PART
III
Item
10. Directors, Executive Officers and Corporate Governance.
Directors
and Executive Officers
The
following table discloses our directors and executive officers who served during the fiscal year ended December 31, 2017 and through
April 30, 2018:
Name
|
|
Age
|
|
Title
|
|
|
|
|
|
John
D. Maatta
|
|
66
|
|
Chief
Executive Officer, President, and Director
|
|
|
|
|
|
Paul
L. Kessler
|
|
57
|
|
Executive
Chairman
|
|
|
|
|
|
Randall
S. Malinoff
1
|
|
58
|
|
Chief
Operating Officer
|
|
|
|
|
|
Greg
Suess
|
|
45
|
|
Director
|
|
|
|
|
|
Jordan
Schur
2
|
|
53
|
|
Director
|
|
|
|
|
|
Michael
Breen
3
|
|
55
|
|
Director
|
|
|
|
|
|
Vadim
Mats
4
|
|
34
|
|
Former
Director
|
|
(1)
|
Effective
June 17, 2017, Mr. Malinoff no longer serves as the Company’s Chief Operating Officer.
|
|
(2)
|
Mr.
Schur joined the Board as a Director on March 29, 2017
|
|
(3)
|
Mr.
Breen joined the Board as a Director on March 29, 2017.
|
|
|
|
|
(4)
|
Mr.
Mats resigned as a Director on March 23, 2017.
|
John
D. Maatta, age 66, Chief Executive Officer, President and Director
John
D. Maatta has been a member of the Board since May 25, 2011, serving as Chairman of the Board from February 5, 2016 through April
22, 2016 and Mr. Maatta has served as the Company’s Chief Executive Officer and President since May 3, 2016. Formerly, Mr.
Maatta was engaged in the practice of law. Mr. Maatta also served as EVP of The CW Television Network, prior to which he was the
Chief Operating Officer of The CW Network, which is America’s fifth broadcast network and a network that focuses substantially
on targeting young adults between the ages of 18 and 34. From September 2005 through September 2006, Mr. Maatta served as the
Chief Operating Officer of The WB, a Warner Bros. television network (“The WB”), where he had direct oversight of
all business and operations departments, such as business affairs, finance, network distribution (which included The WB 100+ station
group), technology, legal, research, network operations, broadcast standards and human resources. While Chief Operating Officer
at The WB, Mr. Maatta also served as The WB’s General Counsel. Mr. Maatta is currently a director of Trader Vic’s,
Inc., a Polynesian-style restaurant chain, a position he has held since 1998. Mr. Maatta received a Bachelor of Arts in Government
from the University of San Francisco in 1974, and a Juris Doctorate from the University of California, Hastings College of the
Law, in 1977. Between 2013 and 2016 Mr. Maatta served as the President of UNICEF for the Southern California region, and is a
current member of the UNICEF Southern California Board and the Chairman of the UNICEF Chinese Children’s Initiative. Mr.
Maatta is also a member of the Southern California Board of the Asia Society.
The
Board believes that Mr. Maatta’s experience with operating companies in the entertainment industry and his contacts in the
industry are important factor in the Company’s growth as a digital entertainment and event company.
Paul
L. Kessler, age 57, Executive Chairman
Paul
L. Kessler was appointed as Executive Chairman of the Company on December 29, 2016. Mr. Kessler combines over 25 years of experience
as an investor, financier and venture capitalist. In 2000, Mr. Kessler founded Bristol Capital Advisors, LLC, a Los Angeles based
investment advisor, and has served as the Principal and Portfolio Manager from 2000 through the present. Mr. Kessler has broad
experience in operating, financing, capital formation, negotiating, structuring and re-structuring investment transactions. He
is involved in all aspects of the investment process including identification and engagement of portfolio companies. His investment
experience encompasses both public and private companies. Mr. Kessler has actively worked with executives and boards of companies
on corporate governance and oversight, strategic repositioning and alignment of interests with shareholders.
The
Board believes that Mr. Kessler’s extensive experience in matters including capital formation, corporate finance, investment
banking, founder, owner, operator of successful companies, corporate governance, as well as his understanding of capital markets,
will provide a significant contribution to the growth of the Company.
Greg
Suess, age 45, Director
Greg
Suess has been a director of our Company since May 9, 2011. In 2000, he co-founded ROAR, a Beverly Hills-based management and
consulting company that focuses on media and entertainment and provides comprehensive management services for its clients, including
talent and brand management, managing partnerships, strategic alliances and marketing strategies that engage consumers through
entertainment, music and lifestyle experiences. Mr. Suess is, and has been since inception, a partner at ROAR. Since 1997, Mr.
Suess has been with the law firm of Glaser, Weil, Fink, Howard, Avchen & Shapiro, LLP, where he is currently Partner and focuses
on general corporate law and media and entertainment. Mr. Suess holds a Bachelor of Science from the University of Southern California
(Lloyd Greif Center for Entrepreneurial Studies), and holds a JD/MBA from Pepperdine University. He is a member of the State Bar
of California.
