 37.2% of the issued and outstanding PLC shares of common stock (“PLC Shares”), and the former equity holders of Viveve and their designees will own approximately 62.8% of the issued and outstanding PLC Shares on a fully diluted basis. As contemplated by the Viveve Merger Agreement immediately following the closing of the Proposed Transaction, PLC will complete a private placement transaction (the “Offering”) pursuant to which the Company will sell approximately 11,320,765 PLC Shares at a price of $0.53 per share to certain accredited investors and warrants to purchase up to 940,189 PLC Shares to certain of the investors for gross proceeds of $4,500,000 in cash payments and the conversion of up to approximately $1,500,000 outstanding amount of principal and interest of certain Viveve bridge notes. After the closing of the Offering, it is anticipated that the current PLC shareholders will own 14.7%, the former equity holders of Viveve will own 24.9% and the investors participating in the Offering will own 60.4% of the 18,738,339 issued and outstanding PLC Shares after the Offering.

•

Our management and Board of Directors considered various factors in determining whether to approve the Proposed Transaction and the transactions contemplated thereby. For more information about our decision-making process, see the section entitled “Proposals NoProposal Nos. 1 and 2— Approval of the Merger and Approval of the Spin-Off — PLC’s Board of Directors Reasons for Approval of the Proposed Transaction” beginning on page 47.

•

In addition to voting on the Merger Proposal and Spin-Off Proposal at the annual meeting, the shareholders of PLC will be asked to vote on proposals to approve an amendment to the articles of continuance for PLC to change the Company’s name, to declassify the Board of Directors, to elect five (5) directors to the Board of PLC, to adopt an amendment to the 2013 Stock Option and Incentive Plan, to approve a 1 for 100 share consolidation, to approve the Company’s independent registered accounting firm for the year ending December 31, 2014, all subject to the closing of the Proposed Transaction, and to adjourn the annual meeting, if necessary, to permit further solicitation of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Proposed Transaction. See the sections entitled “Proposal No. 3 — The Name Change Proposal,” beginning on page 52, “Proposal No. 4 — The Board Declassification Proposal,” beginning on page 52, “Proposal No. 5 – Election of Directors to the Board,” beginning on page 53, “Proposal No. 6 — The Incentive Plan Proposal,” beginning on page 55, “Proposal No. 7 — The Share Consolidation Proposal,” beginning on page 64, “Proposal No. 8 — The Auditor Proposal,” beginning on page 68 and “Proposal No. 9 — The Adjournment Proposal” beginning on page 69, and “2014 Annual and Special Meeting of PLC Shareholders” beginning on page 40.

•

Upon the closing of the Proposed Transaction, our Board of Directors will consist of five (5) directors, all of whom will be voted upon by our shareholders at the annual meeting. If all director nominees are elected, our Board will consist of one director who is the current Chairman of the board of directors of Viveve and four current members of the board of directors of Viveve, one of whom is also the Chief Executive Officer of Viveve. See the sections entitled “Proposal No. 5 — Election of Directors to the Board” and “Management After the Proposed Transaction” on pages 53 and 109, respectively.

•

The closing of the Proposed Transaction is subject to a number of conditions set forth in the Viveve Merger Agreement including, among others, receipt of the requisite shareholder approval of the Viveve Merger and RenalGuard Spin-Off contemplated by this proxy statement, approval of the Viveve Merger Agreement by the Viveve shareholders (which approval has already been obtained), the closing of the RenalGuard Spin-Off, the exchange of Viveve’s outstanding convertible debt for shares of Viveve common stock or warrants to purchase PLC Shares, the termination of certain of Viveve’s outstanding convertible debt and warrants, the exchange of our outstanding warrants for shares of our common stock, the exchange of the remaining 5% of our outstanding 5% Senior Secured Convertible Debentures into shares of our common stock, holders of not more than 35% of PLC Shares shall have elected to become dissenting shares, Viveve, as of the closing, shall have no more than $1,500,000 of accounts payable and accrued expenses (excluding accrued interest on any outstanding notes) and a principal balance on its outstanding senior secured notes of no more than $1,500,000, and each of the officers and directors of the Company shall have delivered resignations from their respective positions at the Company that will become effective immediately after the Effective Time of the Viveve Merger. For more information about the closing conditions to the Proposed Transaction, see the section entitled “The Proposed Transaction Agreements” beginning on page 70.

•

The Viveve Merger Agreement may be terminated at any time prior to the consummation of the Viveve Merger in specified circumstances, including if it is apparent to either Viveve or PLC that, as a result of a breach of the Viveve Merger Agreement by the other, a condition to closing for such party will be unable to be satisfied or waived by October 31, 2014. For more information about the termination rights under the Viveve Merger Agreement, see the section entitled “The Proposed Transaction Agreements” beginning on page 70.

•

The Proposed Transaction involves numerous risks. For more information about these risks, see the section entitled “Risk Factors” beginning on page 21.

•

In considering the recommendation of PLC’s Board of Directors to vote for the proposals presented at the annual meeting, you should be aware that our executive officers and members of our Board of Directors have interests in the Proposed Transaction that are different from, or in addition to, the interests of our shareholders generally. The members of our Board of Directors were aware of these differing interests and considered them, among other matters, in evaluating and negotiating the transaction agreements and in recommending to our shareholders that they vote in favor of the proposals presented at the annual meeting. These interests include, among other things:

•

RenalGuard Solutions, Inc., upon the closing of the RenalGuard Spin-Off, intends to hire or to engage as consultants certain of PLC’s current officers, including Mark Tauscher, PLC’s current president and chief executive officer, and Gregory Mann, PLC’s current chief financial officer;

•

if Mark Tauscher, PLC’s current president and chief executive officer, and Gregory Mann, PLC’s current chief financial officer, are not engaged by RenalGuard Solutions, Inc., Mr. Tauscher and Mr. Mann may be entitled to certain severance payments from RenalGuard Solutions, Inc.;

•

as current shareholders of PLC, certain of PLC’s directors and officers will retain an ownership stake in the Company after the closing of the Viveve Merger, at which time the Viveve business will be the Company’s sole business; and

•

the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Proposed Transaction.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

The financial and other information included in this proxy statement regarding PLC and Viveve is presented in accordance with the scaled disclosure provisions under the Exchange Act that are available to “smaller reporting companies” as defined thereunder.

FREQUENTLY USED TERMS

In this document:

“closing” refers to the consummation of the Proposed Transaction.

“closing date” refers to the date on which the closing occurs.

“Code” refers to the Internal Revenue Code of 1986, as amended.

“Combined Company” means PLC and Viveve, as the surviving wholly owned subsidiary of PLC, collectively after consummation of the Proposed Transaction.

“Debentures” means the outstanding 5% Senior Secured Convertible Debentures issued by PLC.

“Exchange Act” refers to the Securities Exchange Act of 1934, as amended.

“GCP” means GCP IV LLC, a Delaware limited liability company managed by Genesis Capital Advisors LLC, a New York based asset management firm.

“GCP Warrants” means warrants to purchase 51,622,805 shares of common stock of PLC issued to GCP.

“PLC” refers to PLC Systems Inc., a Yukon Territory corporation.

“proposed articles” means the proposed amendments to the articles of continuance of PLC Systems Inc. which will become the Combined Company’s articles of continuance upon the consummation of the Proposed Transaction. A copy of the proposed articles is attached hereto as Annex C.

“RenalGuard” refers to PLC’s RenalGuard business, its sole business line.

“RenalGuard Reorganization Agreement” means the RenalGuard reorganization agreement to be entered into between the Company, RenalGuard Solutions, Inc., certain subsidiaries of RenalGuard Solutions, Inc., and GCP to effect the RenalGuard Spin-Off. A copy of the form of RenalGuard Reorganization Agreement is attached to this proxy statement as Annex B.

“RenalGuard Spin-Off” means the sale of certain of the asset and liabilities of the Company and of all of the issued and outstanding equity securities of RenalGuard Solutions, Inc., our wholly owned subsidiary, to GCP, where RenalGuard Solutions, Inc. will own the RenalGuard business.

“RF” means radiofrequency.

“SEC” refers to the Securities and Exchange Commission.

“Securities Act” refers to the Securities Act of 1933, as amended.

“Viveve” means Viveve, Inc., a Delaware corporation.

“Viveve Merger” refers to the merger pursuant to the Viveve Merger Agreement, whereby Merger Sub will merge with and into Viveve, which will become our wholly owned subsidiary, and we will issue approximately 4,655,023 shares of our common stock and the Cash Merger Consideration to Viveve equity holders.

“Viveve Merger Agreement” refers to the Agreement and Plan of Merger and Reorganization, dated May 9, 2014, by and among the Company and Merger Sub, on the one hand, and Viveve, Inc., a Delaware corporation, on the other hand, as amended by the Amendment to Agreement and Plan of Merger dated August 8, 2014. A copy of the Viveve Merger Agreement, including all amendments thereto, is attached to this proxy statement as Annex A.

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS
FOR SHAREHOLDERS

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the annual meeting of shareholders, including with respect to the Proposed Transaction. The following questions and answers may not include all the information that is important to our shareholders. We urge shareholders to read carefully this entire proxy statement, including the annexes and the other documents referred to herein.

Q:	Why am I receiving this proxy statement?

The Company, Merger Sub and Viveve have agreed to consummate the Viveve Merger, and the Company and GCP have agreed to consummate the RenalGuard Spin-Off under the terms of the Viveve Merger Agreement and a RenalGuard Reorganization Agreement to be negotiated and entered into by the parties thereto, respectively that are described in this proxy statement. Copies of the Viveve Merger Agreement and the form of RenalGuard Reorganization Agreement are attached to proxy statement as Annexes A and B, respectively.

In order to complete the Proposed Transaction, the PLC shareholders must vote to approve the Viveve Merger and the RenalGuard Spin-Off, as required by the Yukon Business Corporations Act (“YBCA”). PLC is requesting its shareholders to approve the Viveve Merger and the RenalGuard Spin-Off at the annual meeting. Accordingly, you are receiving this proxy statement in connection with the solicitation of proxies to be voted at the annual meeting or at any adjournments or postponements thereof.

This proxy statement and its annexes contain important information about the Proposed Transaction and the other matters to be acted upon at the annual meeting. The enclosed voting materials allow you to vote your shares without attending the annual meeting. You should read this proxy statement and its annexes carefully and in their entirety.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement and its annexes.

Q:	What is being voted on?

A:	Below are the proposals on which our shareholders are being asked to vote.

To approve and adopt the Viveve Merger Agreement, the transactions contemplated thereby and the related change of control of PLC, which will result from the Viveve Merger (this proposal is referred to herein as the “Merger Proposal”);

To approve the RenalGuard Spin-Off and the transactions contemplated thereby (this proposal is referred to herein as the “Spin-Off Proposal”);

To consider and vote upon a proposal to approve and adopt an amendment to the Company’s articles of continuance to change the name of the Company to Viveve Medical, Inc. (this proposal is referred to herein as the “Name Change Proposal”);

To consider and vote upon an amendment to our articles of continuance, and to confirm and ratify the amendment to our bylaws, to declassify the Company’s Board of Directors (this proposal is referred to herein as the “Board Declassification Proposal”);

To elect five (5) directors to our Board of Directors, subject to the consummation of the Proposed Transaction (this proposal is referred to herein as the “Director Election Proposal”);

To approve and adopt an amendment to the 2013 Stock Option and Incentive Plan (the “Incentive Plan”) (this proposal is referred to herein as the “Incentive Plan Proposal”);

To approve the filing of an amendment to our articles of continuance to effect a consolidation (or reverse stock split) (the “Share Consolidation”) of outstanding PLC Shares on the basis of one post-consolidation PLC Share for every 100 PLC Shares outstanding immediately prior to the Share Consolidation (this proposal is referred to herein as the “Share Consolidation Proposal”);

To approve the selection by the audit committee of our Board of Directors of Burr Pilger Mayer, Inc., which we refer to as “BPM”, as our registered independent public accounting firm for the fiscal year ending December 31, 2014 and to authorize the audit committee to fix the remuneration to be paid to BPM (this proposal is referred to herein as the “Auditor Proposal”); and

To approve the adjournment of the annual meeting of shareholders to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that, based upon the tabulated vote at the time of the annual meeting, there are not sufficient votes to approve one or more shareholder proposals presented at the annual meeting (this proposal is referred to herein as the “Adjournment Proposal”). This proposal will only be presented at the annual meeting if there are not sufficient votes to approve one or more proposals presented to shareholders for vote.

Q:	Are the proposals conditioned on one another?

The proposals are all conditioned on each other, except for the Adjournment Proposal. The Adjournment Proposal does not require the approval of any other proposal to be effective. It is important for you to note that in the event that any proposal other than the Adjournment Proposal does not receive the requisite vote for approval, then we will not consummate either the RenalGuard Spin-Off or the Viveve Merger, or any other proposal.

Q:	Why is PLC proposing the Merger Proposal and the RenalGuard Spin-Off Proposal?

After due consideration of all other alternatives reasonably available to PLC, the Board of Directors of PLC believes that the RenalGuard Spin-Off and the Viveve Merger will create more value for PLC’s shareholders in the long-term than PLC could achieve as an independent, stand-alone company. As PLC noted in its Annual Report on Form 10-K for the year ended December 31, 2013, the Company will require significant additional financing in 2014 due to the lack of revenue from RenalGuard and its capital needs for clinical trials for RenalGuard, among other reasons. Due to the liabilities incurred by PLC, and the costs of remaining a reporting company, the Board of Directors of PLC has determined that the Proposed Transaction is the most attractive alternative for PLC’s shareholders which will potentially create long-term value for the PLC shareholders.

Q:	What will happen in the Proposed Transaction?

The Proposed Transaction consists of the RenalGuard Spin-Off and the Viveve Merger. At the closing of the RenalGuard Spin-Off which will occur immediately prior to the closing of the Viveve Merger, we will transfer certain of our assets and liabilities and all of the outstanding shares of RenalGuard Solutions, Inc., our wholly-owned subsidiary which will own the RenalGuard business through its holdings of 100% of the outstanding equity in PLC Medical Systems, Inc. and PLC Systemas Medicos Internacionais, in exchange for the cancellation or transfer of 95% of our outstanding Debentures. The holders of the remaining 5% of the outstanding Debentures will convert their Debentures into PLC Shares concurrently with the RenalGuard Spin-Off. As a result, the liens on substantially all of our assets will be released by the holders of the Debentures and RenalGuard Solutions, Inc. will be a private company, wholly-owned by GCP. At the closing of the Viveve Merger, Merger Sub will merge with and into Viveve, with Viveve surviving the merger as a wholly-owned subsidiary of the Company.

Q:	What equity stake will current PLC shareholders and former Viveve stockholders hold in the Company after the closing of the Proposed Transaction?

It is anticipated that, after the closing of the Proposed Transaction (without giving effect to the Offering described herein), current PLC shareholders will own approximately 37.2% and former equity holders of Viveve will own approximately 62.8% of the issued and outstanding PLC Shares, on a fully diluted basis. As contemplated by the Viveve Merger Agreement, immediately following the closing of the Proposed Transaction, PLC will complete the Offering with gross proceeds of $4,500,000 in cash payments and the conversion of up to approximately $1,500,000 outstanding amount of principal and interest of certain Viveve bridge notes. After the closing of the Offering, it is anticipated that the current PLC shareholders will own 14.7%, the former equity holders of Viveve will own 24.9% and the investors participating in Offering will own 60.4% of the 18,738,339 issued and outstanding PLC Shares after the Offering.

Q:	Is the Proposed Transaction the first step in a “going-private” transaction?

The Company does not intend for the Proposed Transaction to be the first step in a “going-private” transaction for the Company. Indeed, one of the primary purposes of the Proposed Transaction is to provide a platform for Viveve to access the U.S. public markets. The RenalGuard Spin-Off will result in the RenalGuard business being in a privately held company, wholly-owned by GCP.

Q:	What conditions must be satisfied to complete the Proposed Transaction?

There are a number of closing conditions in the Viveve Merger Agreement, including that our shareholders have approved and adopted the RenalGuard Spin-Off and the Viveve Merger, that the Viveve shareholders have approved the Viveve Merger (which approval has already been obtained), that the RenalGuard Spin-Off has been consummated, that certain of Viveve’s outstanding convertible debt and warrants have been exchanged for shares of Viveve common stock or warrants to purchase PLC Shares terminated, that our outstanding warrants and certain of our Debentures have been exchanged for PLC Shares, holders of not more than 35% of PLC Shares shall have elected to become dissenting shares and , Viveve, as of the closing, shall have no more than $1,500,000 of accounts payable and accrued expenses and a principal balance on its outstanding senior secured notes of no more than $1,500,000, and each of the officers and directors of the Company shall have delivered resignations from their respective positions at the Company that will become effective immediately after the Effective Time of the Viveve Merger. For a summary of the conditions that must be satisfied or waived prior to completion of the Proposed Transaction, see the section entitled “The Proposed Transaction Agreements” beginning on page 70.

Q:	Is there a break-up fee under the Viveve Merger Agreement?

A:	Yes. Under certain circumstances, we are required to pay Vivive a termination fee of $150,000 upon termination of the Viveve Merger Agreement.

Q:	Why is PLC proposing the Name Change Proposal?

A:	The proposed amendment to our articles of continuance to change the Company’s name to “Viveve Medical, Inc.” that we are asking our shareholders to approve in connection with the Proposed Transaction better reflects the change in the Company’s business as a result of the Proposed Transaction.

Q:	Why is PLC proposing the Board Declassification Proposal?

The proposed amendment to our articles of continuance would eliminate the classification of the Board and provide instead for the annual election of directors commencing with the Company’s 2014 annual meeting. The Board is recommending the declassification of the Board in light of the growing sentiment among the investment community in favor of annual elections and to promote increased accountability to shareholders. See the section entitled “Proposal No. 4 — The Board Declassification Proposal” beginning on page 52 for additional information.

Q:	Why is PLC proposing the Director Election Proposal?

The Viveve Merger Agreement provides that effective immediately after the closing of the Viveve Merger, the Board of Directors of the Company will consist of five (5) members, each of whom will serve a one year term until the next annual meeting if elected. If all nominated directors are elected, the Board will consist of one director who is the current Chairman of the board of Viveve and four current members of the board of directors of Viveve, one of whom is also the Chief Executive Officer of Viveve. See the sections entitled “Proposal No. 5 — Election of Directors to the Board of Directors” and “Management After the Proposed Transaction” beginning on pages 53 and 109, respectively, for additional information.

Q:	Why is PLC proposing the Incentive Plan Proposal?

The purpose of the amendment to the Incentive Plan is to increase the number of PLC Shares available under the Incentive Plan to provide a means through which the Combined Company and its affiliates may attract and retain key personnel going forward and provide a means whereby directors, officers, members, managers, employees, consultants and advisors (and prospective directors, officers, members, managers, employees, consultants and advisors) of the Company and its affiliates can acquire and maintain an equity interest in the Company, or be paid incentive compensation, thereby strengthening their commitment to the welfare of the Company and its affiliates and aligning their interests with those of the shareholders. See the section entitled “Proposal No. 6 — The Incentive Plan Proposal” for additional information.

Q:	Why is PLC proposing the Share Consolidation Proposal?

The principal purpose of the Share Consolidation is to increase the per share market price of PLC Shares and to reduce the number of PLC Shares outstanding, which we believe will have several benefits to PLC and its shareholders. The PLC Board of Directors believes that increasing the market price of PLC Shares will generate greater investor interest in the Combined Company, facilitate trading and liquidity in the shares of the Combined Company, enhance the prestige of the shares of the Combined Company in the marketplace and better enable the Combined Company to raise funds to finance its planned operations.

Investors may be less interested in purchasing low-priced securities, because the brokerage commissions, as a percentage of the total transaction value, tend to be higher for such securities. Also, institutional investors (other than those which focus on small-capitalization companies or low-priced securities) are less likely to invest in low-priced securities. In light of the foregoing, the PLC Board of Directors believes that it is in the best interests of PLC’s shareholders to approve the Share Consolidation. See the section entitled “Proposal No. 7 — The Share Consolidation Proposal” for additional information.

Q:	What happens if I sell my shares of PLC common stock before the annual meeting?

Only holders of record of our common stock at the close of business on the Record Date are entitled to notice of the annual meeting of shareholders and to vote at the annual meeting and any adjournments or postponements of the annual meeting. However, to the extent that any shareholder has transferred any of his shares after the Record Date and the transferee, upon producing properly endorsed certificates evidencing such shares or otherwise establishing ownership of such shares, demands not later than ten (10) days before the annual meeting that his name be included in the list of shareholders of record entitled to vote at the annual meeting, the transferee alone shall be entitled to vote the transferred shares at the annual meeting. A complete list of our shareholders of record entitled to vote at the annual meeting will be available beginning ten days after the Record Date through the date of the annual meeting at our principal executive offices for inspection by shareholders during ordinary business hours for any purpose germane to the annual meeting.

Q:	What vote is required to approve the proposals presented at the annual meeting of shareholders?

The approval of the Merger Proposal, the Spin-Off Proposal, the Name Change Proposal, the Board Declassification Proposal and the Share Consolidation Proposal requires the affirmative vote of holders of not less than two-thirds of the shares of common stock voting on the matter. Approval of the Incentive Plan Proposal, the Auditor Proposal, the Director Election Proposal and the Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of common stock voting on the matter. Accordingly, a PLC shareholder’s failure to vote by proxy or to vote in person at the annual meeting, an abstention from voting, or the failure of a PLC shareholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee will have no effect on the outcome of any vote on such proposals.

Q:	How many votes do I have?

A:	Our shareholders are entitled to one vote at the annual meeting for each PLC Share held of record as of the Record Date. As of the close of business on the Record Date, there were 176,025,356 outstanding PLC Shares.

Q:	What constitutes a quorum?

Pursuant to our by-laws, two shareholders, or proxy holders representing two shareholders, holding not less than 10% of the outstanding shares of our common stock entitled to vote at the annual meeting, shall constitute a quorum with respect to that matter at the annual meeting. Shareholders of common stock present in person or represented by proxy (including shareholders who abstain or do not vote with respect to one or more of the matters presented for shareholder approval) will be counted for purposes of determining whether a quorum is present. “Broker non-votes,” which are shares that are held in “street name” by a bank or brokerage firm that indicates on its proxy that it does not have discretionary authority to vote on a particular matter, will not be counted for purposes of determining whether a quorum is present.

Pursuant to our by-laws, if within one-half hour from the time appointed for the annual meeting, a quorum in not present, the annual meeting shall be adjourned to the same day in the following week at the same time and place. If at such adjourned meeting a quorum is not present within one-half hour from the time appointed, the shareholders present in person or by proxy shall constitute a quorum. As of the Record Date for the annual meeting, 17,602,535 shares of our common stock would be required to achieve a quorum.

Q:	How does the PLC Board of Directors recommend that I vote on the proposals?

The PLC Board of Directors has determined that the Proposed Transaction and the other transactions contemplated by the Viveve Merger Agreement and RenalGuard Reorganization Agreement are fair to, advisable to and in the best interests of PLC’s shareholders and unanimously recommends that you vote “FOR” the Merger Proposal, the Spin-Off Proposal, the Name Change Proposal, the Board Declassification Proposal, the Director Election Proposal, the Incentive Plan Proposal, the Share Consolidation Proposal, the Auditor Proposal and the Adjournment Proposal.

Q:	What interests do PLC’s current officers and directors have in the Proposed Transaction?

A:	Our directors and executive officers may have interests in the Proposed Transaction that are different from, or in addition to or in conflict with, yours. These interests include:

•

RenalGuard Solutions, Inc., upon the closing of the RenalGuard Spin-Off, intends to hire or engage as consultants certain current officers of PLC, including Mark Tauscher, PLC’s current president and chief executive officer, and Gregory Mann, PLC’s current chief financial officer;

•

the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Proposed Transaction.

These interests may influence our directors in making their recommendation that you vote in favor of the Merger Proposal, Spin-Off Proposal and other proposals.

Q:	Do I have appraisal rights if I object to the RenalGuard Spin-Off?

Yes, you will have appraisal rights with respect to the RenalGuard Spin-Off, as a sale of all or substantially all of the Company’s assets, pursuant to Section 193 of the Yukon Business Corporations Act, provided you satisfy the annual criteria and conditions set forth in the Yukon Business Corporations Act. For more information on appraisal rights, see “Appraisal Rights” on page 131.

Q:	What happens if the Proposed Transaction is not consummated or is terminated?

There are certain circumstances under which the Viveve Merger Agreement. See the section entitled “The Proposed Transaction Agreements” beginning on page 70 for information regarding the parties’ specific termination rights. If either agreement is terminated pursuant to its terms, the Proposed Transaction will not be consummated.

Q:	When is the Proposed Transaction expected to be completed?

We currently anticipate that the Proposed Transaction will be consummated promptly following the annual meeting of shareholders, provided that all other conditions to the consummation of the Proposed Transaction have been satisfied or waived. It is possible that the failure to timely meet these closing conditions or other factors outside of our control could require us to complete the Proposed Transaction at a later time or not at all. For a description of the conditions for the completion of the Proposed Transaction, see the section entitled “The Proposed Transaction Agreements” beginning on page 70.

Q:	Who is paying for the solicitation of proxies?

PLC will bear the cost of the solicitation of proxies by us. In addition to soliciting stockholders by mail, PLC directors, officers and employees, without additional remuneration, may solicit proxies in person or by telephone or other means of electronic communication. PLC will not pay these individuals for their solicitation activities. Brokers and other custodians, nominees and fiduciaries will be requested to forward proxy-soliciting material to the owners of stock held in their names, and PLC will reimburse such brokers and other custodians, nominees and fiduciaries for their reasonable out-of-pocket costs. Solicitation by PLC’s directors, officers and employees may also be made of some stockholders in person or by mail, telephone or other means of electronic communication following the original solicitation.

Q:	What do I need to do now?

You are urged to read carefully and consider the information contained in this proxy statement, including the annexes, and to consider how the Proposed Transaction will affect you as a shareholder. You should then submit your proxy as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

Q:	How do I vote?

