Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 16, 2017, the Company named Brian Rosin its Chief Operating Officer. Mr. Rosin came to the Company as a result of its July 2016 acquisition of Rant, Inc. ("Rant"), which he co-founded in 2011. While at Rant, Mr. Rosin served as Chief Operating Officer, Vice President Finance & Accounting, and Vice President of Operations. Prior to beginning full-time employment at Rant in February 2012, Mr. Rosin was an Annuity Specialist and LTC Claims Operations Analyst at Banker’s Life and Casualty Company in Chicago, Illinois. Mr. Rosin earned bachelors’ degrees in International Relations and Economics from Northern Illinois University.
Mr. Rosin has no family relationships with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer of the Company. Mr. Rosin is not a party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
We are currently negotiating the terms of an employment agreement with Mr. Rosin and will amend this Form 8-K to include the employment agreement when it has been finalized.
Item 8.01 Other Events.
(a) The Company is negotiating the sale of a majority stake in its non-core assets principally in the technology space, including certain intellectual property related to SDS and the assets related to the DraftDay fantasy sports business. If completed, the contemplated transaction would combine these assets into a new company, Element(X). The Company intends to sell 80.1% of Element(X) to a newly formed and separately funded entity owned by current and former employees of the Company for approximately $8 million We are seeking to receive preferred equity in Element(X) with a two- year term, redeemable at 120% of issue price, plus accrued dividends at 8%; or convertible at our option into equity at 150% of issue price, plus accrued dividends. In addition the Company intends to enter into a shared services agreement with Element(X) providing for payment of $200K a month for legal, accounting, and office-related services. The terms of any such transaction will be determined on an arms-length basis and will only be consummated if the board of directors determines that the transaction is in our best interests as a company. There can be no assurance that we will be successful in consummating such a transaction on the terms as described, or at all.
(b) As reported on the Company’s Current Report on Form 8-K filed on July 13, 2016, on July 12, 2016, the Company closed a private placement (the “Private Placement”) of $4,444,444.44 principal amount of Convertible Debentures (the “Debentures”) and Common Stock Purchase Warrants. As described in Item 2.04 above, the Company is currently in default under the Debentures. The Company is currently in negotiations with holders of approximately 87% of the Debentures in order to permit the Company to pay the holders the outstanding principal balance in cash and to pay any accrued interest and other amounts owed in shares of the Company’s common stock.
(c) As reported on the Company’s Current Report on Form 8-K filed on July 13, 2016, on July 8, 2016, the Company and Sillerman Investment Company III, LLC (“SIC III”), Sillerman Investment Company IV, LLC (“SIC IV”), and Sillerman Investment Company VI, LLC (“SIC VI”), each an affiliate of Robert F.X. Sillerman, the Company’s Executive Chairman and Chief Executive Officer, entered into an Exchange Agreement (the “Exchange Agreement”). The Company is negotiating an amendment to the Exchange Agreement, pursuant to which he and his affiliated entities would agree to convert 100% of their Series C Preferred shares plus accrued dividends at the exchange price of $2.34 and to permit the line of credit from SIC IV in the amount of $5,000,000 for the Company to remain outstanding in the event that a public offering of at least $10,000,000 and satisfaction of the other conditions required for the conversion under the Exchange Agreement. The conversion price represents a 4% premium to the closing price of the Company’s common stock on January 13, 2017.
Item 9.01 Exhibits and Financial Statements
(d) Exhibits
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Exhibit No.
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Description
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99.1
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Information relating to revenues and page views
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