The
Board believes that Mr. Suess’ extensive experience and background in the media and entertainment industry complements the
Company’s events business and its new initiatives and will provide a significant contribution to the Company’s growth.
Michael
Breen, age 55, Director
Mr.
Breen is an English qualified solicitor and was the Managing Director of the Sports and Entertainment Division of Bank Insinger
de Beaufort N.V., a wealth management organization and part of the BNP Paribas Group, one of the world’s largest banks.
Mr. Breen was an equity partner with the law firm Clyde & Co, where he specialized in all aspects of sports and entertainment
law. Mr. Breen also has extensive experience in event based entertainment, having been responsible for the legal documentation
relating to the world-famous UK music awards known as the Brit Awards. Mr. Breen holds an Honours LLB degree in law from the University
College of Wales, Aberystwyth.
The
Board believes Mr. Breen’s extensive experience in the entertainment industry will allow him to provide a significant contribution
to the Company’s growth.
Jordan
Schur, age 53, Director
Mr.
Schur is a veteran of the music and film industries. In 1994, Mr. Schur created Flip Records, a record label that sold over seventy
million records. In 1999, Mr. Schur was appointed President of Geffen Records at Universal Music Group, where he merged the original
Geffen Records with MCA Records and DreamWorks Records. The expanded company went on to become a market leader, generating over
Two Billion Dollars in sales. In 2006, Mr. Schur left Geffen and founded Suretone Records which drove several artists to number
one on itunes and soundscan in the U.S. and around the world. Mr. Schur entered the film industry in 2008, founding Mimran Schur
Pictures and going on to become a successful film producer. In 2012, Mr. Schur founded Suretone Pictures, where he released several
notable films. In 2014, Mr. Schur, in partnership with Cinsay, created and launched Suretone Live, the world’s first syndicatable
e-commerce and social media driven film, television, and music content destination.
The
Board believes Mr. Schur’s extensive experience in the music and film industry will allow him to provide a significant contribution
to the Company’s growth.
Family
Relationships
There
are no family relationships among our directors, executive officers, or persons nominated or chosen by the Company to become directors
or executive officers.
Board
Meetings and Annual Meeting Attendance
The
Board met approximately one time during fiscal year ended December 31, 2017. No director attended less than 100% of the
meetings held while such director was serving on the Board. Additionally, the Board acted approximately one time by unanimous
written consent in lieu of a meeting during 2017.
Committees
of the Board of Directors
Our
Board currently has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee.
Audit
Committee
On
March 17, 2013, the Board authorized the creation of an Audit Committee. Currently, the Audit Committee is not comprised of any
members as its former members have departed from the Board or resigned from their position on the Audit Committee upon accepting
positions as officers of the Company. The Audit Committee’s functions include: selecting our independent registered public
accountants; reviewing the results and scope of the audit and other services provided by our independent registered public accountants;
reviewing our financial statements for each interim period and for our year end and our internal financial and accounting controls;
and recommending, establishing and monitoring the Company’s disclosure controls and procedures. The Audit Committee did
not hold a meeting in 2017. The Company intends to appoint members to the Audit Committee in 2018.
Compensation
Committee
On
March 17, 2013, the Board authorized the creation of a Compensation Committee. Currently, Mr. Suess serves as the sole member
of the Compensation Committee. The Compensation Committee is responsible for establishing and administering our policies involving
the compensation of all of our executive officers and establishing and recommending to our Board the terms and conditions of all
employee and consultant compensation and benefit plans. The Compensation Committee did not hold a meeting in 2017. The
Company intends to appoint additional members to the Compensation Committee in 2018.
Nominating
and Corporate Governance Committee
On
March 13, 2014, the Board authorized the creation of a Nominating and Corporate Governance Committee. Currently, Mr. Suess serves
as the sole member of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee reviews
and provides oversight with regard to the Company’s corporate governance related policies and procedures and also recommends
nominees to the Board and committees of the Board, develops and recommends to the Board corporate governance principles, and oversees
the evaluation of the Board and management. The Nominating and Corporate Governance Committee did not hold a meeting in
2017. The Company intends to appoint additional members to the Nominating and Corporate Governance Committee in 2018.
Committee
Charters
The
Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee have not yet adopted written
charters which govern their conduct. The committees anticipate adopting such charters by the end of the next fiscal quarter.
Board
Oversight in Risk Management
Risk
is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of
risks, including liquidity risk, operational risk, strategic risk and reputation risk. Our Chief Executive Officer also serves
as one of our directors. In the context of risk oversight, at the present stage of our operations we believe that our selection
of one person to serve in both positions provides the Board with additional perspective which combines the operational experience
of a member of management with the oversight focus of a member of the Board. The business and operations of the Company are managed
by our Board as a whole, including oversight of various risks that the Company faces.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more
of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in
beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and
regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).
Based
solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock during the
fiscal year ended December 31, 2017, all but one were timely. Mr. Paul Kessler, the Company’s Chairman of the Board of Directors,
made one late filing in 2017, but has since made all the required filings as of April 30, 2018.