If you were a holder of record of our common stock on August 11, 2014, the Record Date for the annual meeting of shareholders, you may vote with respect to the applicable proposals in person at the annual meeting of shareholders or you may submit a proxy by (1) calling the toll-free number specified on the enclosed proxy card and following the instructions when prompted, (2) accessing the Internet website specified on the enclosed proxy card and following the instructions provided to you, or (3) completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the annual meeting of shareholders and vote in person, obtain a proxy from your broker, bank or nominee.

Q:	What will happen if I abstain from voting or fail to vote at the annual meeting of shareholders?

A:	We will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. For purposes of approval, an abstention or failure to vote will have no effect on any of the proposals.

Q:	What will happen if I sign and return my proxy card without indicating how I wish to vote?

All proxies will be voted in accordance with the instructions contained therein. Signed and dated proxies received by us without an indication of how the shareholder intends to vote on a proposal will be voted in favor of each of the Merger Proposal, the Spin-Off Proposal, the Name Change Proposal, the Board Declassification Proposal, the Director Election Proposal, the Incentive Plan Proposal, the Share Consolidation Proposal, the Auditor Proposal and the Adjournment Proposal.

Q:	If I am not going to attend the annual meeting of shareholders in person, should I return my proxy card instead?

Yes. Whether you plan to attend the annual meeting of shareholders or not, please read the enclosed proxy statement carefully, and submit your proxy by one of the following methods: (1) call the toll-free number specified on the enclosed proxy card and follow the instructions when prompted, (2) access the Internet website specified on the enclosed proxy card and follow the instructions provided to you, or (3) complete, sign, date and return the enclosed proxy card in the postage-paid envelope provided.

Q:	If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe the proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. If you do not provide instructions with your proxy, your bank, broker, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank, broker, or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the purpose of determining the existence of a quorum or the number of votes cast at the annual meeting of shareholders. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

Q:	May I revoke my proxy after I have mailed my signed proxy card?

Yes. You may revoke your proxy by sending a later-dated, signed proxy card to our secretary at the address listed below so that it is received by our secretary prior to the annual meeting of shareholders or attend the annual meeting of shareholders in person and vote. Attendance at the meeting will not itself be deemed to revoke a proxy unless the shareholder of record gives affirmative notice at the meeting that the shareholder intends to revoke the proxy and vote in person. You also may revoke your proxy by sending a notice of revocation to our secretary, which must be received by our secretary prior to the annual meeting of shareholders.

Q:	What should I do if I receive more than one set of voting materials?

You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

Q:	Who can help answer my questions?

A:	If you have questions about the proposals or if you need additional copies of the proxy statement or the enclosed proxy card you should contact:

	PLC Systems Inc.
	459 Fortune Boulevard
	Milford, Massachusetts 01757
	Attention: Gregory W. Mann
	Tel: (508) 541-8800 x145
	Email: gmann@plcmed.com

To obtain timely delivery, our shareholders must request the materials no later than five business days prior to the annual meeting.

You may also obtain additional information about us from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 132.

SUMMARY OF THE PROXY STATEMENT

This summary highlights selected information from this proxy statement and may not contain all of the information that is important to you. To better understand the Proposed Transaction and the proposals to be considered at the annual meeting, you should read this entire proxy statement carefully, including the annexes. See also the section entitled “Where You Can Find More Information” beginning on page 132.

Parties to the Proposed Transaction

PLC

PLC Systems Inc., a Yukon Territory corporation, was formed in 1987. The Company manufactures and markets medical technology for the cardiac and vascular markets, including its RenalGuard® product, designed to reduce the potentially toxic effects that contrast media can have on the kidneys when it is administered to high-risk patients during certain medical imaging procedures.

The mailing address of our principal executive office is 459 Fortune Boulevard, Milford, Massachusetts 01757.

PLC Systems Acquisition Corporation

PLC Systems Acquisition Corporation, a Delaware corporation, which we refer to as Merger Sub, is a wholly owned subsidiary formed by us in 2014 to consummate the Viveve Merger. In the Viveve Merger, Merger Sub will merge with and into Viveve, with Viveve surviving as our wholly-owned subsidiary, and Merger Sub will cease to exist.

Viveve

Viveve, Inc. is a Delaware corporation that was incorporated in 2005 by Jonathon Parmer, MD, an OBGYN physician, and Edward Knowlton, the holder of patents covering the use of RF energy to tighten tissue. Viveve designs, develops, manufactures and markets medical devices for the non-invasive treatment of vaginal introital laxity.

GCP IV LLC

GCP IV LLC is a Delaware limited liability company that is managed by Genesis Capital Advisors LLC, a New York based asset management firm. GCP is the holder of 95% the Company’s outstanding Debentures.

Structure of the Proposed Transaction (Page 44)

The Viveve Merger Agreement provides for the combination of the Company and Viveve through a merger of Merger Sub with and into Viveve, whereby Viveve will become a wholly-owned subsidiary of the Company, and the Company will issue the Viveve equity holders approximately 4,655,023 PLC Shares and the Cash Merger Consideration. The RenalGuard Spin-Off will be consummated immediately prior to the closing of the Viveve Merger and consists of the transfer of certain of our assets and liabilities and all of the outstanding shares of RenalGuard Solutions, Inc., our wholly-owned subsidiary which will own the RenalGuard business through its holdings of 100% of the outstanding equity in PLC Medical Systems, Inc. and PLC Systemas Medicos Internacionais, to GCP in exchange for the cancellation or transfer of all of our outstanding Debentures held by GCP and a release of liens on substantially all of our assets, whereby RenalGuard Solutions, Inc. will become a private company wholly-owned by GCP.

Organizational Structure

The following diagrams illustrate the structure of the Company before and after the closing of the Proposed Transaction and Offering.

Pre-Merger Organizational Chart:

Post-Merger Organizational Chart:

Total PLC Shares to be Issued in the Proposed Transaction (Page 50)

Pursuant to the Viveve Merger Agreement, upon the effectiveness of the Viveve Merger, all shares of capital stock (including common and preferred stock) of Viveve then outstanding, along with certain outstanding warrants and convertible notes, will be converted into the right to receive either PLC Shares (collectively referred to herein as the Closing Net Merger Shares) or the Cash Merger Consideration. The aggregate number of Closing Net Merger Shares to be issued at closing of the Viveve Merger is based on an exchange ratio of 0.0080497 of one PLC Share for every one share of Viveve held by accredited equity holders of Viveve. We currently expect that, at the closing, we will issue approximately 4,655,023 PLC Shares to the Viveve equity holders pursuant to the terms of the Viveve Merger Agreement.

Consideration for Viveve Merger and RenalGuard Spin-Off (Page 44)

Pursuant to the terms of the RenalGuard Reorganization Agreement, all of PLC’s Debentures owned by GCP will be canceled or transferred, the related liens on substantially all of PLC’s assets will be released and all of the GCP Warrants will be canceled in exchange for all of the outstanding equity in RenalGuard Solutions, Inc.

Total PLC Shares Outstanding after the Proposed Transaction

Based on the number of PLC Shares outstanding as of August 11, 2014, and assuming completion of the Share Consolidation, the total number of PLC Shares outstanding after the closing of the Viveve Merger and all related transactions will be approximately 7,417,574, including 4,655,023 PLC Shares issued to former Viveve equity holders prior to the Offering. Based on these assumptions (and without giving effect to the Offering described below), current PLC shareholders and their designees will own approximately 37.2%, and the former equity holders of Viveve and their designees will own approximately 62.8% of the issued and outstanding PLC Shares, on a fully diluted basis. As contemplated by the Viveve Merger Agreement, immediately following the closing of the Proposed Transaction, PLC will complete the Offering for gross proceeds of $4,500,000 in cash payments and the conversion of up to approximately $1,500,000 outstanding amount of principal and interest of certain Viveve bridge notes. After the closing of the Offering, it is anticipated that the current PLC shareholders will own 14.7% of the issued and outstanding PLC Shares, the former equity holders of Viveve will own 24.9% of the issued and outstanding PLC Shares and the investors participating in Offering will own 60.4% of the issued and outstanding PLC Shares, based on 18,738,339 PLC Shares outstanding after the Offering.

Board of Directors of PLC following the Viveve Merger (Pages 53 and 109)

The Viveve Merger Agreement provides that effective immediately after the closing of the Viveve Merger, the Board of Directors of the Company will consist of five (5) directors, all of whom will be voted upon by our shareholders at the annual meeting. If all director nominees are elected, our Board will consist of one director who is the current Chairman of the board of Viveve and four current members of the board of directors of Viveve, one of whom is also the Chief Executive Officer of Viveve. See the sections entitled “Proposal No. 5 — Election of Directors to the Board” and “Management After the Proposed Transaction” beginning on pages 53 and 109 respectively, for additional information.

Accounting Treatment (Page 51)

Based on the terms of the Viveve Merger Agreement, Viveve is deemed to be the accounting acquirer because the former Viveve shareholders, board of directions and management will have voting and operating control of the Combined Company. The RenalGuard Spin-Off will occur prior to the Viveve Merger Agreement, resulting in Viveve merging with PLC’s public shell. The Viveve Merger will be accounted for as capital transaction accompanied by a recapitalization with no goodwill or other intangibles recorded.

Appraisal Rights (Page 131)

Our shareholders will have appraisal rights with respect to the RenalGuard Spin-Off, as a sale of all or substantially all of the Company’s assets, pursuant to Section 193 of the Yukon Business Corporations Act, provided you satisfy the annual criteria and conditions set forth in the Yukon Business Corporations Act. For more information on appraisal rights, see “Appraisal Rights” on page 131.

PLC’s Board of Directors’ Reasons for the Approval of the Proposed Transaction (Page 47)

Our Board of Directors considered a wide variety of factors in connection with its evaluation of the Proposed Transaction. In light of the complexity of those factors, our Board of Directors, as a whole, did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it took into account in reaching its decision. Individual members of our Board of Directors may have given different weight to different factors.

In considering the Proposed Transaction, PLC’s Board of Directors considered the following factors, although not weighted or in any order of significance:

•

a review of strategic alternatives, including the possibility of remaining independent, combinations with other partners, and the possibility of equity or debt public or private offerings;

•

the possibility that if a strategic alternative were not available, PLC would likely default on its debt obligations related to its outstanding Debentures, which could result in the holders of the Debentures, foreclosing on substantially all of PLC’s assets, including RenalGuard, securing the obligations under the Debentures, which would deprive PLC shareholders of any return on their ownership of equity securities of PLC;

•

a review of the business and financial prospects of other potential merger targets;

•

its belief that Viveve has the appropriate infrastructure in place and is competitively positioned to achieve growth;

•

its belief that the Proposed Transaction and our status as a publicly traded company will provide Viveve with greater access to capital to grow its business, thus enhancing Viveve’s potential for growth and maximizing shareholder returns;

•

the terms and conditions of the Viveve Merger Agreement and the RenalGuard Reorganization Agreement and the agreements contemplated by such agreements, including the form and amount of the consideration and the representations, warranties, covenants, conditions to closing and termination rights contained in those agreements;

•

the relative ownership interests of Viveve stockholders and PLC shareholders in the Combined Company immediately following the transaction, based on the shares of Viveve common stock and PLC common stock outstanding at approximately the time the Viveve Merger Agreement was executed;

•

its assessment of the likelihood that the transaction would be completed in a timely manner and that management would be able to successfully operate the Viveve business after the transaction;

•

the regulatory and other approvals required in connection with the transaction and the likelihood such approvals would be received in a timely manner and without unacceptable conditions; and

•

Viveve’s management team’s significant experience in its industry, all of which are expected to continue with the Combined Company.

Quorum and Required Vote for Shareholder Proposals (Page 41)

Pursuant to our by-laws, if within one-half hour from the time appointed for the annual meeting, a quorum is not present, the annual meeting shall be adjourned to the same day in the following week at the same time and place. If at such adjourned meeting a quorum is not present within one-half hour from the time appointed, the shareholders present in person or by proxy shall constitute a quorum. As of the Record Date for the annual meeting, 12,499,820 shares of our common stock would be required to achieve a quorum.

Recommendation to PLC Shareholders (Page 41)

Our Board of Directors believes that each of the Merger Proposal, the Spin-Off Proposal, the Name Change Proposal, the Board Declassification Proposal, the Director Election Proposal, the Incentive Plan Proposal, the Share Consolidation Proposal, the Auditor Proposal and the Adjournment Proposal to be presented at the annual meeting is in the best interests of the Company and our shareholders, and unanimously recommends that our shareholders vote “FOR” each of the proposals.

When you consider the recommendation of our Board of Directors in favor of approval of the Merger Proposal and Spin-Off Proposal, you should keep in mind that our directors and officers have interests in the Proposed Transaction that are different from, or in addition to, your interests as a shareholder. These interests include, among other things:

•

RenalGuard Solutions, Inc., upon the closing of the RenalGuard Spin-Off, intends to hire or to engage as consultants certain current officers of PLC, including Mark Tauscher, PLC’s current president and chief executive officer, and Gregory Mann, PLC’s current chief financial officer;

•

the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Proposed Transaction.

Risk Factors (Page 21)

In evaluating the proposals set forth in this proxy statement, you should carefully read this proxy statement, including the annexes, and annually consider the factors discussed in the section entitled “Risk Factors” beginning on page 21.

SELECTED FINANCIAL INFORMATION

Selected Historical Financial Information of PLC

The following table sets forth selected historical financial information derived from PLC’s unaudited condensed consolidated financial statements for the quarter ended March 31, 2014 included in our Quarterly Report on Form 10-Q for the three months ended March 31, 2014, and consolidated audited financial statements for the years ended December 31, 2013 and 2012 included in our Annual Report on Form 10-K for the year ended December 31, 2013 and incorporated herein by reference. Historical results are not necessarily indicative of results to be expected in any future period. You should read the following selected financial information in conjunction with the Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations and consolidated financial statements and the related notes appearing in our Quarterly Report for the period ended March 31, 2014 on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2013 and incorporated herein by reference.

	Quarter Ended			Years Ended December 31,
(in thousands, except per share data)	March 31, 2014			2013			2012
	(unaudited)
Statements of Operations Information:
Revenues	$	54		$	1,274		$	1,080
Net income (loss)	$	(2,412	)	$	3,499		$	(8,387	)
Income (loss) per share:
Basic	$	(0.02	)	$	0.05		$	(0.27	)
Diluted	$	(0.02	)	$	0.03		$	(0.27	)
Weighted average number of shares outstanding:
Basic		125,000			77,061			31,139
Diluted		125,000			112,728			31,139
Balance Sheet Information (at period end):
Total assets	$	604		$	1,558		$	1,091
Total debt including accrued maturities	$	4,904		$	4,537		$	8,098
Other long-term liabilities	$	3,691		$	2,680		$	3,800
Total stockholders’ deficit	$	(9,016	)	$	(6,642	)	$	(11,947	)
Total liabilities and stockholders’ deficit	$	604		$	1,558		$	1,091

Selected Historical Financial Information of Viveve

The following table sets forth selected historical financial information derived from Viveve’s unaudited condensed financial statements included elsewhere in this proxy statement for the quarter ended March 31, 2014 and Viveve’s audited financial statements included elsewhere in this proxy statement for the years ended December 31, 2013 and 2012. Historical results are not necessarily indicative of results to be expected in any future period. You should read the following selected financial information in conjunction with the section entitled “Viveve’s Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and Viveve’s financial statements and the related notes appearing elsewhere in this proxy statement.

	Three Months Ended			Years Ended December 31,
(in thousands)	March 31, 2014			2013			2012
	(unaudited)
Statements of Operations Information:
Revenue	$	47		$	152		$	249
Net loss	$	(802	)	$	(4,317	)	$	(4,960	)
Balance Sheet Information (at period end):
Total assets	$	689		$	1,138		$	1,061
Total debt	$	6,541		$	6,338		$	2,581
Other long-term liabilities	$	602		$	624		$	726
Total redeemable preferred stock	$	195		$	195		$	195
Total stockholders’ deficit	$	(8,096	)	$	(7,308	)	$	(3,078	)
Total liabilities and stockholders’ deficit	$	689		$	1,138		$	1,061

Selected Unaudited Pro Forma Condensed Combined Financial Information

The following selected unaudited pro forma condensed combined financial data is intended to show how the Viveve Merger and RenalGuard Spin-Off and Offering might have affected historical financial statements if the transactions had been completed on January 1, 2013 for the purposes of the statements of operations and as of March 31, 2014 for the purposes of the balance sheet. This information was prepared based on the historical financial results reported by PLC and Viveve. The following should be read in conjunction with the section entitled "Unaudited Pro Forma Combined Financial Statements" beginning on page 113, PLC's unaudited and audited historical financial statements and notes thereto included in PLC’s Quarterly Report on Form 10-Q, Annual Report on Form 10-K, and Viveve's unaudited and audited historical financial statements and the notes thereto beginning on page F-1.

Viveve is deemed to be the accounting acquirer because the former Viveve shareholders, board of directions and management will have voting and operating control of the Combined Company. The RenalGuard Spin-Off will occur prior to the Viveve Merger Agreement, resulting in Viveve merging with PLC’s public shell. The merger will be accounted for as capital transaction accompanied by a recapitalization with no goodwill or other intangibles recorded.

The unaudited pro forma condensed combined financial statements were prepared in accordance with the regulations of the Securities and Exchange Commission. The pro forma adjustments reflecting the completion of the Proposed Transaction and Offering are based upon the assumptions set forth in the notes to the unaudited pro forma condensed combined financial statements.

(in thousands)	Three Months Ended March 31, 2014			Year Ended December 31, 2013
Consolidated Statement of Operations Data:
Total revenue	$	47		$	152
Gross profit	$	25		$	(30	)
Total operating costs and expenses	$	690		$	3,901
Loss from operations	$	(665	)	$	(3,931	)
Net loss	$	(726	)	$	(4,151	)

Selected Balance Sheet Data (at period end):
Cash and cash equivalents	$	4,306
Working capital	$	1,522
Total assets	$	4,939
Notes payable and accrued interest (net)	$	1,466
Total liabilities	$	3,274
Total stockholders’ equity	$	1,665

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make forward-looking statements in this proxy statement. These forward-looking statements relate to outlooks or expectations for earnings, revenues, expenses or other future financial or business performance, strategies or expectations, or the impact of legal or regulatory matters on business, results of operations or financial condition. Specifically, forward-looking statements may include statements relating to:

•

the benefits of the Proposed Transaction;

•

the future financial performance of the Company following the Proposed Transaction;

•

changes in the market for Viveve products and services;

•

expansion plans and opportunities; and

•

other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions.

These forward-looking statements are based on information available as of the date of this proxy statement, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing PLC’s views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You should not place undue reliance on these forward-looking statements in deciding how to grant your proxy or instruct how your vote should be cast or vote your shares on the proposals set forth in this proxy statement. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

•

the occurrence of any event, change or other circumstances that could give rise to the termination of the Viveve Merger Agreement;

•

the outcome of any legal proceedings that may be instituted against the Company or Viveve following announcement of the Proposed Transaction and transactions contemplated thereby;

•

the inability to complete the transactions contemplated by the Viveve Merger and the RenalGuard Spin-Off due to the failure to obtain approval of the shareholders of the Company, or other conditions to closing in the Viveve Merger Agreement;

•

delays in obtaining, adverse conditions contained in, or the inability to obtain necessary regulatory approvals or complete regulatory reviews required to complete the transactions contemplated by the Viveve Merger Agreement and the RenalGuard Reorganization Agreement;

•

the risk that the Proposed Transaction disrupts current plans and operations as a result of the announcement and consummation of the transactions described herein;

•

the ability to recognize the anticipated benefits of the Proposed Transaction, which may be affected by, among other things, competition, the ability to integrate the Viveve businesses, and the ability of the Combined Company to grow and manage growth profitably;

•

costs related to the Proposed Transaction;

•

changes in applicable laws or regulations;

•

the possibility that the Company or Viveve may be adversely affected by other economic, business, and/or competitive factors; and

•

other risks and uncertainties indicated in this proxy statement, including those under “Risk Factors” beginning on page 21.

RISK FACTORS

In addition to the other information contained in this proxy statement, the following risks impact the business and operations of each of Viveve and PLC. These risk factors are not exhaustive and all investors are encouraged to perform their own investigation with respect to the business, financial condition and prospects of both Viveve and PLC.

Risks Related to Viveve’s Business

Viveve is dependent upon the success of its Viveve System, which has a limited commercial history. If the Viveve System fails to gain or loses market acceptance, Viveve’s business will suffer.

In 2012, Viveve began marketing its Viveve System in Canada, Hong Kong and Japan, and Viveve expects that sales of its Viveve System, including its single-use Viveve treatment tips, will account for substantially all of its revenue for the foreseeable future. Viveve’s Viveve System may not significantly penetrate current or new markets, including the U.S. and elsewhere. If demand for the Viveve System does not increase as Viveve anticipates, or declines, Viveve’s business, financial condition and results of operations will be harmed.

Performing clinical studies on, and collecting data from, the Viveve Treatment is inherently subjective, and Viveve has limited data regarding the efficacy of the Viveve System. If future data is not positive or consistent with Viveve’s prior experience, rates of physician adoption will likely be harmed.

Viveve believes that in order to significantly grow its business, it will need to conduct future clinical studies of the effectiveness of the Viveve System. Clinical studies of vaginal laxity and sexual function are subject to a number of limitations. First, these studies do not involve objective standards for measuring the effectiveness of treatment. Subjective, patient reported outcomes (PRO) are the most common method of evaluating effectiveness. As a result, clinical studies may conclude that a treatment is effective even in the absence of objective measures. Second, as with other non-invasive, energy-based devices, the effect of the Viveve Treatment varies from patient to patient and can be influenced by a number of factors, including the age, ethnicity and level of vaginal laxity and sexual function of the patient among other things.

Current published studies of the Viveve System, conducted in the U.S. and Japan have investigated the tissue-tightening effect of Viveve’s monopolar RF technology using single-arm studies, which were not randomized, blinded or controlled. Clinical studies designed in a randomized, blinded and controlled fashion represent the gold-standard in clinical trial design, which most effectively assess the efficacy of a product or therapy versus a placebo group. Future clinical studies, which may be required by Viveve to drive physician adoption or support regulatory clearance or approval, may require randomized, blinded and controlled trial designs. Since Viveve has not tested the Viveve procedure under these trial design conditions, Viveve cannot be certain that the outcomes will be positive, which would have a material impact on Viveve’s business.

Additionally, Viveve has not conducted any head-to-head clinical studies that compare results from treatment with the Viveve System to surgery or treatment with other therapies. Without head-to-head studies against competing alternative treatments, which Viveve has no current plans to conduct, potential customers may not find clinical studies of Viveve’s technology sufficiently compelling to purchase the Viveve System. If Viveve decides to pursue additional studies in the future, such studies could be expensive and time consuming, and the data collected may not produce favorable or compelling results. If the results of such studies do not meet physicians’ expectations, the Viveve System may not become widely adopted, physicians may recommend alternative treatments for their patients, and Viveve’s business may be harmed.

Viveve currently does not have the ability to market the Viveve System in the U.S. If Viveve wants to sell the Viveve System and single-use treatment tips in the U.S., it will need to obtain FDA clearance or approval, which may not be granted.

Developing and promoting the Viveve System in additional areas, including the U.S., is a key element of Viveve’s future growth strategy. Viveve currently does not have U.S. Food and Drug Administration, or FDA, clearance or approval in the U.S. to market the Viveve System for the non-invasive treatment of vaginal laxity or sexual dysfunction. Viveve is in the process of seeking, and intends to continue to seek, clearance or approval from the FDA to expand its marketing efforts. Viveve cannot predict whether it will receive such clearances or approvals. The FDA will require Viveve to conduct clinical trials to support regulatory clearance or approval, which trials may be time-consuming and expensive, and may produce results that do not result in clearance or approval of Viveve’s FDA application. In the event that Viveve does not obtain FDA clearance or approval, Viveve will be unable to promote the Viveve System in the U.S. and its ability to grow Viveve’s revenue may be adversely affected.

Viveve’s business is not currently profitable, and Viveve may not be able to achieve profitability even if it is able to generate significant revenue.

Through March 31, 2014, Viveve incurred losses since inception of approximately $30.7 million. In 2013, Viveve incurred a loss of $4.3 million and in 2012 a loss of $5.0 million. Despite increasing revenue, Viveve expects to incur significant additional losses in order to grow and expand its business. Viveve cannot predict if and when it will achieve profitability. Viveve’s failure to achieve and sustain profitability could negatively impact the market price of its common stock and may require it to seek additional financing for its business. There are no assurances that Viveve will be able to obtain any additional financing or that any such financing will be on terms that are favorable to Viveve. If Viveve fails to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending, it could have a material adverse effect on Viveve’s ability to achieve its intended business objectives. These factors raise substantial doubt about Viveve’s ability to continue as a going concern.

Viveve has received a qualified audit opinion on its ability to continue as a going concern.

The audit report issued by Viveve’s independent auditors on Viveve’s audited financial statements for the fiscal year ended December 31, 2013, contains a matter of emphasis regarding Viveve’s ability to continue as a going concern. This matter of emphasis indicates there is substantial doubt on the part of its auditors as to Viveve’s ability to continue as a going concern due to the risk that Viveve may not have sufficient cash and liquid assets as of December 31, 2013, to cover its operating capital requirements for the next twelve-month period and if sufficient cash cannot be obtained Viveve would have to substantially alter its operations, or it may be forced to discontinue operations. Such an opinion from the independent registered public accounting firm limits Viveve’s ability to access certain types of financing, or may prevent it from obtaining financing on acceptable terms. There can be no assurance that Viveve’s accounting firm will not qualify its opinion in the future.

It is difficult to forecast future performance, which may cause Viveve’s financial results to fluctuate unpredictably.

