UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14C
Information
Statement Pursuant to Section 14(c)
of
the Securities Exchange Act of 1934
Check
the appropriate box:
[X]
Preliminary Information Statement
[ ]
Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d) (2))
[ ]
Definitive Information Statement
NFÜSZ,
INC.
(Name
of Registrant as Specified in Its Charter)
Payment
of Filing Fee (check the appropriate box):
[X]
No fee required
[ ]
Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1)
Title of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(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):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total fee paid:
[ ]
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:
THIS
INFORMATION STATEMENT IS BEING PROVIDED TO
YOU
BY THE BOARD OF DIRECTORS OF NFÜSZ, INC.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED
NOT TO SEND US A PROXY
nFüsz,
Inc.
344
S. Hauser Blvd., Suite 414
Los
Angeles, California 90036
INFORMATION
STATEMENT
Dear
Stockholders:
This
Information Statement has been filed with the Securities and Exchange Commission (the “
SEC
”) and is being furnished,
pursuant to Section 14C of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), to the holders
(the “
Stockholders
”) of common stock, par value $0.0001 per share (the “
Common Stock
”) of
nFüsz, Inc., a Nevada corporation (the “
Company
”). As of September 30, 2018, we received written consents
from the holders of a majority of the issued and outstanding shares of Common Stock (the “
Majority Stockholders
”)
to authorize the following:
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●
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One
or more reverse stock splits of the Company’s issued and outstanding shares of Common Stock at an aggregate ratio of
not less than one-for-five and not more than one-for-40, within the discretion of our Board of Directors, at any time and
from time-to-time prior to September 30, 2019 (individually or collectively, the “
Reverse Stock Split
”);
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On
December [●], 2018, following the receipt of written consents from the Majority Stockholders, our Board of Directors
(the “
Board
”) accepted authority for the filing, within its discretion, of one or more Certificates of Change
(each, a “
Certificate
”) for one or more Reverse Stock Splits at an aggregate ratio of not less than one-for-five
and not more than one-for-40 at any time and from time-to-time prior to September 30, 2019 (the “
Majority Action
”).
Accordingly, your consent is not required and is not being solicited in connection with the approval of the Majority Action.
We
will mail the Notice of Majority Action to the Stockholders on or about December [●], 2018.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.
Our
Board believes that the Stockholders will benefit from one or more Reverse Stock Splits because it believes that actions could
be a catalyst for an increase in the stock price of our Common Stock, which, in turn, could increase the marketability and liquidity
of our Common Stock, as well as increase the profile of our Company for private investment, acquisitions, and other future opportunities
that become available to the Company.
Our
Board also anticipates one or more Reverse Stock Splits will enable the Company to meet the minimum price requirements in order
to qualify its Common Stock for listing on the NASDAQ Stock Market, LLC (“
NASDAQ
”). No assurance can be given
that the Company will be successful in its efforts to list its Common Stock for trading on NASDAQ. Until such time as the listing
application has been approved and shares of our Common Stock commence trading on NASDAQ, we expect that our Common Stock will
continue to be quoted for trading on the OTCQB.
Accordingly,
it is our Board’s opinion that one or more Reverse Stock Splits would increase the profile of the Company for private investment,
acquisitions, and other future opportunities that become available to the Company and may enable it to meet the minimum price
requirements in order to qualify its Common Stock for listing on NASDAQ.
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BY
ORDER OF THE BOARD OF DIRECTORS
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/s/
Rory J. Cutaia
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Rory
J. Cutaia
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Chairman
of Board, President, and Chief Executive Officer
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December
[●], 2018
nFüsz,
Inc.
344
S. Hauser Blvd., Suite 414
Los
Angeles, California 90036
INFORMATION
STATEMENT
This
information statement (this “
Information Statement
”) is being furnished to holders of record of the common
stock, par value $0.0001 per share (the “
Common Stock
”), at the close of business on December [●],
2018 of nFüsz, Inc., a Nevada corporation (the “
Company
”), with respect to a certain corporate action
of the Company that was initiated by the holders of a majority of the issued and outstanding shares of our Common Stock. This
Information Statement is first being mailed or furnished to the holders of our Common Stock (our “
Stockholders
”)
on or about December [●], 2018.
ABOUT
THIS INFORMATION STATEMENT
What
is the purpose of this Information Statement?
This
Information Statement is being provided pursuant to Section 14 of the Exchange Act to notify our Stockholders of the corporate
actions that were taken pursuant to the written consent of a majority of the total voting power held by the Stockholders as of
September 30, 2018 (the “
Majority Consent Date
”). Effective as of the Majority Consent Date, the Company received
written consents (the “
Majority Action
”) from the holders of a majority of the issued and outstanding shares
of Common Stock (the “
Majority Stockholders
”) that approved one or more reverse stock splits of shares of our
Common Stock at an aggregate ratio of one share of post-Reverse Stock Split Common Stock for not less than five shares of Common
Stock and not more than 40 pre-reverse stock split shares of Common Stock (individually or collectively, a “
Reverse Stock
Split
”). In order to eliminate the costs and management time involve in holding a special meeting, and in order to effect
the corporate action as soon as possible, the Company decided to proceed with the corporate action by accepting the written consents
of the Majority Stockholders in accordance with the Nevada General Corporation Law.
Who
is entitled to notice?
All
holders of record of shares of our Common Stock on the close of business December [●], 2018, are entitled to notice
of the Majority Action.
To
what corporate matters did the Majority Stockholders consent?
The
Majority Stockholders held a majority (approximately 89.6 million) of the issued and outstanding capital stock entitled to vote
on issues that could be brought before our Stockholders on the Majority Consent Date (175,176,248 shares of our Common Stock).
By written consent, the Majority Stockholders have approved providing authority to our Board for it to file, within its discretion,
one or more Certificates to effectuate one or more Reverse Stock Splits of our Common Stock at an aggregate ratio of one share
of post-Reverse Stock Split Common Stock for not less than five pre-Reverse Stock Split shares of Common Stock and not more than
40 pre-Reverse Stock Split shares of Common Stock.
What
vote is required to approve the Majority Action?
As
of Majority Consent Date, the Company received written consents from the Majority Stockholders to approve the Majority Action
that provided our Board with the authority to file, within its discretion, one or more Certificates to effectuate one or more
Reverse Stock Splits of our Common Stock at an aggregate ratio of one share of post-Reverse Stock Split Common Stock for not less
than five pre-Reverse Stock Split shares of Common stock and not more than 40 pre-Reverse Stock Split shares of Common Stock and
no action by our minority Stockholders in connection therewith is required. Under the Nevada General Corporation Law, as amended,
and in accordance with the Bylaws of the Company, all activities requiring approval of our Stockholders may be taken by obtaining
the written consent and approval of holders of voting stock of the Company having a majority of the total vote of shares authorized
to vote on the matter, in lieu of a meeting of our Stockholders.
Is
There Any Relationship Between the Potential Reverse Stock Split and the Pending Acquisition of Sound Concepts, Inc.?
We
do not believe that any potential Reverse Stock Split will have any effect on, or be affected by, our potential merger transaction
with Sound Concepts, Inc. (“Sound Concepts”). We filed a Registration Statement on Form S-1 with the SEC on August
14, 2018 (for a related publicly registered financing), and a Current Report on 8-K, filed with the SEC on November 14, 2018 (announcing
the potential acquisition of Sound Concepts, the consideration for which will consist of a $15 million cash payment (to be derived
partially from the proceeds of the publicly registered financing) and the issuance of shares of our common stock with an at-time-of-issuance
fair market value of $10 million to be issued at the same value as the shares of common stock to be issued in connection with
the public registered financing). Although the number of our shares of common stock to be issued in connection with that acquisition
will vary depending upon the per-share price of the publicly registered financing shares of our common stock (which, itself, will
vary based on the market pricing of our common stock and the ratio of any pre-acquisition closing Reverse Stock Split), the value
of the Sound Concepts acquisition shares will remain fixed at $10 million. Further, if the acquisition of Sound Concepts and the
publicly registered financing were to close as of the date of this Information Statement, the shareholders of Sound Concepts would
then own an aggregate of approximately 12.7% of our common stock. None of such shareholders would own in excess of 2.85% of our
common stock. Thus, we believe that any pre-acquisition closing Reverse Stock Split will not have any non-arithmetic-based relationship
with the issuance of shares of our comment stock in the Sound Concepts acquisition.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information with respect to the beneficial ownership of our Common Stock as of December [●],
2018, by (i) each person known by the Company to own beneficially more than 5% of the outstanding Common Stock; (ii) each director
of the Company; (iii) each officer of the Company, and (iv) all executive officers and directors as a group. Except as otherwise
indicated below, each of the entities or persons named in the table has sole voting and investment powers with respect to all
shares of Common Stock beneficially owned by him as set forth opposite its or his name.