Code
of Ethics
We
have not yet adopted a code of ethics. A Code of Ethics will be adopted in the future.
Legal
Proceedings
There
are no material proceedings to which any director or officer, or any associate of any such director or officer, is a party that
is adverse to our Company or any of our subsidiaries or has a material interest adverse to our Company or any of our subsidiaries.
No director or executive officer has been a director or executive officer of any business which has filed a bankruptcy petition
or had a bankruptcy petition filed against it during the past ten years. No director or executive officer has been convicted of
a criminal offense or is the subject of a pending criminal proceeding during the past ten years. No director or executive officer
has been the subject of any order, judgment or decree of any court permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or banking activities during the past ten years. No director
or officer has been found by a court to have violated a federal or state securities or commodities law during the past ten years.
Item
11. Executive Compensation.
2016
SUMMARY COMPENSATION TABLE
Name
and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
D. Maatta (1)
|
|
2016
|
|
|
$
|
165,277
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
121,953
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
287,230
|
|
Chief
Executive Officer
|
|
2017
|
|
|
$
|
138,269
|
|
|
$
|
|
|
|
$
|
-
|
|
|
$
|
74,980
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
213,249
|
|
Paul
L. Kessler (2)
|
|
2016
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Executive
Chairman
|
|
2017
|
|
|
$
|
6,480
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
34,883
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
41,363
|
|
Randall
S. Malinoff (3)
|
|
2016
|
|
|
$
|
168,462
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
65,613
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
234,075
|
|
Chief
Operating Officer
|
|
2017
|
|
|
$
|
108,846
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
38,392
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
147,238
|
|
John
M. Macaluso
|
|
2016
|
|
|
$
|
163,605
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
251,326
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
414,931
|
|
Former
Chief Executive Officer (4)(5)
|
|
2017
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
(1)
|
Mr.
Maatta was appointed as the Company Chief Executive Officer effective May 3, 2016. Mr. Maatta served as the Company’s
non-executive Chairman from February 5, 2016 through April 22, 2016.
|
|
|
|
|
(2)
|
Mr.
Kessler served as the Company’s non-executive Chairman from April 22, 2016 through December 29, 2016. On December 29,
2016, Mr. Kessler was appointed as Executive Chairman. Mr. Kessler serves as Executive Chairman pursuant to a consulting agreement
between Bristol Capital, LLC and the Company.
|
|
|
|
|
(3)
|
Mr.
Malinoff was appointed as the Company’s Interim Chief Operating Officer effective as of March 2, 2016 and appointed
Executive Vice President and Chief Operating Officer on July 14, 2016. Effective June 17, 2017 Mr. Malinoff no longer serves
as Chief Operating Officer of the Company. Mr. Malinoff resigned from the Company effective July 3, 2017.
|
|
|
|
|
(4)
|
Mr.
Macaluso served as the Company’s Chief Executive Officer from March 19, 2012 through April 19, 2016, when he resigned.
On October 10, 2012, Mr. Macaluso was appointed as the Company’s Chairman of the Board and served in such capacity until
February 5, 2016 when he resigned as Chairman of the Board, but remained a Director until his resignation as a Director on
April 19, 2016.
|
|
|
|
|
(5)
|
The
Company used a credit card in the name of Mr. Macaluso for certain business expenses. This practice may have resulted in Mr.
Macaluso receiving points or rewards under the terms of the credit card provider’s agreement with Mr. Macaluso, even
though the Company makes all payments related to such expenses. The Board is evaluating such practices.
|
Employment
Agreement with John D. Maatta
In
connection with the appointment of John D. Maatta as the President and Chief Executive Officer of the Company, the Company and
Mr. Maatta entered into an employment agreement, dated as of July 15, 2016 but effective as of May 3, 2016 (the “Maatta
Employment Agreement”). The initial term of the Maatta Employment Agreement is for a period of two (2) years, commencing
on May 3, 2016 (the “Maatta Initial Term”). The term of the Maatta Employment Agreement will be automatically extended
for additional terms of one (1) year each (each (1) year extension together with the Maatta Initial Term, the “Maatta Agreement
Term”), unless either the Company or Mr. Maatta gives prior written notice of non-renewal to the other party no later than
sixty (60) days prior to the expiration of the then current Maatta Agreement Term.
During
the Term, the Company will pay Mr. Maatta an annual base salary of $250,000. In addition, Maatta may receive an annual bonus as
determined by the Compensation Committee of the Board and approved by the Board. In December of 2017 and 2016 Mr. Maatta declined
acceptance of any bonus. As of June 17, 2017 Mr. Maatta received reduced compensation in the amount of $60,000.00 per year
with the remainder being deferred. As of January 1, 2018 Mr. Maatta received reduced compensation to $125,000.00 per year with
the remainder being deferred.