Viveve’s limited operating history makes it difficult to predict future performance. Additionally, the demand for the Viveve System may vary from quarter to quarter. A number of factors, over which Viveve has limited or no control, may contribute to fluctuations in its financial results, such as:

•

delays in receipt of anticipated purchase orders;

•

seasonal variations in patient demand for procedures;

•

performance of Viveve’s independent distributors;

•

positive or negative media coverage of the Viveve System, the Viveve Treatment or products of Viveve’s competitors or industry;

•

Viveve’s ability to obtain further regulatory clearances or approvals;

•

delays in, or failure of, product and component deliveries by Viveve’s subcontractors and suppliers;

•

changes in the length of the sales process;

•

customer response to the introduction of new product offerings; and

•

fluctuations in foreign currency.

Viveve’s limited operating history has limited its ability to determine an appropriate sales price for its products.

Viveve’s historical operating performance has limited its ability to determine the proper sales prices for the Viveve System and Viveve’s single-use treatment tips. Establishing appropriate pricing for Viveve’s capital equipment and components has been challenging because there have not existed directly comparable competitive products. Viveve may experience similar pricing challenges in the future as it enters new markets or introduces new products, which could have an unanticipated negative impact on Viveve’s financial performance.

If there is not sufficient patient demand for Viveve treatments, practitioner demand for the Viveve System, including Viveve’s single-use treatment tips, sales could drop, resulting in unfavorable operating results.

Most procedures performed using the Viveve System are elective procedures, the cost of which must be borne by the patient, and are not reimbursable through government or private health insurance. The decision to undergo a Viveve Treatment is thus driven by consumer demand, which may be influenced by a number of factors, such as:

•

Viveve’s sales and marketing efforts directed toward consumers, for which Viveve has limited experience and resources;

•

the extent to which physicians recommend Viveve’s procedures to their patients;

•

the cost, safety and effectiveness of a Viveve Treatment versus alternative treatments;

•

general consumer sentiment about the benefits and risks of such procedures; and

•

consumer confidence, which may be impacted by economic and political conditions.

Viveve’s financial performance could be materially harmed in the event that any of the above factors discourage patients from seeking Viveve procedures.

Negative publicity regarding the Viveve Treatment could harm demand, which would adversely affect sales and Viveve’s financial performance.

Viveve expects that in the future it may experience negative media exposure. Such publicity may present negative individual physician or patient experience regarding the safety or effectiveness of the Viveve Treatment. Competitors could attempt to use such publicity to harm Viveve’s reputation and disrupt current or potential future customer relationships. While, to date, Viveve has not observed any negative publicity, future financial results could be negatively impacted. Additionally, while Viveve believes that obtaining positive publicity is important to its success, and it is an important component of Viveve’s marketing efforts, Viveve has also not yet observed a material impact on its financial results of operations from positive publicity.

Viveve’s reputation and competitive position may be harmed not only by negative media exposure, but also by other publicly-available information suggesting that the Viveve Treatment is not safe or effective. For example, Viveve expects that it will have to file adverse event reports, or Medical Device Reports (MDRs), with the FDA that are publicly available on the FDA’s website if its product may have caused or contributed to a serious injury or malfunctioned in a way that would likely cause or contribute to a serious injury if it were to occur. To date, there are no such MDRs on the FDA’s website related to the Viveve Treatment nor have any patients who have undergone the procedure, in either clinical trials or commercial use, experienced a device related serious adverse event. Despite this safety record, competitors may attempt to harm Viveve’s reputation by pointing to future adverse events that may be reported or publicized, or by claiming that their product is superior because they have not filed as many adverse event reports with the FDA. Such negative publicity and competitor behavior could harm Viveve’s reputation and future sales.

The failure of the Viveve System to meet patient expectations or the occurrence of unpleasant side effects from the Viveve Treatment could impair Viveve’s financial performance.

Viveve’s future success depends upon patients having a positive experience with the Viveve Treatment in order to increase physician demand for Viveve’s products, as a result of positive feedback and word-of-mouth referrals. Patients may be dissatisfied if their expectations of the procedure, side effects and results, among other things, are not met. Despite the safety of the Viveve Treatment, patients may experience undesirable side-effects such as temporary swelling or reddening of the treated tissue. Experiencing any of these side effects could discourage a patient from completing a Viveve Treatment or discourage a patient from having future procedures or referring Viveve Treatments to others. In order to generate referral business, Viveve also believes that patients must be satisfied with the effectiveness of the Viveve Treatment. Results obtained from a Viveve Treatment are subjective and may be subtle. The Viveve Treatment may produce results that may not meet patients’ expectations. If patients are not satisfied with the procedure or feel that it is too expensive for the results obtained, Viveve’s reputation and future sales will suffer.

Viveve’s success depends on growing physician adoption of the Viveve System and continued use of Viveve’s treatment tips.

Some of Viveve’s target physician customers already own self-pay device products. Viveve’s ability to grow its business and convince physicians to purchase the Viveve System depends on the success of Viveve’s sales and marketing efforts. Viveve’s business model involves both a capital equipment purchase of the Viveve System and continued purchases by Viveve’s customers of single-use treatment tips and ancillary consumables. This may be a novel business model for many potential customers who may be used to competing products that are either exclusively capital equipment, such as many laser-based systems. Viveve must be able to demonstrate that the cost of the Viveve System and the revenue that the physician can derive from performing procedures using Viveve’s product are compelling when compared to the cost and revenue associated with alternative products or therapies. When marketing to plastic surgeons, Viveve must also, in some cases, overcome a bias against non-invasive procedures. If Viveve is unable to increase physician adoption of the Viveve System and use of Viveve’s treatment tips, Viveve’s financial performance will be adversely affected.

To successfully market and sell the Viveve System internationally, Viveve must address many issues with which Viveve has limited experience.

International sales accounted for 100% of Viveve’s revenue in 2013 and 2012. Viveve believes that a significant portion of its business will continue to come from international sales through increased penetration in countries where Viveve currently sells the Viveve System, combined with expansion into new international markets. However, international sales are subject to a number of risks, including:

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difficulties in staffing and managing international operations;

•

difficulties in penetrating markets in which Viveve’s competitors’ products may be more established;

•

reduced or no protection for intellectual property rights in some countries;

•

export restrictions, trade regulations and foreign tax laws;

•

fluctuating foreign currency exchange rates;

•

foreign certification and regulatory clearance or approval requirements;

•

difficulties in developing effective marketing campaigns for unfamiliar, foreign countries;

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customs clearance and shipping delays;

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political and economic instability; and

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preference for locally produced products.

If one or more of these risks were realized, it could require Viveve to dedicate significant resources to remedy the situation, and even if Viveve is able to find a solution, Viveve’s revenue may still decline.

To market and sell the Viveve System internationally, Viveve depends on distributors, and they may not be successful.

Viveve currently depends exclusively on third-party distributors to sell and service the Viveve System internationally and to train Viveve’s international customers, and if these distributors terminate their relationships with Viveve or under-perform, Viveve may be unable to maintain or increase its level of international revenue. Viveve will also need to engage additional international distributors to grow its business and expand the territories in which it sells the Viveve System. Distributors may not commit the necessary resources to market, sell and service the Viveve System to the level of Viveve’s expectations. If current or future distributors do not perform adequately, or if Viveve is unable to engage distributors in particular geographic areas, Viveve’s revenue from international operations will be adversely affected.

Viveve currently has limited sales and marketing resources or experience and failure to build and manage a sales force or to market and distribute the Viveve System effectively could have a material adverse effect on Viveve’s business.

Viveve expects to rely on a direct sales force to sell the Viveve System in the U.S. In order to meet Viveve’s future anticipated sales objectives, Viveve expects to grow its domestic sales organization significantly over the next several years. There are significant risks involved in building and managing Viveve’s sales organization, including risks related to Viveve’s ability to:

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hire qualified individuals as needed;

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provide adequate training for the effective sale of the Viveve System; and

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retain and motivate sales employees.

In addition, the Viveve System competes with products that are well-established in the market. Accordingly, it is difficult to predict how well Viveve’s sales force will perform. Viveve’s failure to adequately address these risks could have a material adverse effect on its ability to sell the Viveve System, causing Viveve’s revenue to be lower than expected and harming Viveve’s results of operations.

Viveve competes against companies that have more established products, longer operating histories and greater resources, which may prevent Viveve from achieving significant market penetration or increased operating results.

The medical device and aesthetics markets are highly competitive and dynamic, and are marked by rapid and substantial technological development and product innovations. Demand for the Viveve System could be diminished by equivalent or superior products and technologies offered by competitors. Specifically, the Viveve System competes against other offerings in these markets, including laser and other light-based medical devices, pharmaceutical and consumer products, surgical procedures and exercise therapies.

Competing in these markets could result in price-cutting, reduced profit margins and loss of market share, any of which would harm Viveve’s business, financial condition and results of operations. Viveve’s ability to compete effectively depends upon its ability to distinguish its company and the Viveve System from Viveve’s competitors and their products, and on such factors as:

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safety and effectiveness;

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product pricing;

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success of Viveve’s marketing initiatives;

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compelling clinical data;

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intellectual property protection;

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quality of customer support; and

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development of successful distribution channels, both domestically and internationally.

Some of Viveve’s competitors have more established products and customer relationships than Viveve, which could inhibit Viveve’s market penetration efforts. For example, Viveve may encounter situations where, due to pre-existing relationships, potential customers decided to purchase additional products from Viveve’s competitors. Potential customers also may need to recoup the cost of expensive products that they have already purchased from Viveve’s competitors and thus may decide not to purchase the Viveve System, or to delay such purchase. If Viveve is unable to achieve continued market penetration, Viveve will be unable to compete effectively and its business will be harmed.

In addition, some of Viveve’s current and potential competitors have significantly greater financial, research and development, manufacturing, and sales and marketing resources than Viveve. Viveve’s competitors could utilize their greater financial resources to acquire other companies to gain enhanced name recognition and market share, as well as new technologies or products that could effectively compete with Viveve’s existing product. Given the relatively few competitors currently in the market, any Proposed Transaction could exacerbate any existing competitive pressures, which could harm Viveve’s business.

Competition among providers of devices for the medical device and aesthetics markets is characterized by rapid innovation, and Viveve must continuously innovate the Viveve System and develop new products or Viveve’s revenue may decline.

While Viveve attempts to protect the Viveve System through patents and other intellectual property rights, there are few barriers to entry that would prevent new entrants or existing competitors from developing products that compete directly with Viveve’s products. For example, while Viveve believes its monopolar RF technology maintains a strong intellectual property position, there may be other companies employing competing technologies which claim to have a similar clinical effect to Viveve’s. Additionally, there are others who may market monopolar RF technology for competing purposes in a direct challenge to Viveve’s intellectual property position. As Viveve continues to create market demand for a non-surgical, non-invasive way to treat vaginal laxity and sexual dysfunction, competitors may enter the market with other products making similar or superior claims. Viveve expects that any competitive advantage it may enjoy from its current and future innovations may diminish over time, as companies successfully respond to Viveve’s innovations, or create their own. Consequently, Viveve believes that it will have to continuously innovate and improve the Viveve System and technology or develop new products to compete successfully. If Viveve is unable to develop new products or innovate successfully, the Viveve System could become obsolete and Viveve’s revenue will decline as Viveve’s customers purchase competing products.

Viveve outsources the manufacturing and repair of key elements of the Viveve System to a single manufacturing partner.

Viveve outsources the manufacture and repair of the Viveve System to a single contract manufacturer, Stellartech. If Stellartech’s operations are interrupted or if Stellartech is unable to meet Viveve’s delivery requirements due to capacity limitations or other constraints, Viveve may be limited in its ability to fulfill new customer orders or to repair equipment at current customer sites. Stellartech has limited manufacturing capacity, is itself dependent upon third-party suppliers and is dependent on trained technical labor to effectively repair Viveve’s system. In addition, Stellartech is a medical device manufacturer and is required to demonstrate and maintain compliance with the FDA’s Quality System Regulation, or QSR. If Stellartech fails to comply with the FDA’s QSR, its manufacturing and repair operations could be halted. In addition, both the availability of Viveve’s product to support the fulfillment of new customer orders as well as Viveve’s ability to repair those products installed at current customer sites would be impaired. In addition, as of the date of this Proxy Statement, the development and manufacturing agreement under which Viveve and Stellartech operate has expired without any subsequent extension or renewal by the parties and the minimum conditions to the licenses granted therein have not been satisfied by Viveve. Although the parties continue to operate under the terms of this agreement, Viveve’s manufacturing operations could be adversely impacted if Viveve is unable to enforce Stellartech’s performance under this agreement, or enter into a new agreement with Stellartech upon favorable terms.

Viveve’s manufacturing operations and those of its key manufacturing subcontractors are dependent upon third-party suppliers, making Viveve vulnerable to supply shortages and price fluctuations, which could harm Viveve’s business.

The single source supply of the Viveve System from Stellartech could not be replaced without significant effort and delay in production. Also, several other components and materials that comprise the Viveve System are currently manufactured by a single supplier or a limited number of suppliers. In many of these cases, Viveve has not yet qualified alternate suppliers and relies upon purchase orders, rather than long-term supply agreements. A supply interruption or an increase in demand beyond Viveve’s current suppliers’ capabilities could harm Viveve’s ability to manufacture the Viveve System until new sources of supply are identified and qualified. Viveve’s reliance on these suppliers subjects it to a number of risks that could harm its business, including:

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interruption of supply resulting from modifications to or discontinuation of a supplier’s operations;

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delays in product shipments resulting from uncorrected defects, reliability issues or a supplier’s variation in a component;

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a lack of long-term supply arrangements for key components with Viveve’s suppliers;

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inability to obtain adequate supply in a timely manner, or to obtain adequate supply on commercially reasonable terms;

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difficulty locating and qualifying alternative suppliers for Viveve’s components in a timely manner;

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production delays related to the evaluation and testing of products from alternative suppliers, and corresponding regulatory qualifications;

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delay in delivery due to Viveve’s suppliers prioritizing other customer orders over Viveve’s;

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damage to Viveve’s brand reputation caused by defective components produced by Viveve’s suppliers;

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increased cost of Viveve’s warranty program due to product repair or replacement based upon defects in components produced by Viveve’s suppliers; and

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fluctuation in delivery by Viveve’s suppliers due to changes in demand from Viveve or their other customers.

Any interruption in the supply of components or materials, or Viveve’s inability to obtain substitute components or materials from alternate sources at acceptable prices in a timely manner, could impair Viveve’s ability to meet the demand of its customers, which would have an adverse effect on Viveve’s business.

If, in the future, Viveve decides to perform additional manufacturing functions internally that it currently outsources, Viveve’s business could be harmed by its limited manufacturing experience and related capabilities.

In the future, for financial or operational purposes, Viveve may elect to perform additional component or System manufacturing functions internally. Viveve’s limited experience with manufacturing processes could lead to difficulties in producing sufficient quantities of manufactured items that meet Viveve’s quality standards and that comply with applicable regulatory requirements in a timely and cost-effective manner. In addition, if Viveve experiences these types of manufacturing difficulties, it may be expensive and time consuming to engage a new or previous subcontractor or supplier to fulfill Viveve’s replacement manufacturing needs. The occurrence of any of these events could harm Viveve’s business.

If the Viveve System malfunctions or if Viveve discovers a manufacturing defect that could lead to a malfunction, Viveve may have to initiate a product recall or replace components, which could adversely impact Viveve’s business.

Problems in Viveve’s manufacturing processes, or those of Viveve’s manufacturing partners or subcontractors, which lead to an actual or possible malfunction in any of the components of the Viveve System, may require Viveve to recall product from customers or replace components and could disrupt Viveve’s operations. For example, in December 2012, Viveve began replacing handpiece assemblies that were causing system malfunctions due to fiber optic damage that occurred during the manufacturing process. Viveve subsequently worked with its manufacturing partner to redesign and test the reliability of the newly designed handpiece. The problem was resolved within several weeks and did not have a significant impact on Viveve’s ability to supply products to its customers or, more generally, on Viveve’s results of operations. However, Viveve’s results of operations, its reputation and market acceptance of its products could be harmed if Viveve encounters difficulties in manufacturing that result in a more significant issue or significant patient injury, and delays Viveve’s ability to fill customer orders.

Viveve may not be able to develop an alternative cooling module that will be in compliance with changing environmental regulations in a timely or cost-effective manner.

Viveve’s cooling module relies upon a hydroflurocarbon, or HFC, called R134a, to protect the outer layer of the tissue from over-heating while Viveve’s device delivers RF energy to the submucosal tissue. New environmental regulations phasing out HFCs over the next decade have been adopted or are under consideration in a number of countries, and recent European Union directives require the phase-out of HFCs and prohibit the introduction of new products incorporating HFCs beginning in 2007. If Viveve is unable to develop an alternative cooling module for its device which is not dependent on HFCs in a timely or cost-effective manner, the Viveve System may not be in compliance with environmental regulations, which could result in fines, civil penalties and the inability to sell Viveve’s products in certain major international markets.

In addition, the impending restrictions on HFCs have reduced their current availability, as suppliers have lower incentive to expand production capacity or maintain existing capacity. This change in supply could expose Viveve to supply shortages or increased prices for R134a, which could impair Viveve’s ability to manufacture the Viveve System and adversely affect Viveve’s results or operations. HFCs may also be classified by some countries as a hazardous substance and subject to significant shipping surcharges that may negatively impact profit margins.

Viveve forecasts sales to determine requirements for components and materials used in the Viveve System, and if Viveve’s forecasts are incorrect, Viveve may experience delays in shipments or increased inventory costs.

Viveve keeps limited materials, components and finished product on hand. To manage its manufacturing operations with its suppliers, Viveve forecasts anticipated product orders and material requirements to predict its inventory needs up to six months in advance and enter into purchase orders on the basis of these requirements. Viveve’s limited historical experience may not provide it with enough data to accurately predict future demand. If Viveve’s business expands, its demand for components and materials would increase and Viveve’s suppliers may be unable to meet its demand. If Viveve overestimates its component and material requirements, Viveve will have excess inventory, which would increase Viveve’s expenses. If Viveve underestimates its component and material requirements, it may have inadequate inventory, which could interrupt, delay or prevent delivery of the Viveve System to Viveve’s customers. Any of these occurrences would negatively affect Viveve’s financial performance and the level of satisfaction that Viveve’s customers have with its business.

Even though Viveve requires training for users of the Viveve System and does not sell the Viveve System to non-physicians, there exists a potential for misuse, which could harm Viveve’s reputation and its business.

Internationally, Viveve’s independent distributors sell in many jurisdictions that do not require specific qualifications or training for purchasers or operators of the Viveve System. Viveve does not supervise the procedures performed with the Viveve System, nor can Viveve be assured that direct physician supervision of its equipment occurs according to Viveve’s recommendations. Viveve, and its distributors, require purchasers of the Viveve System to undergo an initial training session as a condition of purchase, but do not require ongoing training. In addition, Viveve prohibits the sale of the Viveve System to companies that rent the Viveve System to third parties, but it cannot prevent an otherwise qualified physician from contracting with a rental company in violation of their purchase agreement with Viveve.

In the U.S., Viveve intends to only sell the Viveve System to licensed physicians who have met certain training requirements. However, current Federal regulations will allow Viveve to sell the Viveve System to “licensed practitioners.” The definition of “licensed practitioners” varies from state to state. As a result, the Viveve System may be operated by licensed practitioners with varying levels of training, and in many states by non-physicians, including physician assistants, registered nurses and nurse practitioners. Thus, in some states, the definition of “licensed practitioner” may result in the legal use of the Viveve System by non-physicians.

The use of the Viveve System by non-physicians, as well as noncompliance with the operating guidelines set forth in Viveve’s training programs, may result in product misuse and adverse treatment outcomes, which could harm Viveve’s reputation and expose it to costly product liability litigation.

Product liability suits could be brought against Viveve due to defective design, labeling, material or workmanship, or misuse of the Viveve System, and could result in expensive and time-consuming litigation, payment of substantial damages and an increase in Viveve’s insurance rates.

If the Viveve System is defectively designed, manufactured or labeled, contains defective components or is misused, Viveve may become subject to substantial and costly litigation by Viveve’s customers or their patients. Misusing the Viveve System or failing to adhere to operating guidelines could cause serious adverse events. In addition, if Viveve’s operating guidelines are found to be inadequate, it may be subject to liability. Viveve may, in the future, be involved in litigation related to the use of the Viveve System. Product liability claims could divert management’s attention from Viveve’s core business, be expensive to defend and result in sizable damage awards against Viveve. Viveve may not have sufficient insurance coverage for all future claims. Viveve may not be able to obtain insurance in amounts or scope sufficient to provide Viveve with adequate coverage against all potential liabilities. Any product liability claims brought against Viveve, with or without merit, could increase Viveve’s product liability insurance rates or prevent it from securing continuing coverage, could harm Viveve’s reputation in the industry and reduce product sales. Product liability claims in excess of Viveve’s insurance coverage would be paid out of cash reserves, harming Viveve’s financial condition and reducing its operating results.

After-market modifications to Viveve’s treatment tips by third parties and the development of counterfeit products could reduce Viveve’s sales, expose it to product liability litigation and dilute its brand quality.

Third parties may introduce adulterated after-market modifications to Viveve’s treatment tips, which enable re-use of Viveve’s treatment tips in multiple procedures. Because Viveve’s treatment tips are designed to withstand a finite number of pulses, modifications intended to increase the number of pulses could result in patient injuries caused by the use of worn-out or damaged treatment tips. In addition, third parties may seek to develop counterfeit products that are compatible with the Viveve System and available to practitioners at lower prices than Viveve’s. If security features incorporated into the design of the Viveve System are unable to prevent after-market modifications to Viveve’s treatment tips or the introduction of counterfeit products, Viveve could be subject to reduced sales, product liability lawsuits resulting from the use of damaged or defective goods and damage to Viveve’s reputation.

Viveve depends on skilled and experienced personnel to operate its business effectively. If Viveve is unable to recruit, hire and retain these employees, Viveve’s ability to manage and expand its business will be harmed, which would impair its future revenue and profitability.

Viveve’s success largely depends on the skills, experience and efforts of its officers and other key employees. While Viveve has employment contracts with many of its officers and other key employees, Viveve’s officers and other key employees may terminate their employment at any time. The loss of any senior management team members could weaken Viveve’s management expertise and harm its business.

Viveve’s ability to retain its skilled labor force and its success in attracting and hiring new skilled employees will be a critical factor in determining whether Viveve will be successful in the future. Viveve may not be able to meet its future hiring needs or retain existing personnel. Viveve will face particularly significant challenges and risks in hiring, training, managing and retaining engineering and sales and marketing employees, as well as independent distributors, most of whom are geographically dispersed and must be trained in the use and benefits of the Viveve System. Failure to attract and retain personnel, particularly technical and sales and marketing personnel, would materially harm Viveve’s ability to compete effectively and grow its business.

Any acquisitions that Viveve makes could disrupt its business and harm its financial condition.

Viveve expects to evaluate potential strategic acquisitions of complementary businesses, products or technologies. Viveve may also consider joint ventures and other collaborative projects. Viveve may not be able to identify appropriate acquisition candidates or strategic partners, or successfully negotiate, finance or integrate acquisitions of any businesses, products or technologies. Furthermore, the integration of any acquisition and management of any collaborative project may divert management’s time and resources from Viveve’s core business and disrupt its operations. Viveve does not have any experience with acquiring companies or products. If Viveve decides to expand its product offerings beyond radiofrequency technologies, Viveve may spend time and money on projects that do not increase its revenue.

Viveve Risks Related to Regulatory Matters

Viveve may be unable to obtain or maintain international regulatory qualifications or approvals for its current or future products and indications, which could harm its business.

Sales of the Viveve System internationally are subject to foreign regulatory requirements that vary widely from country to country. In addition, the FDA regulates exports of medical devices from the U.S. Complying with international regulatory requirements can be an expensive and time-consuming process, and approval is not certain. The time required to obtain clearances or approvals, if required by other countries, may be longer than that required for FDA clearance or approvals, and requirements for such clearances or approvals may significantly differ from FDA requirements. Viveve may rely upon third-party distributors to obtain all regulatory clearances and approvals required in other countries, and these distributors may be unable to obtain or maintain such clearances or approvals. Viveve’s distributors may also incur significant costs in attempting to obtain and in maintaining foreign regulatory approvals or qualifications, which could increase the difficulty of attracting and retaining qualified distributors. If Viveve’s distributors experience delays in receiving necessary qualifications, clearances or approvals to market its products outside the U.S., or if they fail to receive those qualifications, clearances or approvals, Viveve may be unable to market its products or enhancements in international markets effectively, or at all.

If Viveve fails to maintain regulatory approvals and clearances, or is unable to obtain, or experience significant delays in obtaining, FDA clearances or approvals for the Viveve System or Viveve’s future products or product enhancements, its ability to commercially distribute and market these products could suffer.

The Viveve System and Viveve’s future products are subject to rigorous regulation by the FDA and numerous other federal, state and foreign governmental authorities. The process of obtaining regulatory clearances or approvals to market a medical device can be costly and time consuming, and Viveve may not be able to obtain these clearances or approvals on a timely basis, if at all. In particular, the FDA permits commercial distribution of a new medical device only after the device has received clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act, approval of a de novo reclassification petition, or is the subject of an approved premarket approval application, or PMA unless the device is specifically exempt from those requirements. The FDA will clear marketing of a lower risk medical device through the 510(k) process if the manufacturer demonstrates that the new product is substantially equivalent to other 510(k)-cleared products. High risk devices deemed to pose the greatest risk, such as life-sustaining, life-supporting, or implantable devices, or devices not deemed substantially equivalent to a previously cleared device, require the approval of a PMA. The PMA process is more costly, lengthy and uncertain than the 510(k) clearance process. A PMA application must be supported by extensive data, including, but not limited to, technical, preclinical, clinical trial, manufacturing and labeling data, to demonstrate to the FDA’s satisfaction the safety and efficacy of the device for its intended use.

If there is no known predicate for a device, a company can request a de novo reclassification of the product. De novo generally applies where there is no predicate device and the FDA believes the device is sufficiently safe so that no PMA should be required. FDA’s de novo process has just been streamlined to allow a company to request that a new product classification be developed based on information provided by the requesting company. Viveve intends to utilize the Direct De Novo process for the Viveve System. However, Viveve cannot predict when or if such approval will be obtained, or whether FDA will create a new product code. Failure to approve the de novo petition, or establishment of a new product code could require Viveve to seek a PMA for the Viveve System. Delays in receipt or failure to receive clearances or approvals could reduce Viveve’s sales, profitability and future growth prospects.