Name
of Beneficial Owner
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Title
of Class
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Amount
and Nature of Beneficial Ownership(1)
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Percentage
of Class(2)
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Rory J. Cutaia
c/o
344 S. Hauser Drive, Unit 414
Los Angeles, California 90036
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Common Stock
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57,079,621
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(3)
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30.3
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%
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James P. Geiskopf
c/o 344 S. Hauser
Drive, Unit 414
Los Angeles, California 90036
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Common Stock
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5,514,000
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(4)
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3.0
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%
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Jeff Clayborne
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c/o 344 S. Hauser Drive, Unit 414
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Los Angeles, California 90036
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Common Stock
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3,393,141
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(5)
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1.9
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%
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Phillip J. Bond
c/o 344 S. Hauser
Drive, Unit 414
Los Angeles, California 90036
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Common Stock
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200,000
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(6)
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*
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Kenneth S. Cragun
c/o 344 S. Hauser Drive, Unit 414
Los Angeles, California 90036
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Common Stock
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200,000
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(7)
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*
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All executive officers
and directors as a group (5 persons)
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Common Stock
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66,386,762
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(8)
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35.4
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%
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Beneficial owner
of
more than 5%
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Chakradhar
Reddy
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110
3rd Ave. #11B
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New
York, NY 10003
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Common
Stock
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9,300,000
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(9)
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5.1
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%
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*
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Represents
less than 1%.
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(1)
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Except
as otherwise indicated, we believe that the beneficial owners of our Common Stock listed above, based on information furnished
by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where
applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment
power with respect to securities. Common stock subject to options or warrants currently exercisable or exercisable within
60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants,
but are not deemed outstanding for purposes of computing the percentage ownership of any other person.
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(2)
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Percentage
of Common Stock is based on 180,832,359 pre-Reverse Stock Split shares of our Common Stock issued and outstanding as of December
[●], 2018.
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(3)
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Consists
of 45,064,037 pre-Reverse Stock Split shares of Common Stock held directly, 3,603,600 pre-Reverse Stock Split shares of Common
Stock held by Cutaia Media Group Holdings, LLC (an entity over which Mr. Cutaia has dispositive and voting authority)
and 810,092 pre-Reverse Stock Split shares of Common Stock held by his spouse (as to which shares, he disclaims beneficial
ownership). Also includes 2,800,000 pre-Reverse Stock Split stock options held directly and 600,000 pre-Reverse Stock
Split stock options held by Mr. Cutaia’s spouse that are exercisable within 60 days of December [●], 2018
but excludes 2,000,000 pre-Reverse Stock Split stock options held by Mr. Cutaia that are not exercisable within 60 days of
December [●], 2018. The total also includes 4,201,892 pre-Reverse Stock Split warrants granted to Mr. Cutaia
as consideration for extending the payment terms of his outstanding notes payable.
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(4)
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Includes
4,084,000 pre-Reverse Stock Split shares of our Common Stock held directly and 80,000 pre-Reverse Stock Split
shares of our Common Stock held by Mr. Geiskopf’s children. Also includes 1,350,000 shares of our pre-Reverse
Stock Split Common Stock underlying options that are exercisable within 60 days of December [●], 2018.
Excludes 2,000,000 shares of our pre-Reverse Stock Split Common Stock underlying options that are not exercisable
within 60 days of December [●], 2018.
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(5)
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Includes
2,000,000 pre-Reverse Stock Split shares of our Common Stock held directly. Also, includes 1,393,141 shares of our
pre-Reverse Stock Split Common Stock underlying options that are exercisable within 60 days of December
[●], 2018. Excludes 2,800,000 shares of our pre-Reverse Stock Split Common Stock underlying options
that are not exercisable within 60 days of December [●], 2018.
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(6)
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Includes
200,000 shares of our pre-Reverse Stock Split Common Stock underlying options that are exercisable within
60 days of December [●], 2018. Excludes 800,000 shares of our pre-Reverse Stock Split Common Stock
underlying options that are not exercisable within 60 days of December [●], 2018.
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(7)
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Includes
200,000 shares of our pre-Reverse Stock Split Common Stock underlying options that are exercisable within
60 days of December [●], 2018. Excludes 800,000 shares of our pre-Reverse Stock Split Common Stock
underlying options that are not exercisable within 60 days of December [●], 2018.
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(8)
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Includes
all shares, options, and warrants referenced in notes 3 through 7.
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(9)
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Consists
of 9,300,000 pre-Reverse Stock Split shares of our Common Stock held directly.
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No
Director, executive officer, affiliate, or any owner of record or beneficial owner of more than 5% of any class of voting securities
of the Company is a party adversary to the Company or has a material interest adverse to the Company.
DIRECTORS,
EXECUTIVE OFFICERS AND COPORATE GOVERNANCE
Directors
and Executive Officers
All
directors of our Company hold office until the next annual meeting of our Stockholders or until their successors have been elected
and qualified, or until their death, resignation or removal. The executive officers of our Company are appointed by our Board
and hold office until their death, resignation, or removal from office.
Our
directors and executive officers, their ages, positions held, and duration of such, are as follows:
Name
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Position
Held with Our Company
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Age
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Date
First Elected or Appointed
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Rory
J. Cutaia
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Chairman,
President, Chief Executive Officer, Secretary, Treasurer and Director
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62
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October
16, 2014
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Jeff
Clayborne
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Chief
Financial Officer
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47
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July
15, 2016
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James
P. Geiskopf
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Director
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59
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October
16, 2014
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Phillip
J. Bond
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Director
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62
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September
10, 2018
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Kenneth
S. Cragun
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Director
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57
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September
10, 2018
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Business
Experience
The
following is a brief account of the education and business experience of directors and executive officers during at least the
past five years, indicating their principal occupation during the period, and the name and principal business of the organization
by which they were employed:
Rory
J. Cutaia, Chairman, President, CEO, Secretary, Treasurer, and Director
Rory
J. Cutaia founded the Company (formerly Cutaia Media Group, LLC; bBooth, Inc.; and bBoothUSA, Inc.) in December 2012. Prior to
founding the Company, from October 2006 to August 2011, Mr. Cutaia was a partner and
Entrepreneur-in-Residence
at Corinthian
Capital Group, Inc., a private equity fund based in New York City investing in middle market U.S. based companies. During his
tenure at Corinthian, from June 2008 to October 2011, Mr. Cutaia was the co-founder and Executive Chairman of Allied Fiber, Inc.,
a company engaged in the construction of a nation-wide fiber-optic network, and from June 2007 to August 2011, Mr. Cutaia was
CEO of GreenFields Coal Company, a company engaged in the deployment of technology to recycle coal waste and clean-up coal waste
sites. Before joining Corinthian, from January 2000 to October 2006, Mr. Cutaia was the Founder, Chairman, and CEO of The Telx
Group, Inc., a company engaged in the telecom carrier inter-connection, colocation, and data center business, which he sold in
2006. Before founding Telx, Mr. Cutaia was a practicing lawyer with Shea & Gould, a prominent New York City law firm. Mr.
Cutaia obtained his Juris Doctorate degree in law from the Fordham University School of Law in 1985 and his Bachelor of Science,
magna cum laude
, in business management from the New York Institute of Technology in 1982. We believe that Mr. Cutaia is
qualified to serve on our Board because of his knowledge of our current operations in addition to his education and business experiences
described above.
Jeffrey
R. Clayborne, Chief Financial Officer
Jeffrey
R. Clayborne is our Chief Financial Officer. Mr. Clayborne is an experienced finance professional with an entrepreneurial spirit
and proven record of driving growth and profit for both Fortune 50 as well as start-up companies. He brings with him more than
20 years of experience in all aspects of strategy, finance, business development, negotiation, and accounting. Mr. Clayborne earned
his MBA from University of Southern California, with high honors and began his career as a CPA at McGladrey & Pullen, then
KPMG Peat Marwick. He then moved on to senior finance positions at The Walt Disney Company, including Senior Finance Manager at
Walt Disney International, where he oversaw financial planning and analysis for the organization in 37 countries. Thereafter,
Mr. Clayborne moved on to Universal Music Group where he was Vice President, Head of Finance & Business Development for Fontana,
where he managed the financial planning and analysis of the sales and marketing division and led the business development department.