As
additional consideration for entering into the Maatta Employment Agreement, Mr. Maatta received the following:
(i)
100,000 options to purchase shares of the Company’s common stock, such options vesting immediately and expiring May 3, 2021,
at an exercise price of $0.50 per share;
(ii)
100,000 options to purchase shares of the Company’s common stock, such options vesting on September 30, 2016 and expiring
May 3, 2021, at an exercise price of $0.50 per share;
(iii)
100,000 options to purchase shares of the Company’s common stock, such options vesting on December 31, 2016 and expiring
May 3, 2021, at an exercise price of $0.50 per share;
(iv)
100,000 options to purchase shares of the Company’s common stock, such options vesting on March 31, 2017 and expiring May
3, 2021, at an exercise price of $0.55 per share;
(v)
100,000 options to purchase shares of the Company’s common stock, such options vesting on June 30, 2017 and expiring May
3, 2021, at an exercise price of $0.55 per share;
(vi)
100,000 options to purchase shares of the Company’s common stock, such options vesting on September 30, 2017 and expiring
May 3, 2021, at an exercise price of $0.55 per share;
(vii)
100,000 options to purchase shares of the Company’s common stock, such options vesting on December 31, 2017 and expiring
May 3, 2021, at an exercise price of $0.60 per share;
(viii)
100,000 options to purchase shares of the Company’s common stock, such options vesting on March 31, 2018 and expiring May
3, 2021, at an exercise price of $0.60 per share; and
(ix)
300,000 options to purchase shares of the Company’s common stock, such options vesting upon a Change in Control (as defined
in the Maatta Employment Agreement) during the term of the Maatta Employment Agreement, at an exercise price of $0.50 per share.
The
options will vest immediately upon a “Change in Control” as defined in the Maatta Employment Agreement.
Employment
Agreements with Randall S. Malinoff
On
November 8, 2016, the Company formally entered into an employment agreement (the “Malinoff Employment Agreement”)
with Randall S. Malinoff in connection with his appointment as the Company’s Executive Vice President and Chief Operating
Officer on July 14, 2016 (the “Effective Date”) to serve for a period of two years from the Effective Date. In connection
with such appointment, Mr. Malinoff will receive an annual base salary of $225,000 and will be eligible for a performance-based
bonus at the discretion of the Board.
On
November 8, 2016, pursuant to the terms of the Malinoff Employment Agreement, the Company granted six hundred thousand (600,000)
options to purchase shares of the Company’s common stock.
On
July 5, 2017, Mr. Malinoff departed from the Company. Mr. Malinoff is currently engaged in a dispute with the Company. The dispute
pertains to his departure from the Company. Both Mr. Malinoff and the Company have retained counsel to engage on the issues in
controversy. As of December 31, 2017, all of Mr. Malinoff’s options have been cancelled.
Consulting
Agreements
Bristol
Capital, LLC – related party
On
December 29, 2016, the Company, entered into a Consulting Services Agreement (the “Bristol Consulting Agreement”)
with Bristol Capital, LLC, a Delaware limited liability company managed by Paul L. Kessler, the then non-executive Chairman of
the Company. Pursuant to the Bristol Consulting Agreement, Mr. Kessler will serve as Executive Chairman of the Company. The initial
term of the Bristol Consulting Agreement is from December 29, 2016 through March 28, 2017 (the “Initial Bristol Consulting
Term”). The term of the Bristol Consulting Agreement will be automatically extended for additional terms of 90 day periods
each (each additional term together with the Initial Bristol Consulting Term, the “Bristol Consulting Term”), unless
either the Company or Bristol Capital, LLC gives prior written notice of non-renewal to the other party no later than thirty (30)
days prior to the expiration of the then current Bristol Consulting Term.
During
the Bristol Consulting Term, the Company will pay Bristol Capital, LLC a monthly fee (the “Monthly Fee”) of $18,750.
For services rendered by Bristol Capital, LLC prior to entering into the Bristol Consulting Agreement, the Company will pay Bristol
Capital, LLC the Monthly Fee, pro-rated, for the time between September 1, 2016 and December 29, 2016. Bristol Capital, LLC may
also receive an annual bonus as determined by the Compensation Committee of the Board and approved by the Board.
In
addition, the Company will grant to Bristol Capital, LLC options to purchase up to an aggregate of 600,000 shares of the Company’s
common stock, par value $0.0001 per share, in accordance with the following vesting schedule and at the applicable exercise prices
therein:
(i)
75,000 options to purchase shares of the Company’s common stock, such options vesting upon the Effective Date and expiring
on December 29, 2021, at an exercise price of $0.50 per share;
(ii)
75,000 options to purchase shares of the Company’s common stock, such options vesting on December 31, 2016 and expiring
on December 29, 2021, at an exercise price of $0.50 per share;
(iii)
75,000 options to purchase shares of the Company’s common stock, such options vesting on March 31, 2017 and expiring on
December 29, 2021, at an exercise price of $0.55 per share;
(iv)
75,000 options to purchase shares of the Company’s common stock, such options vesting on June 30, 2017 and expiring on December
29, 2021, at an exercise price of $0.55 per share;
(v)
75,000 options to purchase shares of the Company’s common stock, such options vesting on September 30, 2017 and expiring
on December 29, 2021, at an exercise price of $0.55 per share;
(vi)
75,000 options to purchase shares of the Company’s common stock, such options vesting on December 31, 2017 and expiring
on December 29, 2021, at an exercise price of $0.60 per share;
(vii)
75,000 options to purchase shares of the Company’s common stock, such options vesting on March 31, 2018 and expiring on
December 29, 2021, at an exercise price of $0.60 per share; and
(viii)
75,000 options to purchase shares of the Company’s common stock, such options vesting on June 30, 2018 and expiring on December
29, 2021, at an exercise price of $0.60 per share.