Foreign governmental authorities that regulate the manufacture and sale of medical devices have become increasingly stringent and, to the extent Viveve markets and sells its products internationally, it may be subject to rigorous international regulation in the future. In these circumstances, Viveve would rely significantly on its foreign independent distributors to comply with the varying regulations, and any failures on their part could result in restrictions on the sale of Viveve’s products in foreign countries.

If Viveve modifies an FDA-cleared device, Viveve may need to seek and obtain new clearances, which, if not granted, would prevent Viveve from selling its modified product or require Viveve to redesign its product.

Any modifications to an FDA-cleared device that could significantly affect its safety or effectiveness or that would constitute a major change in its intended use would require a new 510(k) clearance or possibly a premarket approval. Viveve may not be able to obtain additional 510(k) clearances or premarket approvals for new products or for modifications to, or additional indications for, Viveve’s existing product in a timely fashion, or at all. Delays in obtaining future clearances would adversely affect Viveve’s ability to introduce new or enhanced products in a timely manner, which in turn could harm Viveve’s revenue and potential future profitability. Viveve has made modifications to its device in the past and may make additional modifications in the future that Viveve believes do not or will not require additional clearances or approvals. If the FDA disagrees, and requires new clearances or approvals for the modifications, Viveve may be required to recall and to stop marketing the modified device, which could harm its operating results and require Viveve to redesign its product.

If Viveve modifies a PMA approved device, Viveve may need to seek and obtain approval of a PMA Supplement, which, if not granted, would prevent Viveve from selling its modified product or require it to redesign its product.

New PMAs or PMA Supplements are required for modifications that affect the safety or effectiveness of the device, including, for example, certain types of modifications to the device’s indication for use, manufacturing process, labeling and design. PMA Supplements often require submission of the same type of information as a PMA, except that the supplement is limited to information needed to support any changes from the device covered by the original PMA and may not require as extensive clinical data or the convening of an advisory panel. There is no guarantee that the FDA will grant PMA approval of Viveve’s future products, if one is required, and failure to obtain necessary approvals for Viveve’s future products would adversely affect its ability to grow its business. Delays in receipt or failure to receive approvals could reduce Viveve’s sales, profitability and future growth prospects.

Clinical trials necessary to support a 510(k) or a PMA application will be expensive and will require the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit. Delays or failures in Viveve’s clinical trials will prevent Viveve from commercializing any modified or new products and will adversely affect Viveve’s business, operating results and prospects.

The FDA has asked Viveve to conduct an investigational device exemption, or IDE, study to support a future product submission for the Viveve System. Initiating and completing clinical trials necessary to support a 510(k) or a PMA application for the Viveve System, as well as other possible future product candidates, will be time consuming and expensive and the outcome uncertain. Moreover, the results of early clinical trials are not necessarily predictive of future results, and any product Viveve advances into clinical trials may not have favorable results in later clinical trials.

Conducting successful clinical studies will require the enrollment of patients, and suitable patients may be difficult to identify and recruit. Patient enrollment in clinical trials and completion of patient participation and follow-up depends on many factors, including the size of the patient population, the nature of the trial protocol, the attractiveness of, or the discomforts and risks associated with, the treatments received by enrolled subjects, the availability of appropriate clinical trial investigators, support staff, and proximity of patients to clinical sites and ability to comply with the eligibility and exclusion criteria for participation in the clinical trial and patient compliance. For example, patients may be discouraged from enrolling in Viveve’s clinical trials if the trial protocol requires them to undergo extensive post-treatment procedures or follow-up to assess the safety and effectiveness of Viveve’s products or if they determine that the treatments received under the trial protocols are not attractive or involve unacceptable risks or discomforts.

Development of sufficient and appropriate clinical protocols to demonstrate safety and efficacy are required and Viveve may not adequately develop such protocols to support clearance and approval. Further, the FDA may require Viveve to submit data on a greater number of patients than Viveve originally anticipated and/or for a longer follow-up period or change the data collection requirements or data analysis applicable to Viveve’s clinical trials. Delays in patient enrollment or failure of patients to continue to participate in a clinical trial may cause an increase in costs and delays in the approval and attempted commercialization of Viveve’s products or result in the failure of the clinical trial. In addition, despite considerable time and expense invested in Viveve’s clinical trials, the FDA may not consider Viveve’s data adequate to demonstrate safety and efficacy. Such increased costs and delays or failures could adversely affect Viveve’s business, operating results and prospects.

If the third parties on which Viveve relies to conduct its clinical trials and to assist Viveve with pre-clinical development do not perform as contractually required or expected, Viveve may not be able to obtain regulatory clearance or approval for or commercialize its products.

Viveve does not have the ability to independently conduct its pre-clinical and clinical trials for its products and Viveve must rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories to conduct such trials. If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if these third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to Viveve’s clinical protocols or regulatory requirements or for other reasons, Viveve’s pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and Viveve may not be able to obtain regulatory approval for, or successfully commercialize, Viveve’s products on a timely basis, if at all, and Viveve’s business, operating results and prospects may be adversely affected. Furthermore, Viveve’s third-party clinical trial investigators may be delayed in conducting Viveve’s clinical trials for reasons outside of their control.

The results of Viveve’s clinical trials may not support its proposed product claims or may result in the discovery of adverse side effects.

Even if Viveve’s clinical trials are completed as planned, it cannot be certain that the results of the clinical trials will support Viveve’s proposed claims for the Viveve System or that the FDA or foreign authorities will agree with Viveve’s conclusions regarding them. Success in pre-clinical studies and early clinical trials does not ensure that later clinical trials will be successful, and Viveve cannot be sure that the later trials will replicate the results of prior trials and pre-clinical studies. The clinical trial process may fail to demonstrate that Viveve’s product candidates are safe and effective for the proposed indicated uses, which could cause Viveve to abandon a product candidate and may delay development of others. Any delay or termination of Viveve’s clinical trials will delay the filing of Viveve’s product submissions and, ultimately, Viveve’s ability to commercialize its product candidates and generate revenues.

Even if Viveve’s products are approved by regulatory authorities, if Viveve or its suppliers fail to comply with ongoing FDA or other foreign regulatory authority requirements, or if Viveve experiences unanticipated problems with Viveve’s products, these products could be subject to restrictions or withdrawal from the market.

Any product for which Viveve obtains clearance or approval, and the manufacturing processes, reporting requirements, post-approval clinical data and promotional activities for such product, will be subject to continued regulatory review, oversight and periodic inspections by the FDA and other domestic and foreign regulatory bodies, such as the Food and Drug Branch of the California Department of Health Services, or CDHS. In particular, Viveve and its suppliers are required to comply with the FDA’s Quality System Regulations, or QSR, and International Standards Organization, or ISO, regulations for the manufacture of its products and other regulations which cover the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of any product for which Viveve obtains clearance or approval. Regulatory bodies, such as the FDA, enforce the QSR and other regulations through periodic inspections. In the past, Viveve’s facility has been inspected by the FDA and CDHS, and observations were noted. The FDA and CDHS have accepted Viveve’s responses to these observations, and Viveve believes that it is in substantial compliance with the QSR. Any future failure by Viveve or one of its suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory bodies, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions:

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untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;

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unanticipated expenditures to address or defend such actions

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customer notifications for repair, replacement, refunds;

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recall, detention or seizure of Viveve’s products;

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operating restrictions or partial suspension or total shutdown of production;

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refusing or delaying Viveve’s requests for 510(k) clearance or premarket approval of new products or modified products;

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operating restrictions;

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withdrawing 510(k) clearances on PMA approvals that have already been granted;

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refusal to grant export approval for Viveve’s products; or

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criminal prosecution.

If any of these actions were to occur it would harm Viveve’s reputation and cause Viveve’s product sales and profitability to suffer and may prevent Viveve from generating revenue. Furthermore, Viveve’s third party manufacturers may not currently be or may not continue to be in compliance with all applicable regulatory requirements which could result in Viveve’s failure to produce its products on a timely basis and in the required quantities, if at all.

Even if regulatory clearance or approval of a product is granted for the Viveve System or future products, such clearance or approval may be subject to limitations on the intended uses for which the product may be marketed and reduce Viveve’s potential to successfully commercialize the product and generate revenue from the product. If the FDA determines that Viveve’s promotional materials, labeling, training or other marketing or educational activities constitute promotion of an unapproved use, it could request that Viveve cease or modify its training or promotional materials or subject Viveve to regulatory enforcement actions. It is also possible that other federal, state or foreign enforcement authorities might take action if they consider Viveve’s training or other promotional materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.

In addition, Viveve may be required to conduct costly post-market testing and surveillance to monitor the safety or effectiveness of its products, and Viveve must comply with medical device reporting requirements, including the reporting of adverse events and malfunctions related to its products. Later discovery of previously unknown problems with Viveve’s products, including unanticipated adverse events or adverse events of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR, may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device Viveve manufactures or distributes, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect Viveve’s business, operating results and prospects.

The Viveve System may also be subject to state regulations which are, in many instances, in flux. Changes in state regulations may impede sales. For example, federal regulations may allow the Viveve System to be sold to, or on the order of, “licensed practitioners,” as determined on a state-by-state basis. As a result, in some states, non-physicians may legally purchase and operate the Viveve System. However, a state could change its regulations at any time, disallowing sales to particular types of end users. Viveve cannot predict the impact or effect of future legislation or regulations at the federal or state levels.

If Viveve or its third-party manufacturers fail to comply with the FDA’s Quality System Regulation, Viveve’s business would suffer.

Viveve’s and its third-party manufacturers are required to demonstrate and maintain compliance with the FDA’s Quality System Regulation, or QSR. The QSR is a complex regulatory scheme that covers the methods and documentation of the design, testing, control, manufacturing, labeling, quality assurance, packaging, storage and shipping of Viveve’s product. The FDA enforces the QSR through periodic unannounced inspections. Viveve anticipates that in the future it will be subject to such inspections. Viveve’s failure, or the failure of its third-party manufacturers, to take satisfactory corrective action in response to an adverse QSR inspection could result in enforcement actions, including a public warning letter, a shutdown of Viveve’s manufacturing operations, a recall of Viveve’s product, civil or criminal penalties or other sanctions, which would cause Viveve’s sales and business to suffer.

If Viveve’s products cause or contribute to a death or a serious injury, or malfunction in certain ways, Viveve will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.

Under the FDA medical device reporting regulations, medical device manufacturers are required to report to the FDA information that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to death or serious injury if the malfunction of the device or one of Viveve’s similar devices were to recur. If Viveve fails to report these events to the FDA within the required timeframes, or at all, the FDA could take enforcement action against Viveve. Any such adverse event involving the Viveve System or future products could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending itself in a lawsuit, will require the dedication of Viveve’s time and capital, distract management from operating Viveve’s business, and may harm Viveve’s reputation and financial results.

The Viveve System may in the future be subject to product recalls that could harm Viveve’s reputation, business and financial results.

The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture. In the case of the FDA, the authority to require a recall must be based on an FDA finding that there is a reasonable probability that the device would cause serious injury or death. In addition, foreign governmental bodies have the authority to require the recall of Viveve’s products in the event of material deficiencies or defects in design or manufacture. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary recall by Viveve or one of its distributors could occur as a result of component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of Viveve’s products would divert managerial and financial resources and have an adverse effect on Viveve’s financial condition and results of operations. The FDA requires that certain classifications of recalls be reported to the FDA within 10 working days after the recall is initiated. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA. Viveve may initiate voluntary recalls involving its products in the future that it determines do not require notification to the FDA. If the FDA disagrees with Viveve’s determinations, they could require Viveve to report those actions as recalls. A future recall announcement could harm Viveve’s reputation with customers and negatively affect Viveve’s sales. In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted.

Federal and state regulatory reforms may adversely affect Viveve’s ability to sell its products profitably.

From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the clearance or approval, manufacture and marketing of a medical device. In addition, FDA regulations and guidance are often revised or reinterpreted by the agency in ways that may significantly affect Viveve’s business and its products. It is impossible to predict whether legislative changes will be enacted or FDA regulations, guidance or interpretations changed, and what the impact of such changes, if any, may be.

For example, in August 2010, the FDA issued its preliminary recommendations on reform of the 510(k) premarket notification process for medical devices. On January 19, 2011, the FDA announced its “Plan of Action” for implementing these recommendations. The Plan of Action included 25 action items, including revising existing guidance or developing guidance to clarify various aspects of the 510(k) process and to streamline the review process for innovative, lower risk products (the “de novo” process); improving training for the Center for Devices and Radiological Health (“CDRH”) staff and industry; increasing reliance on external experts; and addressing and improving internal processes. The FDA has already begun implementing many of these reforms, and may implement other reforms in the future, which could have the effect of making it more difficult and expensive for Viveve to obtain 510(k) clearance.

In addition, a state could change its regulations at any time, disallowing sales to particular types of end users. Viveve cannot predict the impact or effect of future legislation or regulations at the federal or state levels.

Failure to comply with the U.S. Foreign Corrupt Practices Act and similar laws associated with Viveve’s activities outside the U.S. could subject it to penalties and other adverse consequences.

A significant portion of Viveve’s revenues is and will be from jurisdictions outside of the U.S. As a result, Viveve is subject to the U.S. Foreign Corrupt Practices Act, or the FCPA, which generally prohibits U.S. companies and their intermediaries from making corrupt payments to foreign officials for the purpose of directing, obtaining or keeping business, and requires companies to maintain reasonable books and records and a system of internal accounting controls. The FCPA applies to companies and individuals alike, including company directors, officers, employees and agents. Under the FCPA, U.S. companies may be held liable for the corrupt actions taken by employees, strategic or local partners or other representatives. In addition, the government may seek to rely on a theory of successor liability and hold Viveve responsible for FCPA violations committed by companies or associated with assets which Viveve acquires.

In many foreign countries where Viveve operates, particularly in countries with developing economies, it may be a local custom for businesses to engage in practices that are prohibited by the FCPA or other similar laws and regulations. In contrast, Viveve has implemented a company policy requiring its employees and consultants to comply with the FCPA and similar laws. Although Viveve has not conducted formal FCPA compliance training, Viveve is in the process of devising a training schedule for certain of its employees, agents and partners. Nevertheless, there can be no assurance that Viveve’s employees, partners and agents, as well as those companies to which Viveve outsources certain of its business operations, will not take actions in violation of the FCPA or Viveve’s policies for which Viveve may be ultimately held responsible. As a result of its anticipated growth, Viveve’s development of infrastructure designed to identify FCPA matters and monitor compliance is at an early stage. If Viveve or its intermediaries fail to comply with the requirements of the FCPA or similar legislation, governmental authorities in the U.S. and elsewhere could seek to impose civil and/or criminal fines and penalties which could have a material adverse effect on Viveve’s business, operating results and financial conditions. Viveve may also face collateral consequences such as debarment and the loss of its export privileges.

Viveve Risks Related to Its Intellectual Property

Intellectual property rights may not provide adequate protection for the Viveve System, which may permit third parties to compete against Viveve more effectively.

Viveve relies on patent, copyright, trade secret and trademark laws and confidentiality agreements to protect its technology and the Viveve System. Viveve has an exclusive license to 8 issued U.S. patents primarily covering the Viveve System and methods of use, the earliest of which expire in 2015; 3 pending U.S. patent applications, 12 issued foreign patents and 17 pending foreign patent applications, some of which foreign applications preserve an opportunity to pursue patent rights in multiple countries. Some of Viveve’s system components are not, and in the future may not be, protected by patents. Additionally, Viveve’s patent applications may not issue as patents or, if issued, may not issue in a form that will be advantageous to Viveve. Any patents Viveve obtains may be challenged, invalidated or legally circumvented by third parties. Consequently, competitors could market products and use manufacturing processes that are substantially similar to, or superior to, Viveve’s. Viveve may not be able to prevent the unauthorized disclosure or use of its technical knowledge or other trade secrets by consultants, vendors, former employees or current employees, despite the existence generally of confidentiality agreements and other contractual restrictions. Monitoring unauthorized uses and disclosures of Viveve’s intellectual property is difficult, and Viveve does not know whether the steps it has taken to protect its intellectual property will be effective. Moreover, Viveve does not have patent rights in all foreign countries in which a market may exist, and where Viveve has applied for foreign patent rights, the laws of many foreign countries will not protect Viveve’s intellectual property rights to the same extent as the laws of the U.S.

In addition, competitors could purchase the Viveve System and attempt to replicate some or all of the competitive advantages Viveve derives from Viveve’s development efforts, willfully infringe Viveve’s intellectual property rights, design around Viveve’s protected technology or develop their own competitive technologies that fall outside of Viveve’s intellectual property rights. If Viveve’s intellectual property is not adequately protected so as to defend Viveve’s market against competitors’ products and methods, Viveve’s competitive position could be adversely affected, as could Viveve’s business.

Viveve may be involved in future costly intellectual property litigation, which could impact its future business and financial performance.

Viveve’s industry has been characterized by frequent intellectual property litigation. Viveve’s competitors or other patent holders may assert that the Viveve System and the methods Viveve employs are covered by their patents. If the Viveve System or methods are found to infringe, Viveve could be prevented from marketing the Viveve System. In addition, Viveve does not know whether its competitors or potential competitors have applied for, or will apply for or obtain, patents that will prevent, limit or interfere with Viveve’s ability to make, use, sell, import or export the Viveve System. Viveve may also initiate litigation against third parties to protect its own intellectual property that may be expensive, protracted or unsuccessful. In the future there may be companies that market products for competing purposes in direct challenge to Viveve’s intellectual property position, and Viveve may be required to initiate litigation in order to stop them. If Viveve initiates litigation to protect its rights, it runs the risk of having its patents invalidated, which would undermine Viveve’s competitive position.

Litigation related to infringement and other intellectual property claims, with or without merit, is unpredictable, can be expensive and time-consuming and could divert management’s attention from Viveve’s core business. If Viveve loses this kind of litigation, a court could require Viveve to pay substantial damages, and prohibit it from using technologies essential to the Viveve System, any of which would have a material adverse effect on Viveve’s business, results of operations and financial condition. Viveve does not know whether necessary licenses would be available to it on satisfactory terms, or whether it could redesign the Viveve System or processes to avoid infringement.

Competing products may also appear in other countries in which Viveve’s patent coverage might not exist or be as strong. If Viveve loses a foreign patent lawsuit, it could be prevented from marketing the Viveve System in one or more countries.

In addition, Viveve may hereafter become involved in litigation to protect its trademark rights associated with its company name or the names used with the Viveve System. Names used with the Viveve System and procedures may be claimed to infringe names held by others or to be ineligible for proprietary protection. If Viveve has to change the name of its company or Viveve System, Viveve may experience a loss in goodwill associated with its brand name, customer confusion and a loss of sales.

Risks Related to PLC and the Proposed Transaction

Our shareholders will experience immediate dilution as a consequence of the issuance of common stock as consideration in the Proposed Transaction and will be further diluted as a result of the Offering. Having a minority share position may reduce the influence that our current shareholders have on the management of the Company.

We will issue approximately 4,655,023 shares of our capital stock at the closing of the Proposed Transaction to the Viveve accredited equity holders and their designees, after giving effect to the Share Consolidation. As a result, our current shareholders will hold 2,762,551 shares after giving effect to the Share Consolidation or (without giving effect to the Offering described below) approximately 37.2% of the issued and outstanding PLC Shares on a fully diluted basis. Consequently, the ability of our current shareholders following the Proposed Transaction to influence management of the Company through the election of directors will be substantially reduced.

As contemplated by the Viveve Merger Agreement, immediately following the closing of the Proposed Transaction, PLC will complete the Offering for aggregate gross proceeds of $4,500,000 in cash payments and the conversion of up to approximately $1,500,000 outstanding amount of principal and interest of certain Viveve bridge notes. After the closing of the Offering and after giving effect to the Share Consolidation, it is anticipated that the current PLC shareholders will own 14.7%, the former equity holders of Viveve will own 24.9% and the investors participating in the Offering will own 60.4% of the 18,738,339 issued and outstanding PLC Shares after the Offering. This Offering will further dilute our shareholders’ ownership in the Company and further reduce their ability to influence management of the Company through election of directors.

Because we are incorporated in Canada, you may not be able to enforce judgments against us and our Canadian directors.

Under Canadian law, you may not be able to enforce a judgment issued by courts in the U.S. against us or our Canadian directors. The status of the law in Canada is unclear as to whether a U.S. citizen can enforce a judgment from a U.S. court in Canada for violations of U.S. securities laws. A separate suit may need to be brought directly in Canada.

Our stock price has historically fluctuated and may continue to fluctuate significantly in the future which may result in losses for our investors.

Our stock price has been and may continue to be volatile. Some of the factors that can affect our stock price are:

•

the announcement of new products, services or technological innovations by us or our competitors;

•

actual or anticipated quarterly increases or decreases in revenue, gross margin or earnings, and changes in our business, operations or prospects;

•

announcements relating to strategic relationships or mergers;

•

conditions or trends in the medical device industry;

•

changes in the economic performance or market valuations of other medical device companies; and

•

general market conditions or domestic or international macroeconomic and geopolitical factors unrelated to our performance.

The market price of our stock may fall if shareholders sell their stock.

Certain current shareholders hold large amounts of our stock, which they could seek to sell in the public market from time to time. Sales of a substantial number of shares of our common stock within a short period of time would cause our stock price to fall. In addition, the sale of these shares could impair our ability to raise capital through the sale of additional stock.

We may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002 that will be applicable to us after the Proposed Transaction.

Viveve is not currently subject to Section 404 of the Sarbanes-Oxley Act of 2002. However, following the Proposed Transaction, when the officers and employees of Viveve will become the officers and employees of PLC and PLC’s current officers and employees will terminate their relationship with PLC, we will be subject to Section 404. The standards required for a public company under Section 404 of the Sarbanes-Oxley Act of 2002 are significantly more stringent than those required of Viveve, as a privately-held company. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable to the Company after the Proposed Transaction. If we are not able to implement the additional requirements of Section 404 in a timely manner or with adequate compliance, we may not be able to assess whether our internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our common stock.

Subsequent to the consummation of the Proposed Transaction, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

Although we have conducted due diligence on Viveve, we cannot assure you that this diligence revealed all material issues that may be present in Viveve’s businesses, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of our and Viveve’s control will not later arise. As a result, we may be forced to later write-down or write-off assets, restructure Viveve’s operations, or incur impairment or other charges that could result in losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about the Company or its securities. In addition, charges of this nature may cause us to be unable to obtain future financing on favorable terms or at all.

Concentration of ownership after the Proposed Transaction may have the effect of delaying or preventing a change in control.

If the Proposed Transaction and Offering are consummated, 5AM Ventures II (in conjunction with 5AM Co-investors II), and GBS Venture Partners Limited (“GBS Venture”), equity and convertible debenture holders of Viveve, will own 58.3% of the outstanding Common Stock of the Company. As a result, these shareholders, if acting together, have the ability to determine the outcome of corporate actions of the Company requiring shareholder approval. This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our common stock.

There is, at present, only a limited market for our common stock and we cannot ensure investors that an active market for our common stock will ever develop or be sustained.

Our shares of common stock are thinly traded. Due to the illiquidity, the market price may not accurately reflect our relative value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. Because our common stock is so thinly traded, a large block of shares traded can lead to a dramatic fluctuation in the share price and investors may not be able to liquidate their investment in us at all or at a price that reflects the value of the business. In addition, our common stock currently trades on the OTCQB tier of the OTC Markets Group Inc., which generally lacks the liquidity, research coverage and institutional investor following of a national securities exchange like the NYSE MKT, the New York Stock Exchange or the Nasdaq Stock Market. While we intend to list our common stock on a national securities exchange once we satisfy the initial listing standards for such an exchange, we currently do not, and may not ever, satisfy such initial listing standards.

If the Proposed Transaction’s benefits do not meet the expectations of investors or securities analysts, the market price of our securities may decline.

If the benefits of the Proposed Transaction do not meet the expectations of investors or securities analysts, the market price of the Company’s securities prior to the closing of the Proposed Transaction may decline. The market values of our securities at the time of the Proposed Transaction may vary significantly from their prices on the date the Viveve Merger Agreement was executed, the date of this proxy statement, or the date on which our shareholders vote on the Proposed Transaction. Because the exchange ratio in the Viveve Merger Agreement will not be adjusted to reflect any changes in the market price of our common stock, the market value of the Company common stock issued in the Proposed Transaction may be higher or lower than the values of these shares on earlier dates.

In addition, following the Proposed Transaction, fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Prior to the Proposed Transaction, there has not been a public market for Viveve’s stock, and trading in the shares of the Company’s common stock has not been active. Accordingly, the valuation ascribed to Viveve and our common stock in the Proposed Transaction may not be indicative of the price that will prevail in the trading market following the Proposed Transaction. If an active market for our securities develops and continues, the trading price of our securities following the Proposed Transaction could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

Factors affecting the trading price of the Company’s securities may include:

	•	actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
	•	changes in the market’s expectations about our operating results;
	•	success of competitors;
	•	our operating results failing to meet the expectation of securities analysts or investors in a particular period;
	•	changes in financial estimates and recommendations by securities analysts concerning the Company, the market for our products, the health services industry, or the healthcare and health insurance industries in general;
	•	operating and stock price performance of other companies that investors deem comparable to the Company;
	•	our ability to market new and enhanced products on a timely basis;
	•	changes in laws and regulations affecting our business;
	•	commencement of, or involvement in, litigation involving the Company;
	•	changes in the Company’s capital structure, such as future issuances of securities or the incurrence of additional debt;
	•	the volume of shares of our common stock available for public sale;
	•	any major change in our Board or management;
	•	sales of substantial amounts of common stock by our directors, executive officers or significant shareholders or the perception that such sales could occur; and
	•	general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to the Company could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

If, following the Proposed Transaction, securities or industry analysts do not publish or cease publishing research or reports about the Company, its business, or its market, or if they change their recommendations regarding our common stock adversely, the price and trading volume of our common stock could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors. Securities and industry analysts do not currently, and may never, publish research on the Company. If no securities or industry analysts commence coverage of the Company, our stock price and trading volume would likely be negatively impacted. If any of the analysts who may cover the Company change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock would likely decline. If any analyst who may cover the Company were to cease coverage of the Company or fail to regularly publish reports on it, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

We will be a holding company with no business operations of our own and will depend on cash flow from Viveve to meet our obligations.