James
P. Geiskopf, Director
James
P. Geiskopf became a director of our Company in October 2014. Mr. Geiskopf has 32 years of experience leading companies in the
services industry. From 1975 to 1986, Mr. Geiskopf was the Chief Financial Officer of Budget Rent a Car of Fairfield California
and from 1986 to 2007, he was the President and Chief Executive Officer. In 2007, Mr. Geiskopf sold the franchise. Mr. Geiskopf
served on the Board of Directors of Suisun Valley Bank from 1986 to 1993. Mr. Geiskopf also served on the Board of Directors of
Napa Valley Bancorp from 1991 to 1993. The bank holding company was sold to a larger institution in 1993. Mr. Geiskopf is currently
serving on the Board of Directors of ICOX Innovations, Inc. since 2014, a public company quoted on the OTCPK. He is Chairman
of our Audit Committee and serves as our Lead Director.
Mr.
Geiskopf has significant and lengthy business experience including building, operating, and selling companies, serving on the
boards of directors for several banks and serving as a director and officer of several public companies. In these roles he acquired
substantial business management, strategic, operational, human resource, financial, disclosure, compliance, and corporate governance
skills. These were the primary reasons that we concluded that he should serve as a director of our Company.
Mr.
Geiskopf was a director of Electronic Cigarettes International Group, Ltd. (“
ECIG
”) from June 2013 to March
16, 2017, the date of his resignation. ECIG filed a voluntary petition for relief under the provisions of Chapter 7 of Title 11
of the United States Code, 11 U.S.C. §§ 101 et seq. (the “
Bankruptcy Code
”) in the United States
Bankruptcy Court for the District of Nevada (the “
Bankruptcy Court
”) on March 16, 2017 (case number 17-11242).
Kenneth
S. Cragun
Kenneth
S. Cragun became a director of our Company on September 4, 2018. He serves as the chair our Audit Committee and serves on each
of our other two Board committees: Compensation, and Governance and Nominating.
Mr.
Cragun has been Chief Financial Officer of CorVel Corporation since January 2018. CorVel is an Irvine, California-based national
provider of workers’ compensation solutions for employers, third-party administrators, insurance companies, and government
agencies. Mr. Cragun also serves as a partner of Hardesty, LLC, a national executive services firm. He has been a partner of its
Southern California Practice since October 2016. Mr. Cragun is a two-time finalist for the Orange County Business Journal “CFO
of the Year” – Public Companies and has more than 30 years of experience, primarily in the technology industry. He
served as chief financial officer of two Nasdaq-listed companies: Local Corporation (April 2009 to September 2016), formerly based
in Irvine, California, which operated a U.S. top 100 website “Local.com” and, in June 2015, filed a voluntary petition
in the United States Bankruptcy Court for the Central District of California seeking relief under the provisions of Chapter 11
of Title 11 of the Bankruptcy Code, and Modtech Holdings, Inc. (June 2006 to March 2009), formerly based in Perris, California,
which was a leading provider of modular classrooms in California and Florida and a significant provider of commercial and light
industrial modular buildings in California, Florida, Arizona, Nevada, and other neighboring states and, in October 2008, filed
a voluntary petition in the United States Bankruptcy Court for the Central District of California seeking relief under the provisions
of Chapter 11 of the Bankruptcy Code. Mr. Cragun’s industry experience is vast with extensive experience in fast-growth
environments and building teams in more than 20 countries. He received his B.S. in Accounting from Colorado State University-Pueblo.
Mr. Cragun has led multiple financing transactions, including IPOs, PIPEs, convertible debt, term loans, and lines of credit.
For these reasons, we believe that he will provide additional breadth and depth to our Board.
Phillip
J. Bond
Phillip
J. Bond became a director of our Company on September 10, 2018. He serves on each of our three Board committees: Audit, Compensation,
and Governance and Nominating.
Since
leaving government service, Mr. Bond has served as President of Government Relations at Potomac International Partners, Inc.,
a multidisciplinary consulting firm. From 2001 to 2005, Mr. Bond was Undersecretary of the U.S. Department of Commerce for Technology,
and from 2002 to 2003 served concurrently as Chief of Staff to Commerce Secretary Donald Evans. In his dual role, he worked closely
with Secretary Evans to increase market access for U.S. goods and services and further advance America’s technological leadership
at home and around the world. He oversaw the operations of the National Institute of Standards and Technology (NIST), the Office
of Technology Policy, and the National Technical Information Service. During his tenure, the Technology Administration was the
pre-eminent portal between the federal government and the U.S. technology industry.
Earlier
in his career, Mr. Bond served as Senior Vice President of Government Relations for Monster Worldwide, the world’s largest
online career site, and General Manager of Monster Government Solutions. Mr. Bond also served as Director of Federal Public Policy
for the Hewlett-Packard Company; Senior Vice President for Government Affairs and Treasurer of the Information Technology Industry
Council; as Chief of Staff to the late Congresswoman Jennifer Dunn (R-WA); Principal Deputy Assistant Secretary of Defense for
Legislative Affairs; Chief of Staff and Rules Committee Associate for Congressman Bob McEwen (R-OH); and as Special Assistant
to the Secretary of Defense for Legislative Affairs. Mr. Bond is a graduate of Linfield College in Oregon. The Company believes
that Mr. Bond’s years of governmental experience will provide the Company with significant value in the conduct and growth
of its business. Accordingly, we believe that he will provide additional breadth and depth to our Board.
Family
Relationships
There
are no family relationships between any director or executive officer of our Company.
Significant
Employees
We
do not currently have any significant employees other than our executive officers.
Involvement
in Certain Legal Proceedings
Except
as noted below,
n
one
of our directors and executive officers has been involved in any of the following events during the past ten years:
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(a)
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any
petition under the federal bankruptcy laws or any state insolvency laws filed by or against, or an appointment of a receiver,
fiscal agent or similar officer by a court for the business or property of such person, or any partnership in which such person
was a general partner at or within two years before the time of such filing, or any corporation or business association of
which such person was an executive officer at or within two years before the time of such filing;
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(b)
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any
conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other
minor offences);
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(c)
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being
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining such person from, or otherwise limiting, the following activities: (i) acting as a futures
commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing,
or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee
of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct
or practice in connection with such activity; engaging in any type of business practice; or (iii) engaging in any activity
in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state
securities laws or federal commodities laws;
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(d)
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being
the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority
barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described
in paragraph (c)(i) above, or to be associated with persons engaged in any such activity;
|
|
(e)
|
being
found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission to have violated a
federal or state securities or commodities law, and the judgment in such civil action or finding by the Securities and Exchange
Commission has not been reversed, suspended, or vacated;
|
|
|
|
|
(f)
|
being
found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated
any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission
has not been subsequently reversed, suspended or vacated;
|
|
|
|
|
(g)
|
being
the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law
or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited
to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent
cease- and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or
fraud in connection with any business entity; or
|
|
|
|
|
(h)
|
being
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of
the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority
over its members or persons associated with a member.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires our officers and directors and persons who own more than 10% of the outstanding Shares to file
reports of ownership and changes in ownership concerning their Shares with the SEC and to furnish us with copies of all Section
16(a) forms they file. We are required to disclose delinquent filings of reports by such persons.
Based
solely on the copies of such reports and amendments thereto received by us, or written representations that no filings were required,
we believe that all Section 16(a) filing requirements applicable to our executive officers and directors and 10% Stockholders
were met for the year ended December 31, 2017.
Corporate
Governance
General
Our
Board believes that good corporate governance improves corporate performance and benefits all of our Stockholders. Canadian National
Policy 58-201
Corporate Governance Guidelines
provides non-prescriptive guidelines on corporate governance practices for
reporting issuers such as the Company. In addition, Canadian National Instrument 58-101
Disclosure of Corporate Governance
Practices
prescribes certain disclosure by our Company of its corporate governance practices. This disclosure is presented
below.
Board
of Directors
Our
Board currently consists of four directors: Rory J. Cutaia, James P. Geiskopf, Philip J. Bond, and Kenneth S. Cragun. Our Common
Stock is quoted on the OTCQB operated by the OTC Markets Group Inc., which does not impose any director independence requirements.