Outstanding
Equity Awards
2017
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
OPTION
AWARDS
|
|
|
|
|
STOCK
AWARDS
|
|
Name
(a)
|
|
Number
of
Securities
Underlying
Unexercised Options
(#)
Exercisable
(b)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable (c)
|
|
|
Equity
Incentive Plan Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
|
|
|
Option
Exercise Price
($)
(e)
|
|
|
Option
Expiration Date
(f)
|
|
|
Number
of Shares
or
Units of Stock
That Have
Not
Vested
(#)
(g)
|
|
|
Market
Value of
Shares
or
Units of
Stock
That
Have Not
Vested ($)
(h)
|
|
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not Vested (#)
(i)
|
|
|
Equity
Incentive Plan
Awards:
Market or
Payout
Value of
Unearned Shares,
Units
or
Other
Rights That
Have Not Vested
(#)
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
D. Maatta
Chief Executive
Officer and1 President
|
|
|
600,000
|
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
0.60
|
|
|
|
5/11/21
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
L. Kessler
Executive Chairman
|
|
|
450,000
|
|
|
|
150,000
|
|
|
|
150,000
|
|
|
|
0.60
|
|
|
|
12/29/21
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randall
S Malinoff, Executive Vice President and Chief Operating Officer
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Director
Compensation
The
following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named directors by us during
the year ended December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
Name
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
And
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
All
Other
|
|
|
|
|
Principal
Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Awards
($)
|
|
|
Awards
($)
|
|
|
Compensation
($)
|
|
|
Compensation
($)
|
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
L. Kessler
Executive Chairman
1
|
|
|
2017
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,579
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
D. Maatta
Director
2
|
|
|
2017
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,579
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greg
Suess
Director
|
|
|
2017
|
|
|
$
|
9,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,579
|
|
|
|
-
|
|
|
|
-
|
|
|
|
37,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vadim
Mats
Former Director
3
|
|
|
2017
|
|
|
$
|
3,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,645
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jordan
Schur
Director
|
|
|
2017
|
|
|
$
|
6.750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Breen
Director
|
|
|
2017
|
|
|
$
|
6.750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,750
|
|
|
(1)
|
On
April 22, 2016, the Board appointed Mr. Paul L. Kessler as non-executive Chairman of the Board. On December 29, 2016, Mr.
Kessler was appointed as Executive Chairman of the Board. Mr. Kessler serves as Executive Chairman pursuant to a consulting
agreement between the Company and Bristol Capital, LLC, a Delaware limited liability company managed by Mr. Kessler.
|
|
|
|
|
(2)
|
On
February 5, 2016, the Board appointed Mr. John Maatta as the non-executive Chairman of the Board. On April 22, 2016, Mr. Maatta
resigned as non-executive Chairman of the Board and continued to serve as a director.
|
|
|
|
|
(3)
|
On
March 23, 2017 Mr. Mats Resigned from the Board.
|
Director
Agreements
The
Company has entered into director agreements with each of its directors except Mr. Schur and Mr. Breen. The Company plans to enter
into director Agreements with Mr. Schur and Mr. Breen in the near future. Each director agreement commences on the date that the
respective director was appointed a member of the Board and continues through the Company’s next annual stockholders’
meeting, unless automatically renewed at the option of the Board on such date that such director is re-elected to the Board. Pursuant
to the director agreements that were entered into with our directors, each director is granted a non-qualified option to
purchase up to 150,000 shares of the Company’s common stock. Mr. Mats’ director agreement provided for a quarterly
issuance of 10,000 shares of restricted common stock. On April 11, 2012, Mr. Mats waived his right to receive the stock award
granted to him under his director agreement going forward. On May 9, 2011, Mr. Mats was granted a non-qualified option to purchase
150,000 shares of the Company’s common stock.
In
conjunction with the director agreements, we entered into an indemnification agreement with each director that is effective during
the term that such director serves as a member of the Board until six years thereafter. The indemnification agreement indemnifies
the director to the fullest extent permitted under Delaware law for any claims arising out of, or resulting from, among other
things, (i) any actual, alleged or suspected act or failure to act as a director or agent of the Company and (ii) any actual,
alleged or suspected act or failure to act in respect of any business, transaction, communication, filing, disclosure or other
activity of the Company. Further, the director is indemnified for any losses pertaining to such claims, provided, however, that
the losses not include expenses incurred by the director in respect of any claim as which such director shall have been adjudged
liable to the Company, unless the Delaware Chancery Court rules otherwise.