Following the Proposed Transaction, we will be a holding company with no business operations of our own or material assets other than the stock of our subsidiaries. All of our operations will be conducted by our subsidiary, Viveve. As a holding company, we will require dividends and other payments from our subsidiaries to meet cash requirements. The terms of any agreements governing indebtedness that we may enter into may restrict our subsidiaries from paying dividends and otherwise transferring cash or other assets to us. If there is an insolvency, liquidation or other reorganization of any of our subsidiary, our shareholders likely will have no right to proceed against their assets. Creditors of our subsidiary will be entitled to payment in full from the sale or other disposal of the assets of our subsidiary before the Company, as an equity holder, would be entitled to receive any distribution from that sale or disposal. If Viveve is unable to pay dividends or make other payments to the Company when needed, we will be unable to satisfy our obligations.

Directors of the Company have potential conflicts of interest in recommending that securityholders vote in favor of approval of the Merger Proposal and Spin-Off Proposal and approval of the other proposals described in this proxy statement.

When considering our Board of directors’ recommendation that the our shareholders vote in favor of the approval of the Merger Proposal and Spin-Off Proposal, our shareholders should be aware that directors and executive officers of the Company have interests in the Proposed Transaction that may be different from, or in addition to, the interests of our shareholders. These interests include:

	•	RenalGuard Solutions, Inc., upon the closing of the RenalGuard Spin-Off, intends to hire or engage as consultants certain current officers of PLC, including Mark Tauscher, PLC’s current president and chief executive officer, and Gregory Mann, PLC’s current chief financial officer;

	•	if Mark Tauscher, PLC’s current president and chief executive officer, and Gregory Mann, PLC’s current chief financial officer, are not engaged by RenalGuard Solutions, Inc., Mr. Tauscher and Mr. Mann may be entitled to certain severance payments from RenalGuard Solutions, Inc.;

	•	as current shareholders of PLC, certain of PLC’s directors and officers will retain an ownership stake in the Company after the closing of the Viveve Merger, at which time the Viveve business will be the Company’s sole business; and

	•	the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Proposed Transaction.

These interests may influence our directors in making their recommendation that you vote in favor of the Merger Proposal and Spin-Off Proposal, and the transactions contemplated thereby.

The exercise of discretion by our directors and officers in agreeing to changes to the terms of the Viveve Merger Agreement and the RenalGuard Reorganization Agreement, or waivers of closing conditions in the Viveve Merger Agreement may result in a conflict of interest when determining whether such changes to the terms of the Viveve Merger Agreement or the RenalGuard Reorganization Agreement or waivers of conditions are appropriate and in PLC’s securityholders’ best interest.

In the period leading up to the closing of the Proposed Transaction, events may occur that, pursuant to the Viveve Merger Agreement, would require the Company to agree to amend the Viveve Merger Agreement, to consent to certain actions taken by Viveve or to waive rights that we are or may be entitled to under such agreement. Such events could arise because of changes in the course of Viveve’s business, a request by Viveve to undertake actions that would otherwise be prohibited by the terms of the Viveve Merger Agreement or the occurrence of other events that would have a material adverse effect on Viveve’s business and would entitle the Company to terminate the Viveve Merger Agreement. In any of such circumstances, it would be in the discretion of the Company, acting through its Board of directors, to grant its consent or waive its rights. The existence of the financial and personal interests of the directors described elsewhere in this proxy statement may result in a conflict of interest on the part of one or more of the directors between what he may believe is best for the Company and our securityholders and what he may believe is best for himself or his affiliates in determining whether or not to take the requested action. As of the date of this proxy statement, we do not believe there will be any changes or waivers that our directors and officers would be likely to make after shareholder approval of the Proposed Transaction has been obtained. While certain changes could be made without further shareholder approval, if there is a change to the terms of the transaction that would have a material impact on the shareholders, we will be required to circulate a new or amended proxy statement or supplement thereto and resolicit the vote of our shareholders with respect to the Merger Proposal and Spin-Off Proposal.

The PLC Board of Directors did not obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Proposed Transaction.

Our Board of Directors did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Viveve Merger and the RenalGuard Spin-Off. In analyzing the Proposed Transaction, our Board and management conducted due diligence on Viveve, researched the industry in which Viveve operates, and developed a long-range financial model and concluded that the Proposed Transaction was in the best interest of our shareholders. The lack of a third-party valuation or fairness opinion may lead an increased number of our shareholders to vote against the Merger Proposal and the Spin-Off Proposal, which could potentially impact our ability to consummate the Proposed Transaction.

The Company and Viveve will be subject to business uncertainties and contractual restrictions while the Proposed Transaction is pending.

Uncertainty about the effect of the Proposed Transaction on employees and customers may have an adverse effect on the Company and Viveve. These uncertainties may impair our or Viveve’s ability to retain and motivate key personnel and could cause customers and others that deal with any of us or them to defer entering into contracts or making other decisions or seek to change existing business relationships. If key employees depart because of uncertainty about their future roles and the potential complexities of the Proposed Transaction, our or Viveve’s business could be harmed.

We will incur significant transaction and transition costs in connection with the Proposed Transaction.

We expect to incur significant, non-recurring costs in connection with consummating the Proposed Transaction and integrating the operations of Viveve and operating as a public company. We may incur additional costs to maintain employee morale and to retain key employees. We will also incur significant fees and expenses relating to financing arrangements and legal, accounting, financial advisory and other transaction fees and costs associated with the Proposed Transaction. Some of these costs are payable regardless of whether the Proposed Transaction is completed.

The unaudited pro forma financial information included in this document may not be indicative of what our actual financial position or results of operations would have been.

The unaudited pro forma financial information in this proxy statement is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the Proposed Transaction been completed on the dates indicated. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 113 for more information.

2014 ANNUAL AND SPECIAL MEETING OF PLC SHAREHOLDERS

General

We are furnishing this proxy statement to our shareholders as part of the solicitation of proxies by our Board of Directors for use at the annual meeting of shareholders to be held on September 18, 2014, and at any adjournment or postponement thereof. This proxy statement is first being furnished to our shareholders on or about August 11, 2014. This proxy statement provides you with information you need to know to be able to vote or instruct your vote to be cast at the annual meeting of shareholders, as applicable.

A copy of our Quarter Report on Form 10-Q for the three months ended March 31, 2014, our Annual Report on Form 10-K for the year ended December 31, 2013 and the financial statements for the fiscal year ended December 31, 2013 contained therein and Amendment No. 1 to our Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission, or SEC, will be placed before the annual meeting and will be mailed to each shareholder along with this proxy statement. Shareholders can receive additional copies of the proxy statement or Annual Report upon written or oral request to: PLC Systems Inc., Attention: Gregory Mann, 459 Fortune Boulevard, Milford, MA 01757, telephone: (508) 541-8800.

You should rely only on the information contained in this proxy statement in deciding how to vote. No one has been authorized to provide you with information that is different from that contained in this proxy statement. This proxy statement is dated August 11, 2014. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date.

This proxy statement does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or a solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

Date, Time and Place of Annual Meeting

The annual meeting of shareholders of PLC will be held at 10:30 a.m. Eastern time, on September 18, 2014, at Doubletree Hotel, 11 Beaver Street, Milford, Massachusetts 01757, or such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals.

Voting Power; Record Date

You will be entitled to vote or direct votes to be cast at the annual meeting of shareholders if you owned shares of our common stock at the close of business on August 11, 2014, which is the Record Date for the annual meeting of shareholders. You are entitled to one vote for each share of our common stock that you owned as of the close of business on the Record Date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. PLC warrants do not have voting rights. On the Record Date, there were 176,025,356 shares of PLC common stock outstanding. Notice of the Record Date, as required by the Business Corporations Act of the Yukon Territory, which we refer to as Yukon law, was published in the Whitehorse Star newspaper on July 31, 2014.

Proxies

All proxies will be voted in accordance with the instructions contained therein. Signed and dated proxies received by us without an indication of how the shareholder intends to vote on a proposal will be voted in favor of each of the Merger Proposal, the Spin-Off Proposal, the Name Change Proposal, the Board Declassification Proposal, the Director Election Proposal, the Incentive Plan Proposal, the Share Consolidation Proposal, the Auditor Proposal and the Adjournment Proposal. Any proxy may be revoked by a shareholder of record at any time before it is exercised by delivering to our Secretary a duly executed proxy bearing a later date than the proxy being revoked or by voting in person at the meeting. Attendance at the meeting will not itself be deemed to revoke a proxy unless the shareholder of record gives affirmative notice at the meeting that the shareholder intends to revoke the proxy and vote in person.

Each shareholder may appoint an individual other than the individuals named in the enclosed proxy card as his or her proxy to attend and act on the shareholder’s behalf at the meeting by crossing out the names of the proxies that are currently listed and inserting the name of the replacement proxy in the blank space provided on the enclosed proxy card or by executing a proxy card similar to the enclosed form.

Quorum and Required Vote for Shareholder Proposals

The approval of the Merger Proposal, the Spin-Off Proposal, the Name Change Proposal, the Board Declassification Proposal and the Share Consolidation Proposal requires the affirmative vote of holders of not less than two-thirds of the shares of common stock voting on the matter. Approval of the Incentive Plan Proposal, the Auditor Proposal, the Director Election Proposal and the Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of common stock voting on the matter. Accordingly, a PLC shareholder’s failure to submit a proxy or to vote in person at the annual meeting, an abstention from voting, or the failure of a PLC shareholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee will have no effect on the outcome of any vote on such proposals.

Recommendation to PLC Shareholders

Our Board of Directors believes that each of the Merger Proposal, the Spin-Off Proposal, the Name Change Proposal, the Board Declassification Proposal, the Director Election Proposal, the Incentive Plan Proposal, the Share Consolidation, the Auditor Proposal and the Adjournment Proposal to be presented at the annual meeting of shareholders is in the best interests of the Company and our shareholders and unanimously recommends that its shareholders vote “FOR” each of the proposals.

	•	RenalGuard Solutions, Inc., upon the closing of the RenalGuard Spin-Off, intends to hire or to engage as consultants certain current officers of PLC, including Mark Tauscher, PLC’s current president and chief executive officer, and Gregory Mann, PLC’s current chief financial officer;

	•	if Mark Tauscher, PLC’s current president and chief executive officer, and Gregory Mann, PLC’s current chief financial officer, are not engaged by RenalGuard Solutions, Inc., Mr. Tauscher and Mr. Mann may be entitled to certain severance payments from RenalGuard Solutions, Inc.;

	•	as current shareholders of PLC, certain of the PLC’s directors and officers will retain an ownership stake in the Company after the closing of the Viveve Merger, at which time the Viveve business will be the Company’s sole business; and

	•	the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Proposed Transaction.

Broker Non-Votes and Abstentions

Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe the proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. If you do not provide instructions with your proxy, your bank, broker, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank, broker, or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the purpose of determining the existence of a quorum, or for purposes of determining the number of votes cast at the annual meeting of shareholders. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

Submitting Your Proxy; Voting Your Shares

Each share of our common stock that you own in your name entitles you to one vote on each of the proposals. Your one or more proxy cards show the number of shares of our common stock that you own. There are several ways to ensure that your vote is counted:

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You can submit a proxy for your shares by one of the following methods: (1) call the toll-free number specified on the enclosed proxy card and follow the instructions when prompted, (2) access the internet website specified on the enclosed proxy card and follow the instructions provided to you, or (3) complete, sign, date and return the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the annual meeting. If you submit a proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares of our common stock will be voted, as recommended by our Board of Directors: “FOR” the Merger Proposal, “FOR” the Spin-Off Proposal, “FOR” the Name Change Proposal, “FOR” the Board Declassification Proposal, “FOR” the Director Election Proposal, “FOR” the Share Consolidation Proposal, “FOR” the Incentive Plan Proposal, “FOR” the Auditor Proposal and “FOR” the Adjournment Proposal.

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You can attend the annual meeting of shareholders and vote in person. You will be given a ballot when you arrive. However, if your shares of common stock are held in the name of your broker, bank or other nominee, you must get a proxy from the broker, bank or other nominee. That is the only way we can be sure that the broker, bank or nominee has not already voted your shares of common stock.

Revoking Your Proxy

If you give a proxy, you may revoke it at any time before the annual meeting of shareholders, or at such meeting by doing any one of the following:

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you may send another signed proxy card with a later date;

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you may notify the Company’s Secretary, in writing before the annual meeting that you have revoked your proxy; or

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you may attend the annual meeting, revoke your proxy, and vote in person, as indicated above. Attendance at the meeting will not itself be deemed to revoke a proxy unless the shareholder of record gives affirmative notice at the meeting that the shareholder intends to revoke the proxy and vote in person.

Other Matters

As of the date of this proxy statement, the Board does not know of any business to be presented at the annual meeting other than as set forth in the notice accompanying this proxy statement. If any other matters should properly come before the annual meeting, or any adjournment or postponement of the annual meeting, it is intended that the shares represented by proxies will be voted with respect to such matters in accordance with the judgment of the persons voting the proxies.

Who Can Answer Your Questions About Voting Your Shares

If you have any questions about how to vote or direct a vote in respect of your shares of our common stock, you may call our Chief Financial Officer, Gregory Mann at (508) 541-8800 x145.

Appraisal Rights

Our shareholders will have appraisal rights with respect to the RenalGuard Spin-Off, as a sale of all or substantially all of the Company’s assets, pursuant to Section 193 of the Yukon Business Corporations Act, provided you satisfy the criteria and conditions set forth in the Yukon Business Corporations Act. For more information on appraisal rights, see “Appraisal Rights” on page 131.

PROPOSAL NO. 1 — APPROVAL OF THE MERGER

AND

PROPOSAL NO. 2 — APPROVAL OF THE SPIN-OFF

We are asking our shareholders to approve and adopt the RenalGuard Spin-Off and the Viveve Merger, and the related transactions. Our shareholders should read carefully this proxy statement in its entirety for more detailed information concerning the RenalGuard Spin-Off and the Viveve Merger, including the Viveve Merger Agreement and the form of RenalGuard Reorganization Agreement attached to this proxy statement as Annexes A and B, respectively. Please see the section entitled “The Proposed Transaction Agreements” beginning on page 70 for additional information and a summary of certain terms of the RenalGuard Spin-Off and the Viveve Merger. You are urged to read carefully the Viveve Merger Agreement and the RenalGuard Reorganization Agreement in their entirety before voting on these proposals. Completion of the transactions contemplated by each of the Merger Proposal and the Spin-Off Proposal are conditioned upon the approval of the other proposal. Accordingly, if either the Merger Proposal or the Spin-Off Proposal is not approved, neither the Viveve Merger nor the RenalGuard Spin-Off will occur. This summary is qualified by reference to the complete text of the special resolutions concerning the Viveve Merger and the RenalGuard Spin-Off to be passed at the annual meeting, a copy of which is a part of this proxy statement and attached as Annex D.

Vote Required for Approval

The affirmative vote of the holders of not less than two-thirds of the shares of common stock voting on such proposal is required to approve each of the Merger Proposal and the Spin-Off Proposal. The consummation of the Viveve Merger and the RenalGuard Spin-Off are each conditioned on obtaining the requisite shareholder approval of the other.

Structure of the Proposed Transaction

The Proposed Transaction consists of the RenalGuard Spin-Off and the Viveve Merger. After the closing, Viveve will be a wholly-owned subsidiary of the Company.

The RenalGuard Reorganization Agreement provides for the transfer of certain of our assets and liabilities and all of the outstanding shares of RenalGuard Solutions, Inc., our wholly-owned subsidiary which will own the RenalGuard business through its holdings of 100% of the outstanding equity in PLC Medical Systems, Inc. and PLC Systemas Medicos Internacionais, to GCP in exchange for the cancellation or transfer of all of our outstanding Debentures held by GCP, a release of liens on substantially all of our assets, and the cancellation of all of the GCP Warrants, whereby RenalGuard Solutions, Inc. will become a private company wholly-owned by GCP. The Viveve Merger Agreement provides for the combination of the Company and Viveve through a merger of Merger Sub with and into Viveve, whereby Viveve will become a wholly-owned subsidiary of the Company, and the Company will issue the Viveve equity holders approximately 4,655,023 shares of the Company’s common stock and the Cash Merger Consideration. The RenalGuard Spin-Off will be consummated immediately prior to the closing of the Viveve Merger. For additional information on the beneficial ownership of PLC common stock assuming that the Viveve Merger and RenalGuard Spin-Off are approved and the Offering is completed, see the section entitled “Beneficial Ownership of Securities” beginning on page 123.

Consideration for the RenalGuard Spin-Off and Viveve Merger

As consideration for RenalGuard, GCP’s Debentures will be canceled or transferred and the related liens on substantially all of PLC’s assets will be released by GCP. For information on how the purchase price for the RenalGuard Spin-Off is calculated, please see the section entitled “The Proposed Transaction Agreements — The RenalGuard Spin-Off Agreement” beginning on page 79.

As consideration for the Viveve Merger, the Company will issue to Viveve equity holders the Closing Net Merger Shares, consisting of 4,655,023 shares of common stock of the Company, as may be adjusted at closing pursuant to the terms of the Viveve Merger Agreement, and the Cash Merger Consideration. For information on how the Closing Net Merger Shares is calculated and may be adjusted, please see the section entitled “The Proposed Transaction Agreements — The Viveve Merger Agreement” beginning on page 70.

Background of the Proposed Transaction

The terms of the Proposed Transaction are the result of negotiations between the representatives of PLC, Viveve and GCP. The following is a brief description of the background of these negotiations, the Proposed Transaction and related transactions.

PLC was formed in 1987. PLC, through its wholly owned operating subsidiary PLC Medical Systems, Inc., manufactures and markets its RenalGuard product, designed to reduce the potentially toxic effects that contrast media can have on the kidneys when it is administered to high-risk patients during certain medical imaging procedures. With the sale of PLC’s CO2 transmyocardial revascularization business in February 2011, its future prospects are solely dependent upon the successful commercialization of RenalGuard. In mid-2013, due to limited revenue generated by sales of RenalGuard, the costs of clinical trials for RenalGuard and limited sources of additional capital available to PLC, among other reasons, PLC began to explore strategic alternatives with respect to itself, including, but not limited to, a sale of some or all of its assets, licensing potentially valuable technologies to third parties and potential acquisitions. In addition, PLC also considered scaling back and/or ceasing some or all of its operations. GCP holds approximately $4.5 million of PLC’s Debentures and warrants issued in connection with the purchase of the Debentures, in addition to its ownership of other equity securities of PLC. GCP is PLC’s largest creditor and also holds liens on substantially all of PLC’s assets as a security for PLC’s obligations under the Debentures. In connection with the consummation of the Proposed Transaction, the other holders of PLC’s Debentures will exchange their Debentures for PLC Shares.

On July 16, and August 2, 5, 9, 14 and 28, 2013, meetings of the PLC Board of Directors were held in person or by telephone at which the directors were updated by management on the status of PLC’s operations, and the directors discussed the unwillingness of its current investors to provide additional capital to the Company, reductions in workforce and various potential strategic alternatives.

In September 2013, GCP and PLC engaged in initial discussions of Viveve as a potential merger candidate when Evolution Partners, LLC, a third-party consultant of Viveve, approached Bezalel Partners, LLP regarding the potential acquisition of Viveve by PLC. During the second half of 2013, representatives of PLC and GCP also met with other potential merger targets, all of whom were in the life science industry. PLC and GCP did not pursue any of the alternative potential merger targets beyond initial meetings because none of the potential merger targets had a product or business that was at the level of marketability as the products and business of Viveve.

On October 2, 2013, PLC and Viveve signed a non-disclosure agreement and commenced formal discussions to explore a potential transaction between the two parties. On October 7, 2013, representatives of PLC, Viveve, GCP, 5AM Ventures, one of the venture capital investors in Viveve, and Evolution Partners, LLC attended a meeting in New York City at GCP’s offices to further discuss a potential transaction between PLC and Viveve. As a result of that meeting, the parties determined that additional formal discussions were necessary to address terms of a potential acquisition by PLC of Viveve. On October 9, 2013, members of the management of PLC and Viveve had a teleconference call to begin negotiations of the terms of a potential acquisition by PLC of Viveve. On the same day, Viveve gave PLC access to its virtual data room and PLC commenced its due diligence of Viveve. In late October 2013, at the Transcatheter Cardiovascular Therapeutics (TCT) Conference in San Francisco, California, representatives of PLC and 5AM Ventures met to further discuss a potential acquisition of Viveve by PLC. In early November 2013, the chairman of the board of directors of Viveve contacted a member of the Board of Directors of PLC to discuss terms of a potential acquisition of Viveve by PLC. In mid-November 2013, Viveve sent a term sheet to PLC that described the terms of a potential acquisition of Viveve by PLC and contemplated a merger of equals. The term sheet provided for the merger of both the RenalGuard and Viveve businesses and for Viveve’s management team to manage the Combined Company. Members of the management and Board of Directors of PLC carefully reviewed the offered terms and determined that the acquisition of Viveve, along the terms set forth in the term sheet, were unacceptable to PLC. PLC did not believe that there were synergies between the two businesses and was unwilling to forgo participation in the management of the Combined Company. PLC rejected Viveve’s term sheet and the existing negotiations and discussions between PLC and Viveve terminated. PLC and GCP continued to explore all other potential strategic alternatives during this time.

Later in the fourth quarter of 2013, GCP reviewed the financial position of PLC and informed PLC that GCP would not provide any additional funding to PLC. Due to PLC’s difficult financial position and its inability to locate additional sources of capital, members of the management and Board of Directors of PLC determined that PLC would need to continue exploring strategic alternatives, including a potential transaction with GCP, as PLC’s largest creditor. Representatives of GCP discussed with PLC a potential spin-off of RenalGuard into a private company held by GCP in satisfaction of PLC’s obligations to GCP. Members of the management of PLC also began to again explore alternatives, including, but not limited to, initiating a bankruptcy proceeding. In the discussions between representatives of PLC and GCP concerning the possibility of initiating a bankruptcy proceeding, the GCP representatives indicated that it would prefer that PLC avoid bankruptcy, so as to preserve some value in PLC for its shareholders. Based upon its discussions with the GCP representatives, members of PLC’s management determined not to continue exploring the bankruptcy proceeding alternative. Representatives of PLC and GCP also determined that a spin-off of RenalGuard into a private company would need to be consummated immediately prior to a merger between PLC and a third party, in order to preserve some value for the shareholders of PLC. As the value of the assets of the RenalGuard business was significantly less than the $4,500,000 in Debentures owed to GCP, PLC determined that a spin-off of the RenalGuard business in exchange for the cancellation of the GCP Debentures and GCP Warrants in conjunction with the acquisition of Viveve was in the best interest of PLC and its shareholders.

In January 2014, representatives of GCP contacted representatives of Viveve to determine whether Viveve remained interested in exploring a transaction with PLC. It was explained that an acquisition of Viveve by PLC would be consummated immediately after the spin-off of PLC’s RenalGuard business, which would satisfy the most significant outstanding obligations of PLC. GCP and Barry Honig, investors of PLC, also indicated their commitment to provide Viveve with a bridge loan of $500,000 to complete the transaction. In late January 2014, discussions between representatives of PLC, Viveve and GCP recommenced. Shortly thereafter, Viveve sent to PLC a revised term sheet that set forth the new terms of PLC’s acquisition of Viveve and the spin-off of RenalGuard to GCP in exchange for the retirement of the outstanding Debentures held by GCP. Additional terms included the extinguishment of PLC warrants for shares of Common Stock and the conversion of Viveve debt and certain equity to common shares. After further negotiation of the terms of the transactions in late January and early February 2014, PLC, Viveve and GCP agreed in principle to the terms of the acquisition of Viveve by PLC and the spin-off by PLC of RenalGuard as a private company in exchange for the retirement of PLC’s outstanding Debentures held by GCP and the release of the related liens on substantially all of PLC’s assets by GCP. The terms also contemplated that immediately following the closing of the Viveve Merger, PLC would complete the Offering pursuant to which an aggregate of $6,000,000 of PLC common stock and warrants would be issued and sold for a combination of cash and the conversion of certain bridge notes. Representatives of Viveve proposed a pre-Offering valuation of Viveve of $4,000,000 to determine the PLC equity consideration for Viveve. After numerous discussions by representatives of Viveve, PLC, GCP and Alpha Capital Anstalt, Barry Honig and GRQ Consultants, Inc., current shareholders of PLC and potential investors in the Offering (the “PLC Investor Group”), in which GCP and the PLC Investor Group indicated their support for the transaction and valuation, PLC agreed to this valuation in determining the equity in PLC to be issued in exchange for the acquisition of Viveve. PLC’s Board of Directors believed that the valuation was fair based on the Company’s limited alternatives and in its efforts to avoid bankruptcy and preserve value for the PLC shareholders.

On February 13, 2014, PLC, Viveve and a new third-party investor, Alta Bioequities, L.P., that intended to participate as a significant investor in the Offering, executed the non-binding term sheet. Also, in early February 2014, PLC retained Haynes and Boone, LLP (“Haynes and Boone”) to serve as its counsel for the Proposed Transaction.