However, under NASDAQ Marketplace Rule 5605(a)(2), a director is not considered to be independent if he is also an executive officer
or is, or at any time during the past three years was, employee of our Company. Under this Rule, Mr. Cutaia is not independent
because he is our Chairman, President, Chief Executive Officer, and Secretary. Under this rule, each of Messrs. Geiskopf, Bond,
and Cragun is independent.
Orientation
and Continuing Education
We
have an informal process to orient and educate new members of our Board regarding their role as directors and, if relevant, committee
members, as well as the nature and operations of our business. This process provides for an orientation with key members of the
management staff, and further provides access to materials necessary to inform them of the information required to carry out their
responsibilities as a board member. This information includes the most recent Board-approved budget, the most recent annual report,
the audited financial statements and copies of the interim quarterly financial statements.
Our
Board does not provide continuing education for our directors. Each director is responsible to maintain the skills and knowledge
necessary to meet his obligations as director.
Code
of Ethics
In
2014, our Board approved and adopted a Code of Ethics and Business Conduct for Directors, Senior Officers, and Employees (the
“
Code of Ethics
”) that applies to all of our directors, officers, and employees, including our principal executive
officer and principal financial officer. The Code of Ethics addresses such individuals’ conduct with respect to, among other
things, conflicts of interests; compliance with applicable laws, rules, and regulations; full, fair, accurate, timely, and understandable
disclosure by us; competition and fair dealing; corporate opportunities; confidentiality; protection and proper use of our assets;
and reporting suspected illegal or unethical behavior. The Code of Ethics is available on our website at
http://www.nfusz.com/codeofethics
.
Audit
Committee and Audit Committee Financial Expert
On
August 14, 2018, our Board amended and restated the Audit Committee Charter (the “
Audit Committee Charter
”)
to govern the Audit Committee. Currently, Messrs. Geiskopf, Bond, and Cragun (chair) serve as the members of the Audit Committee
and each meets the independence requirements of NASDAQ and the SEC. The Audit Committee Charter requires that each member of the
Audit Committee meet the independence requirements of NASDAQ and the SEC and requires the Audit Committee to have at least one
member that qualifies as an “audit committee financial expert.” In addition to the enumerated responsibilities of
the Audit Committee in the Audit Committee Charter, the primary function of the Audit Committee is to assist our Board in its
general oversight of our accounting and financial reporting processes, audits of our financial statements, and internal control
and audit functions. The Audit Committee Charter can be found online at
http://www.nfusz.com/auditcommittecharter
.
Compensation
Committee
On
August 14, 2018, our Board approved and adopted a charter (the “
Compensation Committee Charter
”) to govern
the Compensation Committee. Currently, Messrs. Geiskopf (chair), Bond, and Cragun serve as the members of the Compensation Committee
and each meets the independence requirements of NASDAQ and the SEC, qualifies as a “non-employee director” within
the meaning of Rule 16b-3 under the Exchange Act, and qualifies as an outside director within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the “
IRC
”). In addition to the enumerated responsibilities of
the Compensation Committee in the Compensation Committee Charter, the primary function of the Compensation Committee is to oversee
the compensation of our executives, produce an annual report on executive compensation for inclusion in our proxy statement, if
and when required by applicable laws or regulations, and advise our Board on the adoption of policies that govern our compensation
programs. The Compensation Committee Charter may be found online at
http://www.nfusz.com/compensationcommittecharter
.
Governance
and Nominating Committee
On
August 14, 2018, our Board approved and adopted a charter (the “
Nominating Committee Charter
”) to govern the
Governance and Nominating Committee (the “
Nominating Committee
”). Currently, Messrs. Bond (chair) and Cragun
serve as the members of the Nominating Committee. The Nominating Committee Charter requires that each member of the Nominating
Committee meet the independence requirements of NASDAQ and the SEC. In addition to the enumerated responsibilities of the Nominating
Committee in the Nominating Committee Charter, the primary function of the Nominating Committee is to determine the slate of director
nominees for election to our Board, to identify and recommend candidates to fill vacancies occurring between the annual meetings
of our Stockholders, and to review our policies and programs that relate to matters of corporate responsibility, including public
issues of significance to us and our Stockholders, and any other related matters required by federal securities laws. The charter
of the Nominating Committee may be found may be found online
http://www.nfusz.com/governanceandnominatingcommittecharter
.
Assessments
Our
Board intends that individual director assessments be conducted by other directors, taking into account each director’s
contributions at board meetings, service on committees, experience base, and their general ability to contribute to one or more
of our Company’s major needs. However, due to our stage of development and our need to deal with other urgent priorities,
our Board has not yet implemented such a process of assessment.
Director
Independence
We
are not currently listed on NASDAQ. In evaluating the independence of our members and the composition of the committees of our
Board, we utilize the definition of “independence” as that term is defined by applicable listing standards of NASDAQ
and by SEC rules, including the rules relating to the independence standards of an audit committee and the non-employee director
definition of Rule 16b-3 promulgated under the Exchange Act.
According
to the NASDAQ definition, we believe that each of Messrs. Geiskopf, Cragun, and Bond is an independent director because none of
them is an officer of our Company, is a beneficial owner of a material amount of shares of our Common Stock, and has received
compensation from us in excess of the relevant limits. We have determined that Mr. Cutaia is not independent due, among other
reasons, that he is the chief executive officer of our Company.
Our
Board expects to continue to evaluate its independence standards and whether and to what extent the composition of our Board and
its committees meets those standards. We intend to continue to appoint such persons to our Board and its committees who meet the
corporate governance requirements imposed by a national securities exchange. Therefore, we intend that a majority of our directors
will continue to be independent directors with at least one director who will qualify as an “audit committee financial expert,”
within the meaning of Item 407(d)(5) of Regulation S-K, as promulgated under the Securities Act of 1933, as amended.
TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS, AND CERTAIN CONTROL PERSONS
We
follow ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.
When and if we contemplate entering into a transaction in which any executive officer, director, nominee, or any family member
of the foregoing would have a direct or indirect interest, regardless of the amount involved, the terms of such transaction are
to be presented to our full Board (other than any interested director) for approval, and are documented in the minutes of those
meetings.
Other
than as disclosed below, since January 1, 2017, the beginning of our last full fiscal year, we have had no related party transactions.
Notes
Payable — Related Parties
We
had the following outstanding notes payable during the period specified above:
Note
|
|
Issuance
Date
|
|
Current
Maturity Date
|
|
Interest
Rate
|
|
|
Original
Borrowing
|
|
|
Largest
Aggregate
Amount
Outstanding
Since
January 1,
2017
|
|
|
Amount
Outstanding
as of
December
[●],
2018
|
|
|
Interest
Paid Since
January 1,
2018
|
|
|
Interest
Paid Since
January 1,
2017
|
|
Note
1
(1)
|
|
December
1, 2015
|
|
February
8, 2021
|
|
|
12.0
|
%
|
|
$
|
1,248,883
|
|
|
$
|
1,198,883
|
|
|
$
|
824,218
|
|
|
$
|
107,357
|
|
|
$
|
251,227
|
|
Note 2
(2)
|
|
December 1, 2015
|
|
February 8, 2021
|
|
|
12.0
|
%
|
|
|
189,000
|
|
|
|
189,000
|
|
|
|
—
|
|
|
|
16,839
|
|
|
|
39,519
|
|
Note 3
(3)
|
|
December 1, 2015
|
|
April 1, 2017
|
|
|
12.0
|
%
|
|
|
111,901
|
|
|
|
111,901
|
|
|
|
111,901
|
|
|
|
—
|
|
|
|
—
|
|
Note 4
(4)
|
|
August 4, 2016
|
|
December 4, 2018
|
|
|
12.0
|
%
|
|
|
343,326
|
|
|
|
343,326
|
|
|
|
240,328
|
|
|
|
76,530
|
|
|
|
102,987
|
|
Note
5
(5)
|
|
August
4, 2016
|
|
December
4, 2018
|
|
|
12.0
|
%
|
|
|
121,875
|
|
|
|
121,875
|
|
|
|
—
|
|
|
|
36,502
|
|
|
|
36,502
|
|
Total
notes payable – related parties, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,964,985
|
|
|
$
|
1,176,447
|
|
|
$
|
237,228
|
|
|
$
|
430,235
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(824,218
|
)
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
352,229
|
|
|
|
|
|
|
|
|
|
(1)
|
On
December 1, 2015, we issued a convertible note in favor of Mr. Cutaia, our Chief Executive Officer, to consolidate all loans
and advances made by Mr. Cutaia to us as of that date. The note bears interest rate of 12% per annum, is secured by our assets,
and had an original maturity date of April 1, 2017. Pursuant to the terms of the note, Mr. Cutaia, at his election, may convert
up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of Common Stock at a conversion rate of
$0.07 per share.
|
|
|
|
On
May 4, 2017, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1,
2017 to August 1, 2018. All other terms of the note remain unchanged. In connection with the extension, we granted to Mr.