On
May 5, 2014, the Board approved the granting to each of the five then non-employee members of the Board on May 9, 2014, a non-qualified
stock option to purchase up to three hundred thousand (300,000) shares of the Company’s common stock at an exercise price
of $0.64 per share. Such options expire five years from the date of issuance and shall vest in equal amounts over a period of
three (3) years at the rate of twenty-five thousand (25,000) shares per fiscal quarter at the end of such quarter, commencing
in the quarter ended June 30, 2014, and pro-rated for the number of days each non-employee member of the Board serves on the Board
during such fiscal quarter.
In
addition, effective as of May 1, 2014, the non-employee members of the Board (i) for their participation in meetings of the Board
and its committees, will be compensated $1,000 for in person meeting, and $250 - $500 per telephonic meeting, depending on the
length of the telephonic meeting, and (ii) will be provided a monthly retainer of $750 per month.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Our
authorized capital stock consists of 100,000,000 shares, of which 80,000,000 are for shares of common stock, par value $0.0001
per share, and 20,000,000 are for shares of preferred stock, par value $0.0001 per share, of which 50,000 have been designated
as Series A Cumulative Convertible Preferred Stock. As of April 30, 2018, there were 68,535,036 shares of our common stock
issued and outstanding, all of which were fully paid, non-assessable and entitled to vote. Each share of our common stock entitles
its holder to one vote on each matter submitted to the stockholders.
The
following table sets forth information as of April 30
,
2018, with respect to the beneficial ownership of our common stock by (i) each of our officers and directors, (ii) our officers
and directors as a group and (iii) each person known by us to beneficially own five percent (5%) or more of our outstanding common
stock. Unless otherwise specified, the address of each of the persons set forth below is in care of Wizard World, Inc., 662 N.
Sepulveda Blvd., Suite 300, Los Angeles, CA 90049.
Title
of Class
|
|
Name
of Beneficial Owner (1)(2)
|
|
Number
of
Shares
|
|
|
Percent
of
Class (3)
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
John
D. Maatta, Chief Executive Officer, President, Director
|
|
|
900,000
|
(4)
|
|
|
1
|
%
|
Common
|
|
Paul
L. Kessler, Executive Chairman
|
|
|
82,962,126
|
(5)
|
|
|
79
|
%
|
Common
|
|
Greg
Suess, Director
|
|
|
385,053
|
(6)
|
|
|
*
|
%
|
Common
|
|
Jordan
Schur, Director
|
|
|
-
|
|
|
|
*
|
%
|
Common
|
|
Michael
Breen, Director
|
|
|
-
|
|
|
|
*
|
%
|
Common
|
|
All
officers and directors as a group (5 persons)
|
|
|
84,247,179
|
|
|
|
80
|
%
|
*
denotes less than 1%
|
(1)
|
Beneficial
ownership generally includes voting or investment power with respect to securities. Unless otherwise indicated, each of the
beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the securities.
Beneficial ownership is determined in accordance with Rule 13d–3(d)(1) under the Exchange Act and includes securities
for which the beneficial owner has the right to acquire beneficial ownership within 60 days.
|
|
|
|
|
(2)
|
Former
directors Mr. Mats (resigned from the Board on March 23, 2017), Mr. Kenneth Shamus (resigned from the Board on October 27,
2016), and Mr. Macaluso (resigned from the Board on April 19, 2016) are not included in this table because they are not presently
directors and do not beneficially own five percent (5%) or more of the Company’s common stock.
|
|
|
|
|
(3)
|
Based
on 68,535,036 shares of common stock issued and outstanding as of April 30, 2018.
|
|
|
|
|
(4)
|
This
total includes shares issuable upon exercise of an option for 1,100,000 shares of common stock, of which approximately 900,000
have vested.
|
|
|
|
|
(5)
|
The
total consists of: (i) 47,728,792 shares owned by Bristol Investment Fund, Ltd., a Cayman Islands exempted company managed
by Bristol Capital Advisors LLC, a Delaware limited liability company, of which Mr. Kessler, as the manager of Bristol Capital,
acting alone, has voting and dispositive power over the shares beneficially owned; (ii) 550,000 shares owned by Bristol Capital
Pension and Profit Sharing, of which Mr. Kessler, acting alone, has voting and dispositive power over the shares beneficially
owned; and (iii) 375,000 shares owned by Bristol Capital LLC, of which Mr. Kessler, acting alone has voting and dispositive
power over the shares beneficially owned. This total includes shares issuable upon exercise of an option for 600,000 shares
of common stock, of which approximately 525,000 shares have vested. This total includes shares issuable upon exercise of options
for 450,000 shares of common stock, of which approximately 450,000 shares have vested. This total includes shares issuable
upon exercise of a warrant for 16,666,667 shares of common stock, of which approximately 16,666,667 have vested. This total
includes shares issuable upon exercise of a convertible note for 16,666,667 shares of common stock, of which approximately
16,666,667 have vested.
|
|
|
|
|
(6)
|
This
total includes shares issuable upon exercise of an option for 300,000 shares of common stock, of which approximately 300,000
have vested.
|
Stock
Option Issuances Under the 2011 Incentive Compensation and Award Plan
Option
Grants
On
May 9, 2011, as subsequently amended on September 14, 2011, April 11, 2012, July 9, 2012 and September 25, 2014, we adopted the
2011 Incentive Stock and Award Plan, which was authorized and approved by the Board, and have granted to all directors, options
to purchase our common stock pursuant to the terms of their employment, consulting and/or director agreements.