In late February 2014, the PLC Investor Group, who were significant shareholders of PLC that were investors in PLC’s February 2013 private placement (the “Palladium Investors”) introduced by Palladium Capital LLP, a financial advisor to PLC, in the course of their due diligence of Viveve, determined that the valuation of Viveve, based upon the post-Proposed Transaction capitalization table used in the term sheet dated February 13, 2014, overstated Viveve’s value as compared to PLC. As such, the PLC Investor Group indicated to PLC that they would not support the Proposed Transaction. After further discussions by representatives of Viveve, PLC, GCP and the PLC Investor Group, it was agreed that the Palladium Investors that participated in the Offering would receive warrants to purchase an aggregate of 5% of the outstanding shares of PLC post-Merger at an exercise price of $0.53 per share. On February 26, 2014, PLC, Viveve and GCP revised the terms of the Proposed Transaction to include the issuance of the warrants in the Offering to the participating Palladium Investors. In order for Viveve to obtain additional liquidity until the Offering and the Proposed Transaction, on March 5, 2014, Viveve entered into a note purchase agreement with GCP and another investor pursuant to which Viveve issued to each of GCP and such other investor a 9% convertible promissory note in the amount of $50,000, which is convertible into shares of PLC common stock upon consummation of the Viveve Merger. The note purchase agreement provided that Viveve may issue an aggregate of $500,000 of 9% convertible promissory notes.

On March 13, 2014, after further due diligence of Viveve, the PLC Investor Group communicated to PLC that the Palladium Investors would not support the Proposed Transaction because it believed that the existing equity holders of PLC should retain additional equity in PLC following the consummation of the Proposed Transaction. On March 18, 2014, Haynes and Boone, on behalf of PLC, communicated to Viveve that PLC would be unable to proceed with the Viveve Merger because it was unable to secure the necessary support for the transaction from the Palladium Investors. After communicating its inability to proceed with the Viveve Merger, PLC and GCP again approached other potential merger targets, but did not pursue any of the potential merger targets beyond initial meetings because none of the potential merger targets had a product or business that was at the level of marketability as the products and business of Viveve. In addition, during such time period, PLC, Viveve, GCP and the PLC Investor Group continued discussions on potential modifications to the terms of the Proposed Transaction that would be able to gain the support of PLC’s equity holders.

To ensure the participation of the Palladium Investors, in March 2014, GCP agreed to transfer a portion of its equity holdings in PLC to the Palladium Investors for nominal consideration. After further discussion between the parties, GCP agreed to transfer an aggregate of 720,000 PLC Shares or rights to shares held by GCP, on a post-Share Consolidation basis, to the Palladium Investors for nominal consideration. The members of PLC’s management presented the terms of the transactions to the Board of Directors of PLC, which the Board of Directors found to be in the best interests of PLC.

On March 25, 2014, PLC, GCP and Viveve modified certain terms that had been set forth in the February 13, 2014 term sheet, pursuant to which, among other things, GCP agreed to transfer its equity securities of PLC to members of the Palladium Investors in order to further increase the equity ownership percentage of PLC of such holders following the consummation of the Proposed Transaction.

On March 27, 2014, after discussion with PLC and Macdonald & Company, PLC’s Yukon Territory counsel, Haynes and Boone sent a draft of the agreement and plan of merger to Richardson & Patel, LLP (“Richardson & Patel”), counsel to Viveve. On March 28, 2014, pursuant to its note purchase agreement, Viveve issued GCP an additional 9% convertible promissory note in exchange for $100,000. On April 3, 2014, Richardson & Patel sent to Haynes and Boone comments to the agreement and plan of merger. The parties continued negotiations of the terms of the agreement and plan of merger and completed due diligence inquiries throughout April 2014. On April 7, 2014, representatives of PLC, Haynes and Boone, Viveve and Richardson & Patel attended a conference call to discuss outstanding issues in the transaction as well as in the latest draft of the agreement and plan of merger circulated by Richardson & Patel, which issues included closing conditions and survival of indemnification rights. It was agreed that neither PLC nor Viveve would have indemnification rights with respect to representations and warranties in the agreement and plan of merger survive the closing of the Proposed Transaction.

On April 9, 2014, Haynes and Boone sent Richardson & Patel and Viveve a revised agreement and plan of merger, in part, based on prior discussions. The principal commercial terms of the Proposed Transaction having been substantially settled, from April 9, 2014 to May 9, 2014, there were several additional exchanges of the agreement and plan of merger and ancillary agreements and related discussions among Haynes and Boone and Richardson & Patel to finalize the agreements that would effect the Proposed Transaction.

On November 13, 2013, and March 24, and April 14 and 28, 2014, meetings of the PLC Board of Directors were held in person or by telephone at which the directors were updated by management on the status of the contemplated transactions with Viveve and the Offering, including the terms being negotiated, analyses of the transaction, the tentative schedule of major events from the signing of the agreement and plan of merger to closing and the closing of the Offering.

On April 28, 2014, at the special meeting of the Board of Directors of PLC, the PLC Board of Directors approved the agreement and plan merger with Viveve substantially in the form of the Viveve Merger Agreement, the RenalGuard Spin-off and other ancillary agreements, directed the officers of PLC to complete negotiations of such agreements, and approved the filing of the preliminary proxy statement pursuant to which the PLC stockholders would be asked to approve the Proposed Transaction and the resulting change of control.

On May 9, 2014, PLC and Viveve executed the final Viveve Merger Agreement. On May 14, 2014, PLC filed the preliminary proxy statement and a Form 8-K with the SEC and issued a press release announcing the execution of the Viveve Merger Agreement and related transactions.

On August 8, 2014, PLC and Viveve executed an amendment to the Viveve Merger Agreement which provided that any non-accredited equity holders of Viveve would receive the Cash Merger Consideration as opposed to PLC Shares.

PLC’s Board of Directors’ Reasons for the Approval of the Proposed Transaction

On April 28, 2014, our Board of Directors unanimously (i) approved the Viveve Merger Agreement and the transactions contemplated thereby, (ii) approved the RenalGuard Spin-Off and the transactions contemplated thereby, (iii) determined that the Viveve Merger is in the best interests of PLC, and (iv) directed that the Viveve Merger Agreement and the RenalGuard Spin-Off be submitted to our shareholders for approval and adoption, and recommended that our shareholders approve and adopt the Viveve Merger Agreement and the RenalGuard Spin-Off.

Before reaching its decision, our Board of Directors reviewed the results of management’s due diligence, which included:

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review of PLC’s business and liquidity situation, with respect to its capital raising needs for the current fiscal year;

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review of availability (and specifically, the lack thereof) of additional capital from existing investors in PLC and from potential new investors;

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extensive meetings and calls with Viveve’s management teams and representatives regarding operations, respective company products and services, major customers and vendors and financial prospects for Viveve, among other typical due diligence matters;

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review of Viveve’s contracts and certain other legal diligence; and

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financial and accounting diligence and certain tax diligence.

Our Board of Directors considered the wide variety of factors set forth below in connection with its evaluation of the Proposed Transaction. In light of the complexity of those factors, our Board of Directors, as a whole, did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it took into account in reaching its decision. Individual members of our Board of Directors may have given different weight to different factors.

In considering the Proposed Transaction, PLC’s Board of Directors considered the following factors, although not weighted or in any order of significance:

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a review of strategic alternatives, including the possibility of remaining independent, combinations with other partners, and the possibility of equity or debt public or private offerings;

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the possibility that if a strategic alternative were not available, PLC would likely default on its debt obligations related to its outstanding Debentures, which could result in the holders of PLC’s Debentures foreclosing on substantially all of PLC’s assets, including RenalGuard, securing the obligations under the Debentures, which would deprive PLC shareholders of any return on their ownership of equity securities of PLC;

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a review of the business and financial prospects of other potential merger targets;

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its belief that Viveve has the appropriate infrastructure in place and is competitively positioned to achieve growth;

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its assessment of the likelihood that the transaction would be completed in a timely manner and that management would be able to successfully operate the Viveve business of the enterprise after the transaction;

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the regulatory and other approvals required in connection with the transaction and the likelihood such approvals would be received in a timely manner and without unacceptable conditions; and

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Viveve’s management team’s significant experience in its industry, all of which are expected to continue with the Combined Company.

Although PLC’s Board of Directors did not seek a third party valuation, and did not receive any report, valuation or opinion from any third party, in connection with the Proposed Transaction, the Board of Directors considered that PLC’s management collectively has significant experience in the healthcare technology, industry, international and public markets transactions, in constructing and evaluating financial models and financial projections and conducting valuations of businesses.

PLC does not intend as a matter of course to make public projections as to future sales, earnings or other results. The prospective financial information and share valuation was prepared solely for the purposes of estimating the enterprise value of Viveve for purposes of the Proposed Transaction. It was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of PLC’s and Viveve’s management, was prepared on a reasonable basis, reflects the best available estimates and judgments, and presents, to the best of management’s knowledge and belief, the expected future financial performance of the pro-forma consolidated Viveve and PLC, taking into consideration the RenalGuard Spin-Off. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement are cautioned not to place undue reliance on the prospective financial information. Neither Viveve’s or PLC’s independent auditors, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.

Our Board of Directors also gave consideration to the following negative factors (which are more fully described in the “Risk Factors” section of this proxy statement), although not weighted or in any order of significance:

The PLC Board of Directors did not obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Proposed Transaction.

Our management and directors may have different interests in the Proposed Transaction than the public shareholders

Our Board of Directors considered the fact that members of our management and Board of Directors may have interests in the Viveve Merger that are different from, or are in addition to, the interests of our shareholders generally, including the matters described under “— Certain Benefits of PLC’s Directors and Officers and Others in the Proposed Transaction” below. However, our Board of Directors concluded that the potentially disparate interests would be mitigated because (i) our Board of Directors believes that the Proposed Transaction represents the best alternative for PLC’s shareholders to retain value in their ownership of PLC’s equity securities, as opposed to PLC’s Debenture holders entering into foreclosure precedings to acquire ownership of substantially all of PLC’s assets, (ii) RenalGuard has not yet entered into any employment agreements or consulting agreements nor otherwise guaranteed offers of employment to any of PLC’s current officers, (iii) the members of our Board of Directors will not continue as directors of PLC upon the closing of the Viveve Merger, and (iv) RenalGuard does not intend to appoint any of the members of our Board of Directors as directors of RenalGuard after the closing of the RenalGuard Spin-Off.

Certain Benefits of PLC’s Directors and Officers and Others in the Proposed Transaction

When you consider the recommendation of our Board of Directors in favor of approval of the Viveve Merger and RenalGuard Spin-Off, you should keep in mind that our Board of Directors and officers have interests in the Proposed Transaction that are different from, or in addition to, your interests as a shareholder. These interests include, among other things:

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the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the Proposed Transaction.

Severance Payments

Tauscher Employment Agreement

PLC Medical Systems, Inc. entered into an employment agreement with Mr. Tauscher in December 1999, which was amended in June 2008, and again in August 2013, providing for an annual base salary of not less than $225,000. If Mr. Tauscher’s employment is terminated following a change of control without “cause” or “good reason” within twelve (12) months of the change of control, this agreement also provides for the payment to Mr. Tauscher of 50% of his base salary payable immediately upon termination of his employment, and the remaining 50% shall be paid in nine (9) equal monthly installments following such termination. Additionally, any severance amount over $300,000 shall be payable in unregistered common stock from the successor entity within ten days of the effective date of termination. As a wholly-owned subsidiary of RenalGuard Solutions, Inc., PLC Medical Systems, Inc. will retain these severance obligations in the RenalGuard Spin-Off.

Mann Employment Agreement

PLC Medical Systems, Inc. entered into an employment agreement with Mr. Mann in October 2011 providing for an annual base salary of not less than $120,000, benefits in accordance with our standard benefits package and stock options to purchase up to 150,000 shares of our common stock. On July 2, 2012, PLC Medical Systems, Inc. increased Mr. Mann’s annual base salary to be no less than $140,000, and approved in June 2012 the payment of severance to Mr. Mann in an amount equal to twelve (12) months’ salary in the event Mr. Mann's employment is terminated upon a change of control and is not retained for at least twelve (12) months following the date of such change of control. As a wholly-owned subsidiary of RenalGuard Solutions, Inc., PLC Medical Systems, Inc. will retain these severance obligations in the RenalGuard Spin-Off.

Total PLC Shares to be Issued in the Proposed Transaction

Based on the number of shares of our common stock outstanding as of August 11, 2014, the total number of outstanding shares of our capital stock after the closing and after giving effect to the Share Consolidation will be approximately 7,417,574, including approximately 4,655,023 shares issued to former Viveve stockholders. Based on these assumptions, and without giving effect to the Offering, current PLC shareholders and their designees will own approximately 37.2% and the former stockholders of Viveve and their designees will own approximately 62.8% of the issued and outstanding PLC Shares, on a fully diluted basis. As contemplated by the Viveve Merger Agreement, immediately following the closing of the Proposed Transaction, PLC will complete the Offering through the sale of an aggregate of approximately 11,320,765 PLC Shares in exchange for gross proceeds of $4,500,000 in cash payments and the conversion of up to approximately $1,500,000 outstanding amount of principal and interest of certain Viveve bridge notes. After the closing of the Offering, it is anticipated that the current PLC shareholders will own 14.7%, the former equity holders of Viveve will own 24.9% and the investors participating in the Offering will own 60.4% of the 18,738,339 issued and outstanding shares of our capital stock.

Board of Directors of PLC following the Viveve Merger

The Viveve Merger Agreement provides that effective immediately after the closing of the Viveve Merger, the Board of Directors of the Company will consist of five (5) members, each to serve until the next annual meeting of shareholders. The Board will consist of Patricia Scheller, Brigitte Smith, Mark Colella, Carl Simpson and Daniel Janney. See the sections entitled “Proposal No. 5 — Election of Directors to the Board” and “Management After the Proposed Transaction” beginning on pages 53 and 109, respectively, for additional information.

Articles of Continuance; Bylaws

The Articles of Continuance and the Bylaws of PLC will remain unchanged, except pursuant to the Proposals that the shareholders are being asked to vote on herein including “Proposal No. 3 — The Name Change Proposal,” beginning on page 52, “Proposal No. 4 — The Board Declassification Proposal,” beginning on page 52 and “Proposal No. 7 — The Share Consolidation Proposal,” beginning on page 64.

Name; Headquarters

The name of the Company after the Proposed Transaction will be “Viveve Medical, Inc.” subject to the approval of the Name Change Proposal, and our headquarters is expected to be located at 150 Commercial Street, Sunnyvale, CA 94086

Appraisal Rights

Appraisal rights are available with respect to the RenalGuard Spin-Off, as a sale of all or substantially all of the Company’s assets, pursuant to Section 193 of the Yukon Business Corporations Act. Holders of PLC common stock will have no appraisal rights available to holders of PLC common stock in connection with the Viveve Merger. For more information on appraisal rights, see “Appraisal Rights” on page 131.

Accounting Treatment

Based on the terms of the Viveve Merger Agreement, Viveve is deemed to be the accounting acquirer because the former Viveve shareholders, board of directions and management will have voting and operating control of the Combined Company. The RenalGuard Reorganization Agreement will occur prior to the Viveve Merger Agreement, resulting in Viveve merging with PLC’s public shell. The merger will be accounted for as capital transaction accompanied by a recapitalization with no goodwill or other intangibles recorded.

Regulatory Matters

No regulatory approvals or requirements are required to be complied with in connection with the Proposed Transaction.

Recommendation of the Board

PLC’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS VOTE “FOR” THE MERGER PROPOSAL AND “FOR” THE SPIN-OFF PROPOSAL.

PROPOSAL NO. 3 — THE NAME CHANGE PROPOSAL

Assuming the Merger Proposal and Spin-Off Proposal are approved, our shareholders are also being asked to approve an amendment to the articles of continuance to change the name of the Company to “Viveve Medical, Inc.” The Company’s Board of Directors has determined that the name change is necessary to reflect the change in business of the Company following the Proposed Transaction and is in the best interest of the Company and its shareholders. This summary is qualified by reference to the complete text of the proposed articles reflecting the name change, a copy of which is a part of this proxy statement and attached as Annex C, and the complete text of the special resolution to be passed at the annual meeting, a copy of which is a part of this proxy statement and attached as Annex D.

This proposal is conditioned upon the approval of both the Merger Proposal and the Spin-Off Proposal. If either the Merger Proposal or the Spin-Off Proposal is not approved, this proposal will have no effect.

Vote Required for Approval

The affirmative vote of the holders of not less than two-thirds of the shares of common stock voting on such proposal is required to approve the Name Change Proposal.

Recommendation of the Board

PLC’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS VOTE “FOR” THE NAME CHANGE PROPOSAL.

PROPOSAL NO. 4 — THE BOARD DECLASSIFICATION PROPOSAL

General

After careful consideration, our Board of Directors voted to approve, and to recommend to our shareholders that they approve, an amendment to our articles of continuance to declassify the Board of Directors effective at this 2014 annual meeting. Our Board of Directors also voted to approve an amendment to our bylaws to provide for such declassification of the Board, which the Board is requesting that the shareholders confirm and ratify. Our Board of Directors currently has five authorized directors and currently consists of five members. We currently have a classified Board of Directors, which is divided into three classes. Each class is elected for a three year term, with the terms staggered so that approximately one third of the directors stand for election each year. If adopted, this proposal would approve the amendment to our articles of continuance and would confirm and ratify the amendment to our bylaws to eliminate the classification of the Board of Directors and requiring every director to stand for election each year at our annual meeting. This will allow our shareholders to vote on the election of our entire board of directors each year, rather than on a staggered basis as with our current classified Board structure. If approved by our shareholders, our articles of continuance and bylaws will be amended to provide for the annual election of all directors commencing immediately at this 2014 annual meeting (See “Proposal No. 5 — Election of Directors to the Board”).

Rationale for Declassification

While a classified Board may provide certain advantages, including promoting Board continuity and stability and encouraging directors to take a long-term perspective, in making the determination to propose declassifying the Board, the Board of Directors felt the benefits of an unclassified Board, namely, increasing director’s accountability to shareholders outweighed the benefits of a classified Board. Since the election of directors is one of the main avenues for shareholders to influence corporate governance and hold management accountable, the Board of Directors has determined that it is in the best interest of the Company and its shareholders. Moreover, many institutional investors believe that the election of directors is the primary means for shareholders to influence corporate governance policies and to hold management accountable for implementing those policies.

Proposed Declassification of the Board of Directors

Subject to approval of this Proposal No. 4 by the holders of two-thirds of the outstanding shares of our Common Stock voting on the matter, the declassification of the Board of Directors will require an amendment to our articles of continuance. This summary is qualified by reference to the complete text of the proposed articles reflecting the declassification of the Board of Directors, a copy of which is a part of this proxy statement and attached as Annex C, and the complete text of the special resolution to be passed at the annual meeting, a copy of which is a part of this proxy statement and attached as Annex D.

The Board of Directors has also approved an amendment to our bylaws declassifying the Board as described above. The Board of Directors is requesting that the shareholders confirm and ratify the amendment to the bylaws.

Vote Required; Recommendation of the Board of Directors

The affirmative vote of the holders of not less than two-thirds of the shares of common stock voting on such proposal is required to approve an amendment to the Company’s articles of continuance to declassify the Board of Directors. The affirmative vote of the holders of not less than a majority of the shares of common stock voting on such proposal is required to confirm and ratify the amendment to the bylaws to declassify the Board of Directors.

PLC’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS VOTE “FOR” THE AMENDMENT OF THE ARTICLES OF CONTINUANCE AND THE RATIFICATION OF THE AMENDMENT TO OUR BYLAWS TO DECLASSIFY THE BOARD OF DIRECTORS.

PROPOSAL NO. 5 — ELECTION OF DIRECTORS TO THE BOARD

Pursuant to the Viveve Merger Agreement, upon the closing of the Proposed Transaction, the Company’s Board will consist of five (5) members. Therefore, the Company is asking its shareholders to vote to elect a total of five (5) directors to the Company’s Board of Directors, each of whose terms will expire at the next annual meeting of shareholders. Our independent directors have nominated each of Patricia Scheller, Brigitte Smith, Mark Colella, Carl Simpson and Daniel Janney, with terms expiring at the annual meeting of shareholders in 2015 and until each of their respective successors is duly elected and qualified, or until their earlier resignation, removal or death. No proxy may be voted for more people than the number of nominees set forth below.

In the event that any nominee for director becomes unavailable or declines to serve as a director at the time of the meeting, the proxy holders will vote the proxies in their discretion for any nominee who is designated by the current Board of Directors to fill the vacancy. It is not expected that any of the nominees will be unavailable to serve.

Set forth below is the name of each nominee to the Board of Directors, the nominees age, the positions and offices held by the nominee, the nominee’s principal occupation and business experience during at least the past five years and the names of other publicly-held companies of which the nominee has served as a director during the past five years. The information presented below regarding the specific experience, qualifications, attributes and skills of each director and nominee led our nominating and corporate governance committee and our Board of Directors to conclude that he or she should serve as a director.

Nominees for Election to the Board of Directors

Patricia Scheller. Ms. Scheller has served as Chief Executive Officer of Viveve since May 2012 and as a director of Viveve since June 2012. Prior to joining Viveve, she served as the CEO of Prescient Medical, Inc. (“PMI”), a privately held company that developed diagnostic imaging catheters and coronary stents designed to reduce deaths from heart attacks, from September 2004 through April 2012 and as a director of PMI from July 2004 to September 2011. Prior to joining PMI, from August 2003 to September 2004, she was the CEO of SomaLogic, a biotechnology company focused on the development of diagnostic products using aptamer technology. From December 2000 to April 2003, Ms. Scheller also managed several business units at Ortho-Clinical Diagnostics, a Johnson & Johnson company, and from October 1997 to November 2000 served in key executive positions at Dade Behring, a clinical diagnostics firm. While at Dade Behring Holdings, Inc., she directed the commercialization of the hsCRP diagnostic test, a screening test for systemic inflammation, which has been shown to increase the risk of heart attacks. The hsCRP test was the first diagnostic test added to the cardiac test panel by the Center for Disease Control and Prevention and American Heart Association in over 30 years. As Director of cardiology systems at Cordis Corporation (a Johnson & Johnson company) from February 1994 to February 1996, Ms. Scheller managed the launch of the first Palmaz-Schatz^® balloon-expandable coronary stent, the first major product entry into what became a $6 billion market. Ms. Scheller received a B.S.E. degree in Biomedical Engineering from Duke University and completed executive business education programs at Harvard University, Massachusetts Institute of Technology, Columbia University and Northwestern University. As a result of Ms. Scheller’s commitment and dedication to the healthcare industry for more than 25 years, serving in various executive capacities, the Board of Directors of PLC nominated Ms. Scheller to serve as a director of PLC.

Brigitte Smith. Ms. Smith is co-founder and Managing Director of GBS Venture Partners, a leading Australian life science venture capital investor, founded in 1998 whose fund GBS Bioventures III owns 30.58% of Viveve’s outstanding common stock. GBS Venture Partners has completed more than 40 medical device and life science investments for companies based in Australia and the U.S. Before joining GBS Venture Partners, she worked with high-tech start-up companies in Australia and the U.S. in fundraising and business development roles. From 1990 to 1992 Ms. Smith also served as a consultant for Bain & Company, a strategic management consulting firm. Ms. Smith is on the board of GBS Venture Partners portfolio companies AirXpanders Inc., Endoluminal Sciences Pty Ltd, Neuromonics Pty Ltd, Proacta Inc., and Viveve Inc. Ms. Smith earned her Bachelor of Chemical Engineering with Honours from the University of Melbourne, her Master of Business Administration with Honours from the Harvard Business School and her Master of International Relations from the Fletcher School of Law and Diplomacy in Boston, Massachusetts, where she was also a Fulbright Scholar. Ms. Smith is a Fellow of The Australian Institute of Company Directors. As a result of Ms. Smith’s significant early-stage investing experience, the Board of Directors of PLC nominated Ms. Smith to serve as a director of PLC.

Mark S. Colella. Mr. Colella has been a director of Viveve since April 2012 and principal of 5AM Ventures, II, Inc., a leading life science venture capital investor, founded in 2002 which owns 30.58% of Viveve’s outstanding common stock, since October 2007. Mr. Colella annualizes in medical device and life science investing at 5AM Ventures and brings over 15 years of venture capital and operating experience within medical device and healthcare companies. Mr. Colella serves or has served in board or advisory roles with Biodesy, Ceterix, DVS (acquired by Fluidigm), Flexion (IPO), Incline (acquired by The Medicines Company), Pearl (acquired by AstraZeneca), Semprus (acquired by Teleflex), Viveve and WaveRx. He also sits on the Advisory Board for the Innovation and New Ventures Office at Northwestern University and The V Foundation Wine Celebration—a charity wine auction—which has raised over $30 million for cancer research. Before joining 5AM Ventures from 2007 to 2008 he was head of marketing for BÂRRX Medical, Inc. (“BÂRRX”), a Bay Area startup medical device company sold to Covidien for $413 million. Prior to BÂRRX, he held various management roles including with Stryker, Inc. from 2002 to 2007, focused in the fields of orthopedics, laparoscopy, urology, gynecology, and general minimally invasive surgery. In addition, he spent four years from 1996 to 2000 as an Executive Director managing healthcare facilities with Primrose Alzheimer’s Living, Inc., an early stage healthcare service startup company, and one year working for Versant Ventures. Mr. Colella holds a B.S. in Biology from Williams College and earned his M.B.A. from Northwestern University, the Kellogg School of Management. Prior to Williams College he spent two years at the U.S. Air Force Academy. Mr. Colella is based in the Menlo Park, CA office. As a result of Mr. Colella’s medical device industry experience, as well as his financial and early stage investing experience, the Board of Directors of PLC nominated Mr. Colella to serve as a director of PLC.

Carl Simpson. Mr. Simpson has served as a director of Viveve since its inception in September of 2005 and has worked in the medical/medical device arena for over 40 years. He is also a founder and Managing Director of Coronis Medical Ventures, LLC, a venture capital entity since 2005. From 2001 to 2004 Mr. Simpson was a partner for Versant Ventures. In 1993, he founded CardioGenesis Corp. a medical device company that designs, manufactures and distributes laser-based surgical products that promote cardiac angiogenesis and served as Vice President of Development until 1997. In 1979, Mr. Simpson founded Advanced Cardiovascular Systems (“ACS”) a medical device company that develops and markets medical devices for treatment of cardiovascular diseases and served as Senior Vice President of Research and Development until 2001. ACS was later sold to Eli Lilly in 1984 and spun-off into Guidant Vascular Intervention. Mr. Simpson currently serves on the board of Novobionics, Curant Medical, Uptake Medical and Entent. He also served on the board of directors of Silver Bullet from 2009 to 2012, CoRepair from 2007 to 2013, Revascular Therapeutics from 2004 to 2011, Conor MedSystems Inc. from 2003 to 2005, Thermage from 1997 to 2004, Interventional Thermodynamics (Innerdyne) from 1989 to 1991 and Interventional Technologies from 1985 to 1989. His undergraduate training is in Microbiology and Biochemistry. His graduate degree is in Electrical Engineering/Computer Science and he holds an MBA, both from the University of Santa Clara. As a result of Mr. Simpson’s prior experience with multiple start-up companies, an understanding of VC business models and 40 years of operational and clinical experience, the Board of Directors of PLC nominated Mr. Simpson to serve as a director of PLC.