Cutaia a three-year warrant to purchase up to 1,755,192 shares of Common Stock at a price of $0.355 per share with a fair
value of $517,291. On August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of
the note to February 8, 2021. All other terms of the note remain unchanged. In connection with the extension, we granted to
Mr. Cutaia a three-year warrant to purchase up to 2,446,700 shares of Common Stock at a price of $.49 per share with a fair
value of $1,074,602. We determined that the extension of the note’s maturity date resulted in a debt extinguishment
for accounting purposes because the fair value of the warrants granted was more than 10% of the original value of the note.
As result, we recorded the fair value of the “new” note, which approximates the then-current carrying value of
$1,198,833 of the then-current note and expensed the entire fair value of the warrants granted of $1,074,602 as part of debt
extinguishment. On September 30, 2018, Mr. Cutaia converted the principal balance that was convertible ($374,665) into 5,352,357
shares of Restricted Common Stock at $0.07 per share.
|
(2)
|
On
December 1, 2015, we issued a convertible note in favor of Mr. Cutaia in the amount of $189,000, representing a portion of
Mr. Cutaia’s accrued salary for 2015. The note is unsecured, bears interest rate of 12% per annum, had an original maturity
date of April 1, 2017, and is convertible into shares of Common Stock at a conversion price of $0.07 per share.
|
|
|
|
On
May 4, 2017, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from April 1,
2017 to August 1, 2018. All other terms of the note remain unchanged and there was no additional compensation or incentive
given. Effective August 8, 2018, we entered into an extension agreement with Mr. Cutaia to extend further the maturity date
of the note from August 1, 2018 to February 8, 2021. All other terms of the note remain unchanged and there was no additional
compensation or incentive given. On September 30, 2018, Mr. Cutaia converted the entire unpaid balance of $189,000 into 2,700,000
restricted shares of our Common Stock at $0.07 per share.
|
|
|
(3)
|
On
December 1, 2015, we issued a note in favor of a former member of our Board in the amount of $111,901, representing unpaid
consulting fees as of November 30, 2015. The note is unsecured, bears interest rate of 12% per annum, and had an original
maturity date of April 1, 2017. This note is currently past due.
|
|
|
(4)
|
On
April 4, 2016, we issued a convertible note in favor of Mr. Cutaia, in the amount of $343,326, to consolidate all advances
made by Mr. Cutaia to us during the December 2015 through March 2016 period. The note bears interest rate of 12% per annum,
is secured by our assets, and had an original maturity date of August 4, 2017. The terms of the note permit Mr. Cutaia to
convert up to 30% of the principal into shares of Common Stock at a conversion price $0.07 per share.
|
|
|
|
On
August 4, 2017, we entered into an extension agreement with Mr. Cutaia to extend the
maturity date of the note from August 4, 2017 to December 4, 2018. All other terms of
the note remain unchanged. In connection with the extension, we granted to Mr. Cutaia
a five-year warrant to purchase up to 1,329,157 shares of Common Stock at a price of
$0.15 per share with a fair value of $172,456.
On
September 30, 2018 Mr. Cutaia converted the 30% of the principal balance that was convertible ($102,998) into 1,471,397
restricted shares of our Common Stock at $0.07 per share.
|
|
|
(5)
|
On
April 4, 2016, we issued a convertible note in favor of Mr. Cutaia in the amount of $121,875, which represented his accrued
salary from December 2015 through March 2016. The note is unsecured, bears interest at the rate of 12% per annum, compounded
annually, and had an original maturity date of August 4, 2017. The note is also convertible into shares of our Common Stock
at $0.07 per share.
|
|
|
|
On
August 4, 2017, we entered into an extension agreement with Mr. Cutaia to extend the maturity date of the note from August
4, 2017 to December 4, 2018. All other terms of the note remain unchanged and there was no additional compensation or incentive
given. On September 30, 2018, Mr. Cutaia converted the entire balance of $121,875 into 1,741,071 restricted shares of our
Common Stock.
|
During
the year ended December 31, 2017, we recorded total interest expense equal to $232,192 pursuant to the terms of the notes and
paid $196,607 in interest.
EXECUTIVE
COMPENSATION
Summary
Compensation
The
particulars of compensation paid to the following persons:
|
(a)
|
all
individuals serving as our principal executive officer during the year ended December 31, 2017;
|
|
|
|
|
(b)
|
each
of our two most highly compensated executive officers who were serving as executive officers
at
the end of the year ended December 31, 2017; and
|
who
we will collectively refer to as the “named executive officers,” for all services rendered in all capacities to our
Company and subsidiaries for the years ended December 31, 2017 and December 31, 2016 are set out in the following summary compensation
table:
Summary
Compensation Table
|
Name
and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compen-
sation
($)
|
|
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compen-
sation
($)
|
|
|
Total
($)
|
|
Rory J.
Cutaia
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman,
President, Chief Executive Officer, and Secretary
|
|
2017
2016
|
(3)
(4)
|
|
|
399,804
357,500
|
|
|
|
Nil
Nil
|
|
|
|
709,500
Nil
|
|
|
|
167,083
108,603
|
|
|
|
Nil
Nil
|
|
|
|
Nil
Nil
|
|
|
|
689,747
127,083
|
|
|
|
1,966,134
593,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Clayborne
(2)
Chief Financial Officer
|
|
2017
2016
|
(3)
(4)
|
|
|
95,615
34,000
|
|
|
|
Nil
Nil
|
|
|
|
324,500
Nil
|
|
|
|
312,846
164,464
|
|
|
|
Nil
Nil
|
|
|
|
Nil
Nil
|
|
|
|
Nil
Nil
|
|
|
|
732,961
198,464
|
|
(1)
|
Mr.
Cutaia was appointed as President, Chief Executive Officer, Secretary, Treasurer, and director on October 16, 2014. 2017 and
2016 deferred salary totaled $399,804 and $259,029, respectively.
|
|
|
(2)
|
Mr.
Clayborne was appointed as Chief Financial Officer on July 15, 2016.
|
(3)
|
Year
ended December 31, 2017.
|
|
|
(4)
|
Year
ended December 31, 2016.
|
Outstanding
Equity Awards at Fiscal Year-End
We
did not have any stock awards outstanding as at December 31, 2017. The following table sets forth, for each named executive officer,
certain information concerning outstanding option awards as of December 31, 2017:
|
|
Option
awards
|
|
|
|
Name
|
|
Number
of securities underlying unexercised options (exercisable)
(#)
|
|
|
Number
of securities underlying unexercised options (unexercisable)
(#)
|
|
|
Equity
incentive plan awards: Number of securities underlying unexercised unearned options
(#)
|
|
|
Option
exercise price
($)
|
|
|
Option
expiration date
|
Rory J. Cutaia
|
|
|
125,000
|
|
|
|
125,000
|
|
|
|
Nil
|
|
|
|
0.08
|
|
|
December 18, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Clayborne
|
|
|
Nil
|
|
|
|
500,000
|
|
|
|
Nil
|
|
|
|
0.36
|
|
|
May 3, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rory J. Cutaia
|
|
|
Nil
|
|
|
|
2,000,000
|
|
|
|
Nil
|
|
|
|
0.08
|
|
|
January 9, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Clayborne
|
|
|
Nil
|
|
|
|
2,000,000
|
|
|
|
Nil
|
|
|
|
0.08
|
|
|
January 9, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rory J. Cutaia
|
|
|
250,000
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
0.11
|
|
|
October 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Clayborne
|
|
|
566,666
|
|
|
|
933,334
|
|
|
|
Nil
|
|
|
|
0.11
|
|
|
July 14, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rory J. Cutaia
|
|
|
1,250,000
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
0.10
|
|
|
May 11, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rory J. Cutaia
|
|
|
250,000
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
0.08
|
|
|
November 1, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rory J. Cutaia
|
|
|
800,000
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
0.50
|
|
|
May 12, 2019
|
Retirement
or Similar Benefit Plans
There
are no arrangements or plans in which we provide retirement or similar benefits for our directors or executive officers.