In
conjunction with the director agreements and indemnification agreements described above, we entered into a Non-qualified Stock
Option Agreement (“Stock Option Agreement”) with each director, pursuant to which the director was granted a non-qualified
stock purchase option (the “Non-qualified Option”) to purchase up to an aggregate of one hundred fifty thousand (150,000)
shares of our common stock, subject to the terms and conditions of the Plan. The exercise price for the Non-qualified Option is
the closing price of the Company’s common stock on the execution date of the director agreement. The Non-qualified Option
is exercisable for a period of five years and vests in equal amounts over a period of three (3) years at the rate of twelve thousand
five hundred (12,500) shares per fiscal quarter at the end of such quarter, and pro-rated for the number of days the director
served on the Board during such fiscal quarter. Notwithstanding the foregoing, if the director ceases to be a member of Board
at any time during the three (3)-year vesting period for any reason (such as resignation, withdrawal, death, disability or any
other reason), then any un-vested portion of the Non-qualified Option shall be irrefutably forfeited. At this time, no such
Non-qualified Stock Option Agreements have been entered into with Directors Michael Breen or Jordan Schur, and neither such Director
has been awarded any options or equity-based compensation.
On
May 5, 2014, the Board approved the granting to each of the five non-employee members of the Board on May 9, 2014, a Non-qualified
Option to purchase up to three hundred thousand (300,000) shares of the Company’s common stock subject to the terms and
conditions of the Plan. The exercise price for the Non-qualified Options is $0.64. The Non-qualified Option is exercisable for
period of five (5) years from the date of issuance and such option shall vest in equal amounts over a period of three (3) years
at the rate of twenty-five thousand (25,000) shares per fiscal quarter at the end of such quarter, commencing in the quarter ended
June 30, 2014, and pro-rated for the number of days each non-employee member of the Board serves on the Board during such fiscal
quarter.
Restricted
Stock Awards
On
January 14, 2011, the Company entered into a director agreement with Vadim Mats. The term of such agreement was for one year.
As compensation for his services, Mr. Mats was to receive ten thousand (10,000) shares of the Company’s restricted common
stock, par value $0.0001 per share at the end of every fiscal quarter during which he serves as a member of the Board. For any
period during the term that Mr. Mats did not serve a full quarter, the amount of shares of common stock issued was be pro-rated
based on the number of days during such quarter that the Mr. Mats was a member of the Board. On April 11, 2012, Mr. Mats waived
his right to receive the stock award granted to him under his director agreement going forward.
Stock
Option Issuances Under the 2016 Incentive Compensation and Award Plan
Option
Grants
On
August 12, 2016, Board unanimously approved, authorized and adopted (subject to stockholder approval) the 2016 Incentive Stock
and Award Plan (the “2016 Plan”) to replace the expired Third Amended and Restated 2011 Incentive Stock and Award
Plan. The 2016 Plan provides for the issuance of up to 5,000,000 shares of the Company’s common stock through the grant
of nonqualified options, incentive options and restricted stock to the Company’s directors, officers, consultants, attorneys,
advisors and employees.
On
July 15, 2016, in conjunction with the Maatta Employment Agreement, the Company granted to Mr. Maatta 800,000 options to purchase
shares of the Company’s common stock, par value $0.0001 per share which shall vest quarterly over the period beginning on
July 15, 2016 and ending May 3, 2021, at an exercise price range of $0.50 to $0.60 per share.
On
November 8, 2016, in conjunction with the Malinoff Employment Agreement, the Company granted to Mr. Malinoff 600,000 options to
purchase shares of the Company’s common stock, par value $0.0001 per share which shall vest quarterly over the period beginning
on November 8, 2016 and ending July 14, 2021, at an exercise price range of $0.50 to $0.60 per share. These options issued to
Mr. Malinoff have been cancelled.
On
December 29, 2016, in conjunction with the Bristol Consulting Agreement, the Company granted to Bristol 600,000 options to purchase
shares of the Company’s common stock, par value $0.0001 per share which shall vest quarterly over the period beginning on
December 29, 2016 and ending December 29, 2021, at an exercise price range of $0.50 to $0.60 per share.
Item
13. Certain Relationships and Related Transactions.
We
present all possible transactions between us and our officers, directors and 5% stockholders, and our affiliates, to our Board
for their consideration and approval. Any such transaction will require approval by a majority of the disinterested directors
and such transactions will be on terms no less favorable than those available to disinterested third parties. During their years
ended December 31, 2014 and 2015, the Company had the following transactions with related persons reportable under Item 404 of
Regulation S-K:
Bristol
and ROAR each received a 2.5% profits participation and ownership interest in CONtv.