Daniel Janney. Mr. Janney will be appointed as a director of Viveve prior to the closing of the Proposed Transaction. Mr. Janney currently serves as a director of Esperion Therapeutics, Inc. (NASDAQ: ESPR) since November 2012. Mr. Janney is a managing director at Alta Partners, a life sciences venture capital firm, which he joined in 1996. Prior to joining Alta, from 1993 to 1996, he was a Vice President in Montgomery Securities' healthcare and biotechnology investment banking group, focusing on life sciences companies. Mr. Janney is a director of a number of companies including Alba Therapeutics Corporation, Lithera, Inc., Prolacta Bioscience, Inc., Sutro Biopharma and ViroBay, Inc. He holds a Bachelor of Arts in History from Georgetown University and an M.B.A. from the Anderson School at the University of California, Los Angeles. As a result of Mr. Janney's experience working with and serving on the boards of directors of life sciences companies and his experience working in the venture capital industry, the Board of Directors of PLC nominated Mr. Janney to serve as a director of PLC.

Vote Required for Approval

The affirmative vote of the holders of a majority of the shares of common stock voting is required to elect each director. Votes marked “FOR” a nominee will be counted in favor of that nominee. Proxies will have full discretion to cast votes for other persons in the event any nominee is unable to serve. Our Board of Directors has no reason to believe that any nominee will be unable to serve if elected. Failure to vote by proxy or to vote in person at the annual meeting, an abstention from voting, or the failure of a PLC shareholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee will have no effect on the vote.

Recommendation of the Board

PLC’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS VOTE “FOR” THE ELECTION OF EACH OF THE FIVE NOMINEES TO THE BOARD OF DIRECTORS.

PROPOSAL NO. 6 — THE AMENDMENT TO THE 2013 STOCK OPTION AND INCENTIVE PLAN

Our Board has unanimously approved an amendment (the “First Amendment”) to the Company’s 2013 Stock Option and Incentive Plan (the “Incentive Plan”) to increase the number of shares reserved under the Incentive Plan from 113,826 to 3,111,587 on a post-Share Consolidation basis, and the Board has unanimously recommended that our shareholders approve and adopt the First Amendment to the Incentive Plan. Equity is a key component in our ability to attract, motivate and retain high quality employees. The increase in authorized shares in the Incentive Plan requested in this proposal will allow the Board of Directors to make additional equity grants that we believe align management and stockholder interests.

Set forth below is a description of the Incentive Plan. Our shareholders should read carefully the First Amendment and the entire Incentive Plan, which is attached as Annex E to this proxy statement, before voting on this proposal.

Vote Required for Approval

The Incentive Plan will be approved and adopted if holders of at least a majority of the outstanding shares of our common stock voted at the annual meeting vote “FOR” this proposal.

2013 Stock Option and Equity Incentive Plan

Background

As of August 11, 2014, a total of 64,176 shares on a Post-Consolidation basis were available for issuance under the 2013 Stock Option and Incentive Plan (the “2013 Plan”). Under our current forecasts and taking into account our historical forfeiture rates, we expect that the number of shares still available for grant under the Incentive Plan will not provide a sufficient number of shares to meet the needs of our equity compensation program beginning this year. As a result, we may not be able to issue equity to our employees, directors and consultants in amounts that we believe are necessary to attract, retain and motivate them unless our shareholders approve the Incentive Plan.

The new Incentive Plan seeks an authorization of 3,111,587 shares. The number of shares under the new Incentive Plan for which we are seeking authorization represents approximately 16.5% of our outstanding shares as of the closing of the Proposed Transaction on a post-Share Consolidation basis, which excludes all shares issuable on exercise of outstanding warrants, options and outstanding debenture conversions.

Long-Term Equity is a Key Component of our Compensation Philosophy

Our Board believes that the Company must offer a competitive equity incentive program if it is to continue to successfully attract and retain the best possible candidates for positions within the Company. Our Board expects that the Incentive Plan will be an important factor in attracting, retaining and rewarding high caliber employees who are essential to our success and in providing incentives to these individuals to promote the success of the Company thereby aligning their interests with the interests of the Company’s shareholders.

The alternative to using equity for retention and incentive purposes would be to significantly increase cash compensation. We do not believe increasing cash compensation to make up for any shortfall in equity awards would be practical or advisable because, as a high-technology company, we believe that equity awards provide a more effective compensation vehicle than cash for attracting, retaining and motivating our employees and that equity awards align employees and shareholder interests with a reduced impact on cash flow.

Flexibility to Fully Deduct Equity Compensation under Section 162(m)

The Incentive Plan also is designed to allow the Company the ability to grant equity awards that qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) so that the Company may be able to deduct in full for federal income tax purposes the compensation recognized by its executive officers in connection with certain awards granted under the Incentive Plan.

Section 162(m) of the Internal Revenue Code of 1986, as amended (“162(m)”) generally denies a corporate tax deduction for annual compensation exceeding $1 million paid to the chief executive officer and other “covered employees,” as determined under Section 162(m) of the Code (“Section 162(m)”) and applicable guidance. However, certain types of compensation, including performance-based compensation, are generally excluded from this deductibility limit. To enable the Company the ability to grant stock options, stock appreciation rights and certain restricted stock grants, restricted stock units, performance shares, and performance units awarded under the Incentive Plan that qualify as “performance-based” within the meaning of Section 162(m), the Incentive Plan limits the sizes of such awards as further described below. By approving the Incentive Plan, the shareholders will be approving, among other things, eligibility requirements for participation in the Incentive Plan, performance measures upon which specific performance goals applicable to certain awards would be based, limits on the numbers of shares that could be made to participants, and the other material terms of the Incentive Plan and awards granted under the Incentive Plan. Notwithstanding the foregoing, the Company retains the ability to grant equity awards under the Incentive Plan that do not qualify as “performance-based” compensation within the meaning of Section 162(m).

Summary of the Plan

The following is a summary of the principal features of the Incentive Plan and its operation. The summary is qualified in its entirety by reference to the Incentive Plan as set forth in Annex E.

General

The purposes of the Incentive Plan are to attract and retain the best available personnel, to provide incentives to individuals who perform services to the Company, to align the interests of such individuals with the interests of the Company’s shareholders and to promote the success of the Company’s business. These incentives are provided through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, and performance shares, as the Plan Administrator (as defined below) may determine.

Authorized Shares

Subject to the adjustment provisions contained in the Incentive Plan, shareholders are being asked to approve 3,111,587 shares of Company Common Stock for issuance under the Incentive Plan.

If any award granted under the Incentive Plan expires or becomes unexercisable without having been exercised in full, or is forfeited to or repurchased by the Company, the expired, unexercised, forfeited or repurchased shares subject to such award will become available for future grant or sale under the Incentive Plan. With respect to the exercise of stock appreciation rights, the net number of shares covered by the portion of the exercised award will cease to be available under the Incentive Plan. If unvested shares of restricted stock, restricted stock units, performance shares or performance units are repurchased by or forfeited to the Company, such shares will become available for future grant under the Incentive Plan. Shares used to pay the tax and/or exercise price of an award will become available for future grant or sale under the Incentive Plan. Payment of cash rather than shares pursuant to an award will not result in reducing the number of shares available for issuance under the Incentive Plan.

Adjustments to Shares Subject to the Incentive Plan

In the event of any dividend or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares or other securities of the Company, or other change in the corporate structure affecting the Company’s Common Stock occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Incentive Plan, will adjust the number and class of shares that may be delivered under the Incentive Plan, and/or the number, class and price of shares of stock subject to outstanding awards, and the award grant limitations discussed above.

Limitations (including Non-Employee Directors Award Limitations)

The Incentive Plan contains annual grant limits intended to satisfy Section 162(m). Specifically, the initial value of any performance units issued to any one individual in any fiscal year of the Company pursuant to the Incentive Plan shall not exceed $1,000,000.

The Administrator will adjust the share limitations in this section in the event of any adjustment to the Company’s shares discussed above in the “Adjustment to Shares Subject to the Incentive Plan” section.

Additionally, subject to the terms of the Incentive Plan, the terms of outstanding awards may not be amended to reduce the exercise price of outstanding stock options or stock appreciation rights or cancel outstanding stock options or stock appreciation rights in exchange for cash, other awards or stock options or stock appreciation rights with an exercise price that is less than the exercise price of the original options or stock appreciation rights without shareholder approval.

Administration

The Board has delegated administration of the Incentive Plan to the Board’s Compensation Committee. The Board and the Compensation Committee may further delegate administration of the Incentive Plan to any committee of the Board, or a committee of individuals satisfying applicable laws appointed by the Board in accordance with the terms of the Incentive Plan. For purposes of this summary of the Incentive Plan, the term “Administrator” will refer to the Board or any committee designated by the Board to administer the Incentive Plan. To make grants to certain officers and key employees of the Company, the members of the committee must qualify as “non-employee directors” under Rule 16b-3 of the Securities Exchange Act of 1934. In the case of awards intended to qualify for the performance-based compensation exemption under Section 162(m), administration must be by a committee comprised solely of two or more “outside directors” within the meaning of Section 162(m).

Subject to the terms of the Incentive Plan, the Administrator has the sole discretion to select the service providers who will receive awards, to determine the terms and conditions of awards, to modify or amend each award (subject to the repricing restrictions of the Incentive Plan), including to accelerate vesting or waive forfeiture restrictions, and to interpret the provisions of the Incentive Plan and outstanding awards. The Administrator may allow a participant to defer the receipt of payment of cash or delivery of shares that otherwise would be due to such participant. The Administrator may make rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws and may make all other determinations deemed necessary or advisable for administering the Incentive Plan.

Notwithstanding the foregoing, the Administrator cannot institute, without prior shareholder approval, an exchange program whereby the exercise prices of outstanding awards may be reduced, outstanding awards may be surrendered or cancelled in exchange for awards with a higher or lower exercise price, or outstanding awards may be transferred to a third party.

Eligibility

Awards may be granted to service providers of the Company and employees and consultants of any parent or subsidiary corporation of the Company. Incentive stock options may be granted only to employees who, as of the time of grant, are employees of the Company or any parent or subsidiary corporation of the Company.

Stock Options

Each option granted under the Incentive Plan will be evidenced by a written or electronic agreement between the Company and a participant specifying the number of shares subject to the option and the other terms and conditions of the option, consistent with the requirements of the Incentive Plan.

The exercise price per share of each option may not be less than the fair market value of a share of the Company’s Common Stock on the date of grant. However, any incentive stock option granted to a person who at the time of grant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company (a “Ten Percent Shareholder”) must have an exercise price per share equal to at least 110% of the fair market value of a share on the date of grant. The aggregate fair market value of the shares (determined on the grant date) covered by incentive stock options which first become exercisable by any participant during any calendar year also may not exceed $100,000. Generally, the fair market value of the Common Stock is the closing sales price of our stock as reported on the OTCQB tier of the OTC Markets Group, Inc. or such other national securities exchange or automated inter-dealer quotation system on which the shares are listed.

The Incentive Plan provides that the Administrator will determine the acceptable form(s) of consideration for exercising an option. An option will be deemed exercised when the Company receives the notice of exercise and full payment for the shares to be exercised, together with applicable tax withholdings.

Options will be exercisable at such times or under such conditions as determined by the Administrator and set forth in the award agreement. The maximum term of an option will be specified in the award agreement, provided that options will have a maximum term of no more than ten (10) years, and provided further that an incentive stock option granted to a Ten Percent Shareholder must have a term not exceeding five (5) years.

The Administrator will determine and specify in each award agreement, and solely in its discretion, the period of post-termination exercise applicable to each option following the participant’s cessation of service with the Company. In the absence of such a determination by the Administrator, the participant generally will be able to exercise his or her option for (i) three (3) months following his or her cessation of service for reasons other than death or cause and (ii) one (1) year following his or her death (with all shares subject to the option becoming fully vested and exercisable); provided, however, that the option immediately will terminate upon a cessation of service for cause.

In addition, if the participant is terminated for cause, the Company has the option to repurchase at cost any shares previously acquired through the exercise of an option under the Incentive Plan.

Stock Appreciation Rights

A stock appreciation right gives a participant the right to receive the appreciation in the fair market value of Company Common Stock between the date of grant of the award and the date of its exercise. Each stock appreciation right granted under the Incentive Plan will be evidenced by a written or electronic agreement between the Company and the participant specifying the exercise price and the other terms and conditions of the award, consistent with the requirements of the Incentive Plan.

The exercise price per share of each stock appreciation right may not be less than the fair market value of a share on the date of grant. Upon exercise of a stock appreciation right, the holder of the award will be entitled to receive an amount determined by multiplying (i) the difference between the fair market value of a share on the date of exercise over the exercise price by (ii) the number of exercised shares. The Company may pay the appreciation in cash, in shares, or in some combination thereof. The term of a stock appreciation right will be no more than ten (10) years from the date of grant. The terms and conditions relating to the period of post-termination exercise and the Company repurchase rights with respect to options described above also apply to stock appreciation rights.

Restricted Stock Awards

Awards of restricted stock are rights to acquire or purchase shares, which vest in accordance with the terms and conditions established by the Administrator in its sole discretion. Each restricted stock award granted will be evidenced by a written or electronic agreement between the Company and the participant specifying the number of shares subject to the award and the other terms and conditions of the award, consistent with the requirements of the Incentive Plan. Restricted stock awards may be subject to vesting conditions as the Administrator specified, and the shares acquired may not be transferred by the participant until vested. Notwithstanding the foregoing, if the Administrator desires that the award qualify as performance-based compensation under Section 162(m), any restrictions will be based on a specified list of performance goals and certain other requirements (see “Performance Goals” below for more information).

Unless otherwise provided by the Administrator, a participant will forfeit any shares of restricted stock as to which the restrictions have not lapsed prior to the participant’s termination of service. In addition, if the participant is terminated for cause, the Company has the option to repurchase at cost any vested shares previously acquired through an award of restricted stock under the Incentive Plan.

Unless the Administrator provides otherwise, participants holding restricted stock will have the right to vote the shares and to receive any dividends paid, except that dividends or other distributions paid in shares will be subject to the same restrictions on transferability and forfeitability as the original award. The Administrator may, in its sole discretion, reduce or waive any restrictions and may accelerate the time at which any restrictions will lapse or be removed.

Restricted Stock Units

The Administrator may grant restricted stock units which represent a right to receive shares at a future date as set forth in the participant’s award agreement. Each restricted stock unit granted under the Incentive Plan will be evidenced by a written or electronic agreement between the Company and the participant specifying the number of shares subject to the award and other terms and conditions of the award, consistent with the requirements of the Incentive Plan.

Restricted stock units will result in a payment to a participant only if the performance goals or other vesting criteria the Administrator may establish are achieved or the awards otherwise vest. Notwithstanding the foregoing, if the Administrator desires that the award qualify as performance-based compensation under Section 162(m), any restrictions will be based on a specified list of performance goals and certain other requirements (see “Performance Goals” below for more information).

After the grant of a restricted stock unit award, the Administrator, in its sole discretion, may reduce or waive any restrictions or vesting criteria that must be met to receive a payout and may accelerate the time at which any restrictions will lapse or be removed. A participant will forfeit any unearned restricted stock units as of the date set forth in the award agreement. The Administrator in its sole discretion may pay earned restricted stock units in cash, shares of the Company’s Common Stock, or a combination of cash and shares.

Performance Units and Performance Shares

Performance units and performance shares may also be granted under the Incentive Plan. Each award of performance units or shares granted under the Incentive Plan will be evidenced by a written or electronic agreement between the Company and the participant specifying the performance period and other terms and conditions of the award, consistent with the requirements of the Incentive Plan. Performance units and performance shares will result in a payment to a participant only if the performance goals or other vesting criteria the Administrator may establish are achieved or the awards otherwise vest.

Earned performance units and performance shares will be paid, in the sole discretion of the Administrator, in the form of cash, shares (which will have an aggregate fair market value equal to the earned performance units or shares at the close of the applicable performance period), or in a combination thereof. The Administrator may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment or service), or any other basis determined by the Administrator, in its discretion. Notwithstanding the foregoing, if the Administrator desires that the award qualify as performance-based compensation under Section 162(m), any restrictions will be based on a specified list of performance goals and certain other requirements (see “Performance Goals” below for more information).

After the grant of a performance unit or performance share, the Administrator, in its sole discretion, may accelerate, reduce or waive any performance objectives or other vesting provisions for such performance units or shares. Performance units will have an initial value established by the Administrator on or before the date of grant. Each performance share will have an initial value equal to the fair market value of a share on the grant date. A participant will forfeit any performance shares or units that are unearned or unvested as of the date set forth in the award agreement.

Performance Goals

The granting and/or vesting of awards of Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units, and other incentives under the Incentive Plan may be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of Section 162(m) and may provide for a targeted level or levels of achievement (“performance goals”) including: earnings before interest, taxes, depreciation and amortization (EBITDA), earnings before taxes and net earnings, earnings per share, gross margin, new product development or innovation, net income, operating income, quality, operating margin, return on capital, return on equity, revenue, revenue growth, and total shareholder return. The performance goals may differ from participant to participant and from award to award. Any criteria used may be measured (as applicable), in absolute terms, in combination with another performance goal or goals (for example, as a ratio or matrix), in relative terms (including, but not limited to, results for other periods, passage of time and/or against another company or companies or an index or indices), on a per-share or per-capita basis, against the performance of the Company as a whole or a segment of the Company (including, but not limited to, any combination of the Company and any subsidiary, division, joint venture, affiliate, and/or other segment), and/or on a pre-tax or after-tax basis. Prior to latest date by which would meet the requirements under Section 162(m), the Administrator will determine whether any significant element(s) or item(s) will be included or excluded from the calculation of performance goals with respect to any award recipient. As determined in the discretion of the Administrator latest date by which would meet the requirements under Section 162(m), achievement of performance goals for a particular award may be calculated in accordance with GAAP, or on a basis other than GAAP.

To the extent necessary to comply with the performance-based compensation provisions of Section 162(m), with respect to any award granted subject to performance goals, and no later than the latest possible date that could be used and still comply with the performance-based compensation provisions of Section 162(m), the Administrator will, in writing: (i) designate one or more participants, who would be considered a “covered employee” within the meaning of Code Section 162(m), to whom an award will be made, (ii) select the performance goals applicable to the performance period, (iii) establish the performance goals, and amounts or methods of computation of the awards which may be earned for the performance period, and (iv) specify the relationship between performance goals and the amounts or methods of computation of such awards, as applicable, to be earned by each participant for such performance period. Following the completion of each performance period, the Administrator will certify in writing whether the applicable performance goals have been achieved for such performance period. In determining the amounts earned by a participant, the Administrator may reduce or eliminate (but not increase) the amount payable at a given level of performance to take into account additional factors that the Administrator may deem relevant to the assessment of individual or corporate performance for the performance period. A participant will be eligible to receive payment pursuant to an award for a performance period only if the performance goals for such period are achieved.

Transferability of Awards

Unless determined otherwise by the Administrator, awards granted under the Incentive Plan generally are not transferable other than by will or by the laws of descent or distribution, and all rights with respect to an award granted to a participant generally will be available during a participant’s lifetime only to the participant.

Dissolution or Liquidation

In the event of the Company’s proposed dissolution or liquidation, the Administrator will notify each participant as soon as practicable prior to the effective date of such proposed transaction. An award will terminate immediately prior to consummation of such proposed action to the extent the award has not been previously exercised.

Change in Control

The Incentive Plan provides that, in the event of a merger or a “change in control” (as defined in the Incentive Plan), each award will be treated as the Administrator determines, including that each award be assumed or substantially equivalent awards substituted by the acquiring or succeeding corporation or its affiliate. The Administrator will not be required to treat all outstanding awards the same in the transaction.

If the successor corporation does not assume or substitute for the award, the participant will fully vest in and have the right to exercise all of his or her outstanding options and stock appreciation rights, all restrictions on restricted stock will lapse, and, with respect to restricted stock units, performance shares, and performance units, all performance goals or other vesting criteria will be deemed achieved target levels and all other terms and conditions met. In addition, if an option or stock appreciation right is not assumed or substituted for, the Administrator will notify the participant in writing or electronically that the option or stock appreciation right will be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and the option or stock appreciation right will terminate upon the expiration of such period.

If the successor corporation assumes or substitutes outstanding awards held by a non-employee director and the non-employee director ceases to be a director prior to or on the closing of the merger or change in control or within twelve months following the merger or change in control, then his or her options and stock appreciation rights will fully vest and become immediately exercisable. In addition, all restrictions on restricted stock, restricted stock units, performance shares, or performance units held by such non-employee director will lapse, and all performance goals or other vesting requirements will be deemed achieved at 100%, and all other terms and conditions met.

Termination or Amendment

The Incentive Plan will automatically terminate ten (10) years from the date of its adoption by the Board, unless terminated at an earlier time by the Board. The Administrator may amend, alter, suspend or terminate the Incentive Plan at any time, provided that no amendment may be made without shareholder approval to the extent approval is necessary or desirable to comply with any applicable laws. No amendment, alteration, suspension or termination may impair the rights of any participant unless mutually agreed otherwise between the participant and the Administrator.

Summary of U.S. Federal Income Tax Consequences

The following summary is intended only as a general guide to the material U.S. federal income tax consequences of participation in the Incentive Plan. The summary is based on existing U.S. laws and regulations, and there can be no assurance that those laws and regulations will not change in the future. The summary does not purport to be complete and does not discuss the tax consequences upon a participant’s death, or the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside. As a result, tax consequences for any particular participant may vary based on individual circumstances.

Incentive Stock Options

An optionee recognizes no taxable income for regular income tax purposes as a result of the grant or exercise of an incentive stock option qualifying under Section 422 of the Code. Optionees who neither dispose of their shares within two (2) years following the date the option was granted nor within one (1) year following the exercise of the option normally will recognize a capital gain or loss equal to the difference, if any, between the sale price and the purchase price of the shares. If an optionee satisfies such holding periods upon a sale of the shares, the Company will not be entitled to any deduction for federal income tax purposes. If an optionee disposes of shares within two (2) years after the date of grant or within one (1) year after the date of exercise (a “disqualifying disposition”), the difference between the fair market value of the shares on the exercise date and the option exercise price (not to exceed the gain realized on the sale if the disposition is a transaction with respect to which a loss, if sustained, would be recognized) will be taxed as ordinary income at the time of disposition. Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. Any ordinary income recognized by the optionee upon the disqualifying disposition of the shares generally should be deductible by the Company for federal income tax purposes, except to the extent such deduction is limited by applicable provisions of the Code.

The difference between the option exercise price and the fair market value of the shares on the exercise date is treated as an adjustment in computing the optionee’s alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the regular tax for the year. Annual rules may apply with respect to certain subsequent sales of the shares in a disqualifying disposition, certain basis adjustments for purposes of computing the alternative minimum taxable income on a subsequent sale of the shares and certain tax credits which may arise with respect to optionees subject to the alternative minimum tax.

Nonstatutory Stock Options

Options not designated or qualifying as incentive stock options will be nonstatutory stock options having no annual U.S. tax status. An optionee generally recognizes no taxable income as the result of the grant of such an option. Upon exercise of a nonstatutory stock option, the optionee normally recognizes ordinary income equal to the amount that the fair market value of the shares on such date exceeds the exercise price. If the optionee is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the exercise of a nonstatutory stock option, any gain or loss, based on the difference between the sale price and the fair market value on the exercise date, will be taxed as capital gain or loss. No tax deduction is available to the Company with respect to the grant of a nonstatutory stock option or the sale of the stock acquired pursuant to such grant.

Stock Appreciation Rights

In general, no taxable income is reportable when a stock appreciation right is granted to a participant. Upon exercise, the participant generally will recognize ordinary income in an amount equal to the fair market value of any shares of our Common Stock received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.

Restricted Stock Awards

A participant acquiring restricted stock generally will recognize ordinary income equal to the fair market value of the shares on the vesting date. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The participant may elect, pursuant to Section 83(b) of the Code, to accelerate the ordinary income tax event to the date of acquisition by filing an election with the Internal Revenue Service no later than thirty (30) days after the date the shares are acquired. Upon the sale of shares acquired pursuant to a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.

Restricted Stock Unit Awards

There are no immediate tax consequences of receiving an award of restricted stock units. A participant who is awarded restricted stock units generally will be required to recognize ordinary income in an amount equal to the fair market value of shares issued to such participant at the end of the applicable vesting period or, if later, the settlement date elected by the Administrator or a participant. Any additional gain or loss recognized upon any later disposition of any shares received would be capital gain or loss.

Performance Shares and Performance Unit Awards

A participant generally will recognize no income upon the grant of a performance share or a performance unit award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of receipt in an amount equal to the cash received and the fair market value of any cash or nonrestricted shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.

Section 409A

Section 409A of the Code provides certain new requirements for nonstatutory deferred compensation arrangements with respect to an individual’s deferral and distribution elections and permissible distribution events. Awards granted under the Incentive Plan with a deferral feature will be subject to the requirements of Section 409A of the Code. If an award is subject to and fails to satisfy the requirements of Section 409A of the Code, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation. Certain states have enacted laws similar to Section 409A which impose additional taxes, interest and penalties on nonstatutory deferred compensation arrangements. The Company will also have withholding and reporting requirements with respect to such amounts.