Resignation,
Retirement, Other Termination, or Change in Control Arrangements
Other
than the employment agreement of Rory J. Cutaia, we have no contract, agreement, plan or arrangement, whether written or unwritten,
that provides for payments to our directors or executive officers at, following, or in connection with the resignation, retirement
or other termination of our directors or executive officers, or a change in control of our Company or a change in our directors’
or executive officers’ responsibilities following a change in control.
Compensation
of Directors
The
table below shows the compensation of our directors who were not our named executive officers for the fiscal year ended December
31, 2017:
Name
|
|
Fees
earned or paid in cash
($)
|
|
|
Stock
awards
($)
|
|
|
Option
awards
($)
|
|
|
Non-equity
incentive plan compensation
($)
|
|
|
Nonqualified
deferred compensation earnings
($)
|
|
|
All
other compensation
($)
|
|
|
Total
($)
|
|
James P.
Geiskopf
(1)
|
|
|
Nil
|
|
|
|
147,000
|
|
|
|
148,777
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
295,777
|
|
(1)
Mr. Geiskopf was appointed a director of our Company in October 2014.
Golden
Parachute Compensation
For
a description of the terms of any agreement or understanding, whether written or unwritten, between our Company and any officer
or director concerning any type of compensation, whether present, deferred or contingent, that will be based on or otherwise will
relate to an acquisition, merger, consolidation, sale or other type of disposition of all or substantially all assets of our Company,
see above under the heading “Executive Compensation” and “Director Compensation.”
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth, for each director who is not an executive officer, certain information concerning outstanding option
awards as of December 31, 2017:
|
|
Option
awards
|
|
Name
|
|
Number
of securities underlying unexercised options (exercisable)
(#)
|
|
|
Number
of securities underlying unexercised options (unexercisable)
(#)
|
|
|
Equity
incentive plan awards: Number of securities underlying unexercised unearned options
(#)
|
|
|
Option
exercise price
($)
|
|
|
Option
expiration date
|
James P. Geiskopf
|
|
|
Nil
|
|
|
|
2,000,000
|
|
|
|
Nil
|
|
|
|
0.08
|
|
|
January 9, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James P. Geiskopf
|
|
|
750,000
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
0.10
|
|
|
May 11, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James P. Geiskopf
|
|
|
600,000
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
0.50
|
|
|
November 11, 2019
|
The
following is a description of other equity awards granted to directors during the year ended December 31, 2017: None.
We
have no formal plan for compensating our directors for their services in their capacity as directors. Our directors are entitled
to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of
our Board. Our Board may award special remuneration to any director undertaking any special services on their behalf other than
services ordinarily required of a director.
PRINCIPAL
ACCOUNTING FEES AND SERVICES
Audit
Fees
The
following table sets forth the fees billed to our Company for the year ended December 31, 2017 and 2016 for professional services
rendered our independent registered public accounting firm Weinberg & Company.
Fees
|
|
2017
|
|
|
2016
|
|
Audit Fees
|
|
$
|
59,498
|
|
|
$
|
31,890
|
|
Audit Related Fees
|
|
|
1,027
|
|
|
|
506
|
|
Tax Fees
|
|
|
-
|
|
|
|
-
|
|
Other Fees
|
|
|
10,673
|
|
|
|
-
|
|
Total
Fees
|
|
$
|
71,198
|
|
|
$
|
32,396
|
|
Pre-Approval
Policies and Procedures
The
Board and the Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent
registered public accounting firm. These services may include audit services, audit-related services, tax services, and other
services. Pre-approval is specific to the particular service or category of services and is generally subject to a specific budget.
Our independent registered public accounting firm and management are required to report periodically to the Audit Committee regarding
the extent of services provided by our independent registered public accounting firm in accordance with this pre-approval, and
the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.
The Board, or the Audit Committee, as applicable, pre-approved all fees for audit and non-audit work performed during fiscal 2017
and 2016.
ACTIONS
TO BE TAKEN
A
Reverse Stock Split will become effective on the date that we file a Certificate of Change (the “
Certificate
”)
with the Secretary of State of the State of Nevada, or such later date as we may specify in the Certificate. Although our Board
anticipates that it will authorize one or more Reverse Stock Splits, it has not determined the dates or specific ratios. Nevertheless,
we may not file a Certificate with the Secretary of State of the State of Nevada until at least the twentieth (20
th
)
day following the date on which this Information Statement is mailed to the Stockholders.
Notwithstanding
the foregoing, we must first notify FINRA of an intended Reverse Stock Split by filing the Issuer Company Related Action Notification
Form no later than ten (10) days prior to the anticipated record date of such action. Our failure to provide such notice may constitute
fraud under Section 10 of the Exchange Act. A new CUSIP number will be assigned to our Common Stock as a result of any Reverse
Stock Split.
Reverse
Stock Split
Our
Board unanimously
accepted authority for the
filing, within its discretion, of one or more Certificates for one or more Reverse Stock Splits at an aggregate ratio of not less
than one-for-five and not more than one-for-40 at any time and from time-to-time prior to September 30, 2019.
Our
Board believes that effecting one or more such reverse splits is in the best interests of the Company. A Reverse Stock Split will
become effective at on the day noted on the Certificate to be filed with the Secretary of State of the State of Nevada, which
may not occur until at least the twentieth (20
th
) day following the date on which this Information Statement is mailed
to our Stockholders.
As
a result of any Reverse Stock Split, each of our Stockholders will hold the same percentage of outstanding Common Stock immediately
following such Reverse Stock Split as such Stockholder held immediately prior to such Reverse Stock Split, subject to adjustments
that may result from the treatment of fractional shares or “odd lots” as described below. Currently, the Company is
authorized to issue up to a total of 200,000,000 shares of Common Stock. In addition to the
180,832,359
pre-Reverse Stock Split shares of Common Stock issued and outstanding on December
[●]
, 2018, our Board must reserve up to approximately 57,264,158 pre-Reverse Stock
Split shares of Common Stock that may be issued upon the exercise of warrants, options or conversion rights. Except with respect
to the shares of Common Stock issuable upon the exercise, at the option of the holder, of any options, warrants or conversion
at present our Board has no other commitment to issue additional shares of Common Stock.
Purpose
of Implementing a Reverse Stock Split.
Our
Board accepted the authority for one or more Reverse Stock Splits for the following reasons:
|
●
|
Our
Board believes that one or more Reverse Stock Splits is the most effective means of increasing the per-share market price
of our Common Stock in order to satisfy certain quantitative standards for it to become listed on NASDAQ;
|
|
|
|
|
●
|
Our
Board believes that a higher per-share market price of our Common Stock could encourage greater investor interest in us and
promote greater liquidity for our Stockholders; and
|
|
|
|
|
●
|
Our
Board believes that one or more Reverse Stock Splits is advisable to maintain our financing and capital-raising ability and
better position us to continue and/or expand our operations.
|
Meet
Securities Exchange Listing Requirements
Our
Common Stock is quoted on the OTC Markets Group Inc.’s OTCQB market under the symbol “FUSZ.” Trading in stock
quoted on the OTC Markets Group Inc.’s OTCQB market is often thin and characterized by wide fluctuations in trading prices
due to many factors that may have little to do with our operations or business prospects. The market price of our Common Stock
may be highly volatile. This volatility could depress the market price of our Common Stock for reasons unrelated to our operating
performance. Moreover, the OTCQB market and other over-the-counter trading systems do not benefit from the same type of Market-Maker
trading systems utilized by stock exchanges such as the NYSE and NYSE Market and automated quotation systems such as NASDAQ. Rather,
on the OTCQB market and other over-the-counter markets, there is no assurance that a bid/ask price will be posted to facilitate
trading of an over-the-counter quoted issuer at any particular point in time. As a result, trading of securities on the OTCQB
market and other over-the-counter systems is often more sporadic than the trading of securities listed on the NYSE, NYSE Market,
NASDAQ, or similar large securities exchanges or markets. Accordingly, our Stockholders may have greater difficulty selling their
shares at any particular point in time.