Effective
December 29, 2014, the Company and a member of the Board formed Wiz Wizard. The Company and the member of the Board each own 50%
of the membership interest and shall allocate the profits and losses accordingly upon repayment of the initial capital contributions
on a pro rata basis. On February 4, 2016, the member of the Board assigned his fifty percent (50%) membership interest to the
Company.
On
June 16, 2016, the Company entered into a Standard Multi-Tenant Sublease (“Sublease”) with Bristol Capital Advisors,
LLC, (“Bristol”) an entity Controlled by the Company’s Executive Chairman. The term of the Sublease is
for 5 years and 3 months, beginning on July 1, 2016 with monthly payments of $8,118. Upon execution of the sublease. The Company
paid a security deposit of $9,137 and $199,238 for prepaid rent of which $76,006 remains as of December 31, 2017. It is noted
that Bristol is itself a tenant of the subject premises and that the Company’s sub-tenancy is a pass-through rent paid to
the third-party owner of the premises without mark-up or financial gain by Bristol.
Effective
December 1, 2016, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with Bristol
Investment Fund, Ltd., an entity controlled by the Executive Chairman of the Company (at the time of Purchase Agreement, Mr. Kessler
served as the non-executive Chairman of the Company), for the sale of the Company’s securities, comprised of (i) $2,500,000
of convertible debentures convertible at a price of $0.15 per share (the “Debenture”), (ii) warrants (the “Series
A Warrants”) to acquire 16,666,667 shares of the Company’s common stock, at an exercise price of $0.15 per share (the
“Series A Initial Exercise Price”), and (iii) warrants (the “Series B Warrants” and together with the
Series A Warrants, the “Warrants”) to acquire 16,666,650 shares of the Company’s common stock at an exercise
price of $0.0001 per share (the “Series B Initial Exercise Price”). As a condition to Bristol Investment Fund, Ltd.
entering into the Purchase Agreement, the Company entered into a Security Agreement (the “Security Agreement”) in
favor of Bristol Investment Fund, Ltd., granting a security interest in substantially all of the property of the Company, whether
presently owned or existing or hereafter acquired or coming into existence, including but not limited to, its ownership interests
in its subsidiaries, to secure the prompt payment, performance and discharge in full of all of the Company’s obligations
under the Debenture.
The
Company received $2,500,000 in cash from the offering of the securities. The net proceeds of the offering, approximately $2,475,000,
were used by the Company for working capital purposes.
Director
Independence
The
common stock of the Company is currently quoted on the OTCBB and OTCQB, quotation systems which currently do not have director
independence requirements. On an annual basis, each director and executive officer will be obligated to disclose any transactions
with the Company in which a director or executive officer, or any member of his or her immediate family, have a direct or indirect
material interest in accordance with Item 407(a) of Regulation S-K. Following completion of these disclosures, the Board will
make an annual determination as to the independence of each director using the current standards for “independence”
that satisfy the criteria for the NASDAQ.
As
of April 30, 2018, the Board determined that the following directors are independent under these standards:
Greg
Suess, Jordan Schur, and Michael Breen.
The
Company has a standing Compensation Committee, a standing Audit Committee and a standing Nominating and Corporate Governance Committee.
As of April 30, 2018, the Board has determined that Mr. Suess, sole member of the Compensation Committee and Nominating
and Corporate Governance Committee, is an independent director.
Item
14. Principal Accountant Fees and Services.
Audit
Fees
(a)
The Company’s former independent registered public accounting firm, Rosenberg Rich Baker Berman & Company (“RRBB”),
was engaged on February 16, 2016. The aggregate fees billed by RRBB for the audit or review of the Company’s financial statements
for the fiscal year ended December 31, 2017 and 2016 was $35,500 and $42,000, respectively.
The
Company’s current independent registered public accounting firm, MaughanSullivan LLC (“Maughan”), was engaged
on December 17, 2017. The aggregate fees billed by Maughan for the audit of the Company’s financial statements for the fiscal
year ended December 31, 2017 and 2016 were $19,500 and $0, respectively
Audit
Related Fees
(b)
RRBB did not bill the Company any amounts for assurance and related services that were related to its audit or review of the Company’s
financial statements during the fiscal years ended December 31, 2017 and 2016.
Maughan
did not bill the Company any amounts for assurance and related services that were related to its audit or review of the Company’s
financial statements during the fiscal years ended December 31, 2017 and 2016.
Tax
Fees
(c)
The aggregate fees billed by RRBB for tax compliance, advice and planning was $15,800 for the fiscal year ended December 31, 2016.
The
aggregate fees billed by Maughan for tax compliance, advice and planning was $0 for the fiscal year ended December 31, 2017.
All
Other Fees
(d)
RRBB did not bill the Company for any products and services other than the foregoing during the fiscal year ended December 31,
2017 and 2016.
Maughan
did not bill the Company for any products and services other than the foregoing during the fiscal year ended December 31, 2017
and 2016.