Tax Effect for the Company

The Company generally will be entitled to a tax deduction in connection with an award under the Incentive Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option). Annual rules limit the deductibility of compensation paid to our Chief Executive Officer and other “covered employees” as determined under Section 162(m) and applicable guidance. Under Section 162(m), the annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000. However, we can preserve the deductibility of certain compensation in excess of $1,000,000 if the conditions of Section 162(m) are met. These conditions include (among others) shareholder approval of the Incentive Plan, setting limits on the number of awards that any individual may receive and for awards other than certain stock options, establishing performance criteria that must be met before the award actually will vest or be paid. The Incentive Plan has been designed to permit (but not require) the Administrator to grant awards are intended to qualify as performance-based for purposes of satisfying the conditions of Section 162(m).

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECTS OF FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY WITH RESPECT TO AWARDS UNDER THE INCENTIVE PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.

Number of Awards Granted to Employees, Consultants, and Directors

The number of awards that an employee, director or consultant may receive under the Incentive Plan is in the discretion of the Administrator and therefore cannot be determined in advance other than with respect to the automatic grants to non-employee directors which have been approved by the Board. The following table sets forth on a pre-Share Consolidation basis (i) the aggregate number of shares of Common Stock subject to options granted under the 2013 Plan to our Named Executive Officers (“NEOs”) during the last fiscal year, and (ii) the average per share exercise price of such options. No other awards have been issued to our named executive officers.

Name of Individual or Group	Number of Shares Subject to Options Granted		Average Per Share Exercise Price of Option Grants
Mark R. Tauscher, Chief Executive Officer		1,908,565	$	0.09
Gregory W. Mann, Chief Financial Officer		1,272,377	$	0.09
All executive officers, as a group		3,180,942	$	0.09
All directors who are not executive officers, as a group		589,300	$	0.09
All employees who are not executive officers, as a group		1,345,901	$	0.09

Grants under the Incentive Plan will be made at the discretion of the compensation committee. Except with respect to the options expected to be granted on the closing date of the Proposed Transaction as set forth in the table below, the grants under the Incentive Plan are not yet determinable. The value of the awards granted under the Incentive Plan will depend on a number of factors, including the fair market value of PLC common stock on future dates, the exercise decisions made by the participants, and the extent to which any applicable performance goals necessary for vesting or payment are achieved. The closing price of PLC common stock on August 7, 2014 was $0.01.

Name of Individual or Group	Number of Shares Subject to Options Granted (1)		Average Per Share Exercise Price of Option Grants (1)
Patricia Scheller, Chief Executive Officer		221,682	$	1.24
Scott Durbin, Chief Financial Officer		82,580	$	1.24
All executive officers, as a group		304,262	$	1.24
All directors who are not executive officers, as a group		1,812	$	7.45
All employees who are not executive officers, as a group		14,744	$	5.76

(1) Reflects adjustment based on the exchange ratio, as defined in the Merger Agreement, of 0.0080497 of one PLC Share for every one share of Viveve.

Recommendation of the Board

PLC’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS VOTE “FOR” THE APPROVAL AND ADOPTION OF THE AMENDMENT TO THE INCENTIVE PLAN.

PROPOSAL NO. 7 — THE SHARE CONSOLIDATION PROPOSAL

Introduction

The PLC Board of Directors has unanimously approved and is recommending that PLC shareholders authorize the filing of an amendment to the articles of continuance to effect a consolidation (or reverse stock split) of outstanding PLC Shares on the basis of one post-consolidation PLC Share for every one hundred (100) PLC Shares outstanding immediately prior to the Share Consolidation. Assuming the proposal is approved, it is anticipated that articles of amendment to the articles of continuance will be filed to effect the Share Consolidation as soon as practicable following consummation of the Proposed Transaction. However, pursuant to the Share Consolidation Resolution, the PLC Board of Directors may, in its discretion, decide not to proceed with the Share Consolidation at any time prior to the filing of articles of amendment without further authorization from or notice to the PLC shareholders. This proposal is conditional upon PLC shareholder approval of the Merger Proposal and the Spin-Off Proposal. If either the Merger Proposal or the Spin-Off Proposal is not approved, this proposal will have no effect.

If this proposal is approved and the PLC Board of Directors implements the Share Consolidation, it will become effective immediately after articles of amendment to amend PLC’s articles of continuance are filed with the registrar under the YBCA. This summary is qualified by reference to the complete text of the proposed articles reflecting the Share Consolidation, a copy of which is a part of this proxy statement and attached as Annex C, and the complete text of the special resolution to be passed at the annual meeting, a copy of which is a part of this proxy statement and attached as Annex D.

If the Share Consolidation is implemented:

•

each of the issued and outstanding PLC Shares as of the Record Date will automatically be consolidated on the basis of one post-consolidation PLC Share for every one hundred (100) PLC Shares outstanding immediately prior to the Share Consolidation; and

•

the number of shares issuable pursuant to the Proposed Transaction, the number of PLC Shares issuable upon the exercise of any outstanding options and warrants, the exercise price thereof and the number of shares reserved for future issuances under the Incentive Plan will be adjusted as appropriate to reflect the Share Consolidation.

Vote Required for Approval

The affirmative vote of the holders of not less than two-thirds of the shares of common stock voting on such proposal is required to approve the Share Consolidation Proposal.

Purpose of the Proposed Share Consolidation

While PLC expects that the Share Consolidation will increase the Combined Company’s share price, the long-term consequences are less predictable. The price of the Combined Company’s shares are likely to be affected by the Combined Company’s performance and by general market and economic conditions that cannot be predicted or evaluated by the PLC Board of Directors at this time. Accordingly, even if the Share Consolidation is successful in achieving a higher share price in the short-term, there is no assurance that the market value of the Combined Company’s shares will be greater after the Share Consolidation than it would be without ever effecting the Share Consolidation.

If the Share Consolidation proposal is approved, the PLC Board of Directors may nevertheless decide not to proceed with the Share Consolidation. Under this proposal, the PLC Board of Directors is retaining this discretion because the closing price of the Combined Company’s shares could substantially increase before or after the annual meeting therefore weakening the reasons for any share consolidation.

Material Effects of the Proposed Share Consolidation

If the Share Consolidation Resolution is approved at the Annual Meeting and the PLC Board of Directors elects to effect the proposed Share Consolidation, each PLC Share outstanding immediately prior to the Share Consolidation would automatically be changed, as of the effective time of the Share Consolidation, into one-hundredth of one PLC Share. In addition, subject to the terms and conditions of each optionholder’s option agreement with PLC and each warrantholder’s warrant certificate, the number of PLC Shares issuable upon the exercise of PLC’s outstanding options and warrants, the exercise price thereof and the number of shares reserved for future issuances under the Incentive Plan will be adjusted as appropriate to reflect the Share Consolidation.

The Share Consolidation will affect all PLC shareholders uniformly and will not affect any PLC shareholder’s percentage ownership interests or proportionate voting power, except to the extent that the Share Consolidation results in any PLC shareholders owning a fractional PLC Share in which case each fractional PLC Share that is less than one-half of one PLC Share will be cancelled without any compensation therefor and each fractional PLC Share that is at least one-half of one PLC Share will be adjusted upward to one whole PLC Share. After the Share Consolidation, the PLC Shares will have the same voting rights and rights to dividends and distributions, if any, and will be identical in all other respects to the PLC Shares now authorized. The PLC Shares issued pursuant to the Share Consolidation will remain fully paid and non-assessable. The Share Consolidation is not intended as, and will not have the effect of, a “going private transaction” covered by Rule 13e-3 of the Exchange Act. Following the Share Consolidation, the Combined Company will remain subject to the reporting requirements of the Exchange Act.

PLC shareholders should recognize that if the Share Consolidation is effected, they would own fewer PLC Shares than they presently own. In addition, the Share Consolidation may increase the number of PLC shareholders who own odd-lots (less than 100 shares). Shareholders who hold odd-lots may experience an increase in the cost of selling their PLC Shares, as well as greater difficulty in effecting such sales.

Procedure for Effecting Share Consolidation and Exchange of Stock Certificates

If PLC shareholders authorize this proposal, PLC intends to file an amendment to the articles of continuance with the registrar under the YBCA as soon as practicable following consummation of the Proposed Transaction, at which time the Share Consolidation will take effect.

Effect on Beneficial Holders of PLC Shares (i.e., shareholders who hold in “street name”)

Upon the Share Consolidation, PLC intends to treat PLC Shares held by shareholders in “street name,” through a broker, investment dealer, bank, trust company or other nominee, in the same manner as registered shareholders whose PLC Shares are registered in their names. Brokers, investment dealers, banks, trust companies or other nominees will be instructed to effect the Share Consolidation for their beneficial holders holding the PLC Shares in “street name.” However, these brokers, investment dealers, banks, trust companies or other nominees may have different procedures than registered shareholders for processing the Share Consolidation. If a shareholder holds PLC Shares with a broker, investment dealer, bank, trust company or other nominee and has any questions in this regard, such shareholder is encouraged to contact his or her broker, investment dealer, bank, trust company or other nominee.

Share Certificates

The letter of transmittal (the “Letter of Transmittal”) which is being sent to registered PLC shareholders with this proxy statement sets out the procedure to be followed by registered PLC shareholders for use in transmitting their share certificates to PLC’s registrar and transfer agent, Computershare Trust Company, N.A. (“Computershare”) in exchange for new certificates reflecting (i) the number of PLC Shares to which such PLC shareholder is entitled as a result of the Share Consolidation and (ii) the change in the Company’s name to “Viveve Medical, Inc.”

In order to receive the new consolidated PLC Shares reflecting the Name Change and Share Consolidation, a registered PLC shareholder must deliver or send the Letter of Transmittal, properly completed and duly executed, together with certificate(s) representing its PLC Shares and all other required documents to Computershare at the address set forth in the Letter of Transmittal. It is each registered PLC shareholder’s responsibility to ensure that the Letter of Transmittal is received by Computershare. No certificates for fractional consolidated PLC Shares will be issued. PLC shareholders holding PLC shares in the name of a broker, bank or other nominee should contact that nominee for instructions and assistance in exchanging their PLC Shares pursuant to the Share Consolidation and Name Change.

If the Share Consolidation and Name Change are approved and effected, PLC shareholders are entitled to receive new share certificates reflecting both the Share Consolidation and the Name Change. If neither the Share Consolidation nor the Name Change are approved and effected, the existing certificate or certificates and all other ancillary documents submitted to Computershare will be returned forthwith to the PLC shareholder at the address set out in the Letter of Transmittal or, failing such address being specified, to the PLC shareholder at the last address of the undersigned as it appears on the securities register of PLC.

No Fractional Shares

No fractional PLC Shares will be issued if, as a result of the proposed Share Consolidation, a PLC shareholder would otherwise become entitled to a fractional PLC Share. Instead, each fractional PLC Share that is less than one-half of one PLC Share will be cancelled without any compensation therefor, and each fractional PLC Share that is at least one-half of one PLC Share will be adjusted upward to one whole PLC Share.

Dissenter’s Rights

Under the YBCA, PLC shareholders do not have any dissent and appraisal rights with respect to the proposed Share Consolidation.

Possible Disadvantages of the Proposed Share Consolidation

Even though the PLC Board of Directors believes that the potential advantages of the Share Consolidation (or reverse stock split) outweigh any disadvantages that might result, the following are some of the possible disadvantages:

•

The reduced number of PLC Shares resulting from the Share Consolidation could adversely affect the liquidity of PLC Shares.

•

There can be no assurance that the market price per PLC Share after the proposed Share Consolidation will remain unchanged or increase in proportion to the reduction in the number of PLC Shares outstanding before the Share Consolidation. For example, based on a closing price of the PLC Shares of $0.03 per share and the ratio of one post-consolidation PLC Share for every 100 PLC Shares outstanding immediately prior to the Share Consolidation, there can be no assurance that the post-Share Consolidation market price of the PLC Shares would be $3.00 per share or greater. Accordingly, the total market capitalization of the PLC Shares (the aggregate value of all the issued and outstanding PLC Shares at the prevailing market price) after the proposed Share Consolidation may be lower than the total market capitalization before the proposed Share Consolidation. Moreover, in the future, the market price of the PLC Shares following the Share Consolidation may not exceed the market price prior to the Share Consolidation.

•

A share consolidation may leave certain shareholders with one or more “odd lots,” which are holdings in amounts of less than 100 PLC Shares. These odd lots may be more difficult to sell than PLC Shares in even multiples of 100.

•

While the PLC Board of Directors believes that a higher share price may help generate investor interest, there can be no assurance that the proposed Share Consolidation will result in a per-share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of the shares of the Combined Company may not necessarily improve.

Certain U.S. Federal Income Tax Consequences of the Proposed Share Consolidation

The following is a summary of certain U.S. federal income tax consequences relating to the proposed Share Consolidation as of the date hereof. This summary addresses only U.S. holders who hold their PLC Shares as a capital asset for U.S. federal income tax purposes (i.e., generally, property held for investment).

For purposes of this summary, a “U.S. holder” means a beneficial owner of PLC Shares who is any of the following for U.S. federal income tax purposes: (i) a citizen or resident of the United States, (ii) a corporation created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if (1) its administration is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all of its substantial decisions, or (2) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

This summary is based on interpretations of the Internal Revenue Code of 1986, as amended, and regulations, rulings and judicial decisions as of the date hereof. These authorities may be changed, perhaps retroactively, and may adversely affect the U.S. federal income tax consequences described herein. This summary does not discuss all of the tax consequences that may be relevant to particular PLC shareholders or to PLC shareholders subject to annual treatment under U.S. federal income tax laws. Moreover, this description does not address the U.S. federal estate and gift tax, alternative minimum tax, state, local, foreign or other tax consequences of the Share Consolidation.

Each PLC shareholder should consult its own tax adviser concerning the particular U.S. federal tax consequences of the proposed Share Consolidation, as well as any consequences arising under the laws of any other taxing authority, such as any state, local or foreign income tax consequences to which the individual PLC shareholders may be subject. There can be no assurance that the Internal Revenue Service will agree with one or more of the tax consequences described herein, and we have not obtained, nor do we intend to obtain, a ruling from the Internal Revenue Service with respect to the United States federal income tax consequences of the Share Consolidation.

A share consolidation will not result in the recognition of gain or loss by a U.S. holder for U.S. federal income tax purposes. The U.S. holder’s aggregate adjusted bases of the post-Share Consolidation shares will be the same as the U.S. holder’s aggregate adjusted bases of the pre-Share Consolidation shares. The holding period of the post-Share Consolidation shares will include a U.S. holder’s holding periods for the pre-Share Consolidation shares.

The Combined Company will not recognize any gain or loss as a result of the proposed Share Consolidation.

Recommendation of the Board

PLC’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE SHARE CONSOLIDATION PROPOSAL.

PROPOSAL NO. 8 — THE AUDITOR PROPOSAL

To provide continuity and permit an orderly transition pursuant to the Viveve Merger, the audit committee of our Board of Directors has selected BPM as our independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2014. BPM is the independent registered public accounting firm of Viveve and audited the financial statements of Viveve as of December 31, 2013 and 2012 and for the years ended December 31, 2013 and 2012 included in this proxy.

Vote Required for Approval

The affirmative vote of the holders of a majority of the shares of common stock voting on the matter at the meeting is necessary to approve the selection of BPM as our independent registered public accounting firm and to authorize the audit committee to fix the remuneration to be paid to BPM. Although the audit committee has sole authority to appoint auditors, in the event of a negative vote, the audit committee may reconsider its selection. A representative of BPM is expected to be present at the annual meeting with the opportunity to make a statement if he or she desires to do so, and is expected to be available to respond to appropriate questions. Representatives of McGladrey LLP, which served as PLC’s auditor during 2013 and audited PLC’s 2012 and 2013 financial statements are also expected to be present at the annual meeting with the opportunity to make a statement if he or she desires to do so, and is expected to be available to respond to appropriate questions.

Recommendation of the Board

OUR BOARD OF DIRECTORS BELIEVES THAT THE AUDITOR PROPOSAL IS IN OUR AND OUR SHAREHOLDERS’ BEST INTERESTS AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THIS PROPOSAL.

Audit Fees and Non-Audit Fees

The following table summarizes the fees incurred by McGladrey LLP, our independent registered public accounting firm for 2013 and 2012 and billed to us for each of the last two fiscal years:

Fee Category	2013		2012
Audit Fees(1)	$	99,000	$	76,500
Audit-Related Fees	$	—	$	—
Tax Fees(2)	$	21,000	$	23,500
All Other Fees	$	—	$	—

(1)	Audit fees consist of fees for the audit of our financial statements, the review of the interim financial statements included in our quarterly reports on Form 10-Q, and other professional services provided in connection with statutory and regulatory filings or engagements.

(2)	Tax fees consist of fees for tax compliance and tax planning services. Tax compliance services, which relate to the preparation of corporate tax returns, accounted for all fees paid in 2013 and 2012.

Pre-Approval Policy and Procedures

Our audit committee has adopted policies and procedures relating to the approval of all audit and non-audit services that are to be performed by our registered public accounting firm. This policy generally provides that we will not engage our registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by the audit committee or the engagement is entered into pursuant to one of the pre-approval procedures described below.

From time to time, our audit committee may pre-approve specified types of services that are expected to be provided to us by our registered public accounting firm during the next twelve months. Any such pre-approval must be detailed as to the particular service or type of services to be provided and must also be generally subject to a maximum dollar amount.

Our audit committee has also delegated to the chairman of the audit committee the authority to approve any audit or non-audit services to be provided to us by our registered public accounting firm. Any approval of services by the chairman of the audit committee pursuant to this delegated authority must be reported on at the next meeting of the audit committee.

Change of Independent Public Accountants

On August 7, 2014, the PLC board of directors approved the dismissal of McGladrey LLP as PLC's independent registered public accounting firm, contingent on and to be effective as of the date of the closing of the Viveve Merger.

The reports of McGladrey LLP on PLC's consolidated financial statements for the fiscal years ended December 31, 2013 and 2012 did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, other than to include a qualification as to substantial doubt about PLC’s ability to continue as a going concern, audit scope or accounting principle, and included explanatory paragraphs.

During PLC’s fiscal years ended December 31, 2013 and 2012 and through August 11, 2014, (i) there were no disagreements (as that term is defined in Item 304(a)(1)(iv) of Securities and Exchange Commission Regulation S-K and the related instructions) between PLC and McGladrey LLC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of McGladrey LLC would have caused McGladrey LLC to make reference to the subject matter of the disagreement in connection with its reports on the Company's consolidated financial statements for such years, and (ii) there were no "reportable events" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

On August 7, 2014, the audit committee approved the appointment of BPM as PLC's independent registered public accounting firm to perform independent audit services beginning with the fiscal year ending December 31, 2014. During PLC's fiscal years ending December 31, 2013, and 2012, and through August 11, 2014, neither PLC, nor anyone on its behalf, consulted BPM regarding either (i) application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to the consolidated financial statements of PLC, in any case where a written report or oral advice was provided to PLC by BPM that BPM concluded was an important factor considered by PLC in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a disagreement (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a "reportable event" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

PROPOSAL NO. 9 — THE ADJOURNMENT PROPOSAL

The Adjournment Proposal, if adopted, will allow our Board of Directors to adjourn the annual meeting of shareholders to a later date or dates to permit further solicitation of proxies. The Adjournment Proposal will only be presented to our shareholders in the event that, based on the tabulated votes, there are not sufficient votes at the time of the annual meeting of shareholders to approve one or more of the proposals presented at the annual meeting. In no event will our Board of Directors adjourn the annual meeting of shareholders or consummate the Proposed Transaction beyond the date by which it may properly do so under our articles of continuance and Yukon Territory law.

Consequences if the Adjournment Proposal is Not Approved

If the Adjournment Proposal is not approved by our shareholders, our Board of Directors may not be able to adjourn the annual meeting of shareholders to a later date in the event that, based on the tabulated votes, there are not sufficient votes at the time of the annual meeting of shareholders to approve the other proposals.

Required Vote

Adoption of the Adjournment Proposal requires the affirmative vote of a majority of the shares voting at the annual meeting of shareholders and entitled to vote thereon. Adoption of the Adjournment Proposal is not conditioned upon the adoption of any of the other proposals.

Recommendation of the Board

PLC’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.

THE PROPOSED TRANSACTION AGREEMENTS

This section of the proxy statement describes the material provisions of the RenalGuard Reorganization Agreement and the Viveve Merger, but does not purport to describe all of the terms of the RenalGuard Reorganization Agreement or the Viveve Merger. The following summary is qualified in its entirety by reference to the complete text of the Viveve Merger Agreement and the form of RenalGuard Reorganization Agreement, copies of which are attached as Annexes A and B hereto. You are urged to read the Viveve Merger Agreement and the RenalGuard Reorganization Agreement in their entirety as the primary legal documents that govern the Proposed Transaction.

Each of the RenalGuard Reorganization Agreement and the Viveve Merger Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of each agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating each of those agreements. The representations, warranties and covenants in the Viveve Merger Agreement are also modified in important part by the underlying disclosure schedules which are not filed publicly and which are subject to a contractual standard of materiality different from that generally applicable to shareholders and were used for the purpose of allocating risk among the parties rather than establishing matters as facts. We do not believe that these schedules contain information that is material to an investment decision.

The Viveve Merger Agreement

Structure of Merger

The Viveve Merger Agreement provides for the merger of our wholly-owned subsidiary, Merger Sub, with and into Viveve, with Viveve surviving as a wholly-owned subsidiary of the Company. As result, each outstanding share of capital stock of Viveve will convert into the right to receive shares of our common stock, and each outstanding share of common stock of Merger Sub will convert into one share of common stock of Viveve.

Consideration to be Issued at Closing of the Viveve Merger

Pursuant to the Viveve Merger Agreement, upon the effectiveness of the Viveve Merger, all shares of capital stock (including common and preferred stock) of Viveve held by accredited equity holders will be exchanged for the right to receive shares of common stock of the Company (collectively referred to herein as the Closing Net Merger Shares). The aggregate number of Closing Net Merger Shares to be issued at closing of the Viveve Merger is based on an exchange ratio of 0.0080497 of one PLC Share for every one share of Viveve. We currently expect that, at the closing, we will issue approximately 4,655,023 PLC Shares to the accredited Viveve equity holders pursuant to the terms of the Viveve Merger Agreement. Viveve will not have any warrants or options issued and outstanding at the time of the Viveve Merger. The remaining shares of capital stock of Viveve held by the non-accredited equity holders will be exchanged for a cash payment equal to the product of (A) 0.0080497 and (B) $0.53 for each share of Viveve common stock, at the closing. We currently expect that, at the closing, we will make an aggregate cash payment of less than $35,000 to the non-accredited Viveve equity holders pursuant to the terms of the Viveve Merger Agreement.

Closing and Effective Time of the Viveve Merger

The Viveve Merger is expected to be consummated at the earliest practicable time after the satisfaction or waiver of the conditions described below under the subsection below entitled “—Conditions to the Closing of the Viveve Merger,” but in no event later than ten business days following the satisfaction or waiver of the conditions described below under the subsection below entitled “—Conditions to the Closing of the Viveve Merger.”

Conditions to Closing of the Viveve Merger

Conditions to the Obligations of each of Company, Merger Sub and Viveve

The obligations of each of the Company, Merger Sub and Viveve to effect the Viveve Merger and otherwise consummate the transactions contemplated by the Viveve Merger Agreement are subject to the satisfaction (or waiver by each party), at or prior to the closing, of each of the following conditions:

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There has been no government action or change of law that would prohibit or make illegal the transactions contemplated by the Viveve Merger Agreement.

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The Company has received the requisite Company shareholder approval contemplated by this proxy statement, including approval of the Viveve Merger Agreement and the Viveve Merger.

Conditions to the Company’s and Merger Sub’s Obligations

The obligations of the Company and Merger Sub to effect the Viveve Merger and otherwise consummate the transactions contemplated by the Viveve Merger Agreement are subject to the satisfaction (or waiver by the Company), at or prior to the closing, of each of the following conditions:

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All of Viveve’s representations and warranties in the Viveve Merger Agreement that contain a materiality qualification are true and correct in all respects as of the date of the Viveve Merger Agreement and as of the closing date as if made on and as of the closing date and the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had or would reasonably be likely to not have a Material Adverse Effect.

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All of Viveve’s representations and warranties in the Viveve Merger Agreement that do not contain a materiality qualification are true and correct in all material respects as of the date of the Viveve Merger Agreement and as of the closing date as if made on and as of the closing date and the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had or would reasonably be likely to not have a Material Adverse Effect.

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Each of the covenants and obligations that Viveve or any of its subsidiaries is required to comply with or to perform at or prior to the closing has been complied with and performed in all material respects.

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The Company has received a secretary’s certificate from Viveve, certifying as to (i) the proper corporate action by Viveve to approve the Viveve Merger and related transactions, and (ii) the incumbency of the signatories of Viveve and containing a certified certificate of incorporation and good standing certificate for Viveve.

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No Material Adverse Effect with respect to Viveve has occurred, and no event has occurred or circumstance exists that, in combination with any other events or circumstances, would reasonably be expected to have a Material Adverse Effect on Viveve.

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Viveve has completed the transactions contemplated by the Warrant Termination Agreements and the Viveve Convertible Note Termination Agreements.

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At least 98% of the stockholders of Viveve have executed a stockholder questionnaire.

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Viveve has paid the PLC Professional Fees (as defined below) related to the Viveve Merger and the related transactions.

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Viveve has (i) no more than $1.5 million of liabilities in the form of accounts payable and accrued expenses, and (ii) a principal balance on its outstanding senior secured notes of no more than $1.5 million.

Conditions to Viveve’s Obligations

The obligations of Viveve to effect the Viveve Merger and otherwise consummate the transactions contemplated by the Viveve Merger Agreement are subject to the satisfaction (or waiver by Viveve), at or prior to the closing, of the following conditions:

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All of the Company and Merger Sub’s representations and warranties in the Viveve Merger Agreement that contain a materiality qualification qualifiers are true and correct in all respects as of the date of the Viveve Merger Agreement and as of the closing date as if made on and as of the closing date and the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had or would reasonably be likely to not have a material adverse effect.

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