Our
Board’s primary objective in implementing one or more Reverse Stock Splits is to increase the per-share market price of
our Common Stock in order to meet certain of the quantitative standards for listing on NASDAQ. We believe that listing our Common
Stock on NASDAQ would provide better support for and maintain the liquidity of our Common Stock and increase recognition for our
Company and our Stockholders. Effecting one or more Reverse Stock Splits would reduce the then-issued and outstanding number of
shares of our Common Stock, which reduction our Board believes would increase the price per-share of our Common Stock to a level
sufficient to meet the quantitative standards for listing on NASDAQ. Although we have applied to have our Common Stock listed
on NASDAQ and have received our first set of questions and comments from NASDAQ, we cannot assure you that our listing application
will be approved whether or not our Common Stock meets the per-share market price listing standard. Further, we cannot assure
you that implementing any Reverse Stock Split will result in the per-share market price of our Common Stock meeting all of the
quantitative listing standards of any securities exchange, nor can we assure you that we will be able to meet the other quantitative
listing standards or any other listing standards required to become listed on any such securities exchange. As discussed below,
we also believe that the implementation of one or more Reverse Stock Splits will have certain other benefits to us and to our
Stockholders.
Increase
Market Price and Marketability of Our Common Stock
We
also believe that the increased per-share market price of our Common Stock expected as a result of implementing a Reverse Stock
Split will improve the marketability and liquidity of our Common Stock and will encourage interest and trading in our Common Stock.
Our Common Stock is a penny stock. The SEC has adopted Rule 15g-9, which generally defines “penny stock” to be any
equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per
share, subject to certain exceptions. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides
information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson
in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.
The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally
or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s
confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules
may discourage investor interest in and limit the marketability of our Common Stock.
Our
Board believes that reducing the current number of shares of our Common Stock may support a higher fair market per-share value
of our Common Stock based on our current market capitalization. Accordingly, because one or more Reverse Stock Splits will reduce
the current number of outstanding shares of our Common Stock, and thereby attempt to raise the fair market per-share value of
our Common Stock to greater than $5.00 per share, is in the best interests of our Stockholders. Our Board believes that a decrease
in the current number of outstanding shares of our Common Stock as a consequence of one or more Reverse Stock Splits should increase
the fair market per-share value of our Common Stock, which may encourage greater interest in our Common Stock and possibly promote
greater liquidity for our Stockholders. However, we cannot assure you that any one or more Reverse Stock Splits will have the
desired effect of raising the fair market per-share value of our Common Stock or increase the marketability of our Common Stock.
Appeal
to a Broader Range of Investors to Generate Greater Investor Interest in Us
Our
Board believes that the fair market per-share value of our Common Stock is currently at a level that may cause potential investors
to view an investment in us as unduly speculative and that the fair market per-share value of our Common Stock is currently lower
than it would be if the number of our issued and outstanding shares of Common Stock were decreased. Although the increase in the
fair market per-share value of our Common Stock, as a consequence of one or more Reverse Stock Splits, may be proportionately
less than the decrease in the number of shares outstanding and any increased liquidity due to any increased per-share price could
be partially or entirely offset by the reduced number of shares outstanding after each such Reverse Stock Split has taken effect,
our Board believes that one or more Reverse Stock Splits could ultimately result in a per-share price of our Common Stock that
adequately compensates for the adverse impact of the market factors noted above and that any increases in the fair market per-share
value of our Common Stock may make the shares of our Common Stock more attractive to potential investors.
Further,
Financial Industry Regulatory Authority (“
FINRA
”) sales practice requirements may also limit an investor’s
ability to buy and sell our Common Stock. Because of the trading volatility often associated with low-priced stocks, many brokerage
houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced
stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies
and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. FINRA has
adopted rules that require a broker-dealer to have reasonable grounds for believing that the investment is suitable for that customer
when making an investment recommendation to a customer. Prior to recommending speculative low-priced stocks to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax
status, investment objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high
probability that speculative low-priced stocks will not be suitable for at least some customers. FINRA requirements make it more
difficult for broker-dealers to recommend that their customers buy our Common Stock, which may limit your ability to buy and sell
our Common Stock. Additionally, because brokers’ commissions on low-priced stocks generally represent a higher percentage
of the stock price than commissions on higher-priced stocks, the current average price per share of our Common Stock can result
in individual Stockholders paying transaction costs representing a higher percentage of their total stock value than would be
the case if the stock price were substantially higher. As a result, certain investors may be dissuaded from purchasing lower-priced
stocks. We believe that a higher stock price that may be a result of one or more Reverse Stock Splits may reduce this concern
and will make our Common Stock a more attractive and cost-effective investment for many investors. It should be noted, however,
that the liquidity of our Common Stock may be adversely affected by any Reverse Stock Splits, given the reduced number of shares
that would be outstanding after a Reverse Stock Split is implemented.
Assist
in Future Financing and Capital Raising Transactions
As
noted above, our Board’s primary objective in implementing one or more Reverse Stock Splits is to increase the per-share
market price of our Common Stock in order to meet certain of the quantitative standards for listing on NASDAQ. We believe that
listing our Common Stock on NASDAQ would provide better support for and
maintain
our financing and capital-raising ability and better position us to continue and/or expand our operations
.
Effecting one or more Reverse Stock Splits would reduce the then-issued and outstanding number of shares of our Common Stock,
which reduction our Board believes would increase the price per-share of our Common Stock to a level sufficient to meet the quantitative
standards for listing on NASDAQ. Although we have applied to have our Common Stock listed on NASDAQ and have received our first
set of questions and comments from NASDAQ, we cannot assure that our listing application will be approved whether or not our Common
Stock meets the per-share market price listing standard. Further, we cannot assure you that implementing any Reverse Stock Split
will result in the per-share market price of our Common Stock meeting all of the quantitative listing standards of any securities
exchange, nor can we assure you that we will be able to meet the other quantitative listing standards or any other listing standards
required to become listed on any such securities exchange.
While
there can be no assurance, our Board believes that implementing one or more Reverse Stock Splits is in the best interests of the
Company and our Stockholders in order to realize the potential benefits discussed above. However, we cannot assure you that any
Reverse Stock Split, if implemented, will have the desired effect of proportionately raising our Common Stock price over the long
term, or at all. The effect of a Reverse Stock Split upon the market price of our Common Stock cannot be predicted with any certainty,
and the history of similar stock splits for companies in similar circumstances is varied. The market price of our Common Stock
may vary based on other factors unrelated to the number of shares outstanding, including our future performance. However, we believe
that the ability to implement one or more Reverse Stock Splits, and thereby have successive reductions in the number of outstanding
shares of our Common Stock, provides our Board with maximum flexibility to react to prevailing market conditions and future changes
to the market price of our Common Stock in order to realize these potential benefits.
Determination
of Ratio.
The ratio of a Reverse Stock Split, if approved and implemented at any time and from time to time, will be an aggregate
ratio of not less than one-for-five and not more than an aggregate ratio of not more than one-for-40, as determined by our Board
in its sole discretion. In determining a Reverse Stock Split ratio, our Board will consider numerous factors, including:
|
●
|
the
historical and projected performance of our Common Stock;
|
|
|
|
|
●
|
prevailing
market conditions;
|
|
|
|
|
●
|
general
economic and other related conditions prevailing in our industry and in the marketplace;
|
|
●
|
the
projected impact of the selected Reverse Stock Split ratio on trading liquidity in our Common Stock;
|
|
|
|
|
●
|
the
desire to satisfy not less than the minimum closing price requirements for listing on NASDAQ or similar securities exchange;
|
|
|
|
|
●
|
our
capitalization (including the number of shares of our Common Stock issued and outstanding and issuable upon conversion of
our debt securities and Preferred Stock and exercise of any warrants and options);
|
|
|
|
|
●
|
the
prevailing trading price for our Common Stock and the volume levels thereof; and potential devaluation of our market capitalization
as a result of such Reverse Stock Split.
|
Effects
of one or more Reverse Stock Splits.
Except
for adjustments that we expect to implement, which may result from the treatment of fractional shares as described below, each
Stockholder will hold the same percentage of our outstanding Common Stock immediately following the implementation of any Reverse
Stock Split as that Stockholder held immediately prior to such Reverse Stock Split. As of the Majority Consent Date, 175,176,248
pre-Reverse Stock Split shares of our Common Stock were issued and outstanding. As of December [●], 2018, 180,832,359
pre-Reverse Stock Split shares of our Common Stock were issued and outstanding, 19,167,641 pre-Reverse Stock Split shares of our
Common Stock were authorized but unissued, and we were obligated to issue up to 57,264,158 pre-Reverse Stock Split shares in the
future upon the exercise of currently outstanding warrants, options, or conversion rights. All of these share numbers will be
adjusted as follows: with respect to outstanding conversion rights, the respective conversion prices thereof would increase by
a factor equal to the inverse of such Reverse Stock Split ratio (
e.g.
, if a one-for-five ratio were to be selected by our
Board, then the conversion price of our outstanding convertible securities would increase by a factor of five) and with respect
to outstanding options and warrants, the respective exercise prices of the options and warrants would increase by a factor equal
to the inverse of such Reverse Stock Split ratio (
e.g.
, if a one-for-five ratio were to be selected by our Board, then
the exercise price of our outstanding options and warrants would increase by a factor of five).
After
a Reverse Stock Split is implemented, each of our Stockholders will own a reduced number of shares of our Common Stock based on
the exchange ratio selected by our Board for that particular Reverse Stock Split. For example, if our Board decides to implement
a one-for-five Reverse Stock Split, then every five pre-Reverse Stock Split shares of our Common Stock that a Stockholder owns
will be combined and converted into a single share of our Common Stock. We estimate that, following the implementation of any
Reverse Stock Split, we would have approximately the same number of Stockholders. Except for any changes as a result of the treatment
of fractional shares or round-lot holders, the completion of a Reverse Stock Split alone would not change any Stockholder’s
proportionate ownership interest in our Common Stock. The implementation of a Reverse Stock Split will not increase the number
of our Stockholders who own “odd lots” of less than 100 shares of our Common Stock. We understand that odd lots may
be more difficult to sell and that brokerage commissions and other costs of transactions in odd lots are generally higher than
the costs of transactions of more than 100 shares of our Common Stock. Accordingly, we expect that we will issue additional shares
of our Common Stock to any record or beneficial holder thereof, who, solely as a result of a Reverse Stock Split and without any
such additional issuance, would otherwise lose the status as a holder of a round-lot.
Because
the number of shares of our authorized Common Stock will not be affected, each Reverse Stock Split will result in an increase
in the number of authorized, but unissued, shares of our Common Stock. We do not expect that a Reverse Stock Split will affect
the par value of our Common Stock, which would remain at $0.0001 per share, or the number of authorized shares of Preferred Stock
that we may issue, which would remain at 15 million shares. Our Preferred Stock is available for issuance from time to time for
such purposes and consideration as our Board may approve in its discretion.
The
table below illustrates the number of shares of our Common Stock that may be authorized for issuance following the filing of a
Certificate, the approximate number of shares of our Common Stock that would remain outstanding following a Reverse Stock Split,
the approximate number of shares of our Common Stock reserved for future issuance upon exercise or conversion of outstanding options,
warrants, and the number of unreserved shares of our Common Stock available for future issuance following a Reverse Stock Split.
The information in the following table is based on 180,832,359 pre-Reverse Stock Split shares of our Common Stock issued and outstanding
as of December [●], 2018, and a maximum of
57,264,158
pre-Reverse Stock
Split shares of our Common Stock that we are obligated to issue as of December [●], 2018.
Proposed
Ratio
|
|
Number
of Shares of Common Stock Authorized
|
|
|
Approximate
Number of Shares of Common Stock Outstanding (Post-Reverse Split)
|
|
|
Approximate
Number of Shares of Common Stock We Are Obligated to Issue in the Future (1)
|
|
|
Approximate
Number
of
Shares
of
Common
Stock
Available
for
Future
Issuance
(2)
|
|
1-for-5
|
|
|
200,000,000
|
|
|
|
36,200,000
|
|
|
|
11,453,000
|
|
|
|
152,347,000
|
|
1-for-15
|
|
|
200,000,000
|
|
|
|
12,067,000
|
|
|
|
3,818,000
|
|
|
|
184,115,000
|
|
1-for-25
|
|
|
200,000,000
|
|
|
|
7,240,000
|
|
|
|
2,291,000
|
|
|
|
190,469,000
|
|
1-for-30
|
|
|
200,000,000
|
|
|
|
6,034,000
|
|
|
|
1,909,000
|
|
|
|
192,057,000
|
|
1-for-35
|
|
|
200,000,000
|
|
|
|
5,171,000
|
|
|
|
1,636,000
|
|
|
|
193,193,000
|
|
1-for-40
|
|
|
200,000,000
|
|
|
|
4,525,000
|
|
|
|
1,432,000
|
|
|
|
194,043,000
|
|
(1)
|
We
are obligated to issue shares of our Common Stock in the future pursuant to certain exercises or conversions of warrants,
options, convertible debt securities, and Preferred Stock. This column sets forth the maximum number of shares of our Common
Stock that, as of December [●], 2018, we are obligated to issue in the future.
|
|
|
(2)
|
The
number of shares of our Common Stock available for future issuances represents the number of shares of our Common Stock authorized
for issuance, less (i) the number of shares of our Common Stock outstanding and (ii) the number of shares that, as of December
[●], 2018, we are obligated to issue in the future.
|
As
reflected in the table above, the number of authorized shares of our Common Stock will not be reduced. Accordingly, each Reverse
Stock Split will have the effect of creating additional unissued and unreserved shares of our Common Stock. We have no current
arrangements or understandings providing for the issuance of any of the additional authorized and unreserved shares of our Common
Stock that would be available as a result of any Reverse Stock Split. However, these additional shares may be used by us for various
purposes in the future without further Stockholder approval (subject to applicable law), including, among other things: (i) raising
capital necessary to fund our future operations, (ii) providing equity compensation to our employees, executive officers, directors,
and consultants, (iii) entering into collaborations and other strategic relationships, (iv) expanding our business through the
acquisition of other businesses or products, (v) declaring of stock splits, and (vi) declaring of stock dividends.
Although
our Board expects that the reduction in outstanding shares of our Common Stock will result in an increase in the per-share price
of our Common Stock, there is no assurance that such a result will occur. Similarly, there is no assurance that, if the per-share
price of our Common Stock increases as a result of a Reverse Stock Split, such increase in the per-share price will be permanent.
The per-share price of our post-Reverse Stock Split Common Stock is dependent on several factors:
|
●
|
Should
the per-share price of our Common Stock decline after implementation of a Reverse Stock Split, the percentage decline may
be greater than would occur in the absence of such Reverse Stock Split.
|
|
|
|
|
●
|
The
anticipated resulting increase in per-share price of our Common Stock due to a Reverse Stock Split is expected to encourage
interest in our Common Stock and possibly promote greater liquidity for our Stockholders. However, such liquidity could also
be adversely affected by the reduced number of shares that would be outstanding after a Reverse Stock Split.
|
|
|
|
|
●
|
A
Reverse Stock Split could be viewed negatively by the capital markets and, consequently, could lead to a decrease in our overall
market capitalization. That is often the case that a reverse stock split-adjusted stock price and market capitalization of
companies that effect a reverse stock split decline.
|
|
|
|
|
●
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One
of the purposes for one or more Reverse Stock Splits is to meet the per-share minimum price requirements to list our Common
Stock on a securities exchange. If we are unable to meet such minimum requirements, and are unable to become listed on a securities
exchange, our liquidity and stock price may be negatively affected (and we may need to implement one or more additional Reverse
Stock Splits).
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Effective
Date.
A Reverse Stock Split will become effective
on the date that we file a Certificate with the Secretary of State of the State of Nevada, or such later date as we may specify
in the Certificate. Nevertheless, we may not file a Certificate with the Secretary of State of the State of Nevada until at least
the twentieth (20
th
) day following the date on which this Information Statement is mailed to the Stockholders.
Except
as explained below with respect to fractional shares and round-lot holders, on the effective date of a Reverse Stock Split, shares
of Common Stock issued and outstanding immediately prior thereto will be combined and converted into new shares of Common Stock
in accordance with the relevant Reverse Stock Split ratio.
Fractional
Shares.
No fractional shares of our Common Stock will be issued as a result of a Reverse Stock Split. Instead, Stockholders
who otherwise would be entitled to receive fractional shares because they hold a number of shares not evenly divisible by the
applicable ratio will automatically be entitled to have any such fractional share rounded up to the nearest whole share.
Round-lot
Round-up.
We expect that we will issue additional
shares of our Common Stock to any record or beneficial holder thereof, who, solely as a result of a Reverse Stock Split and without
any such additional issuance, would otherwise lose the status as a holder of a round-lot.
Effect
on Registered Stockholders of Our Common Stock Holding Certificates.
After the effective date of each Reverse Stock Split,
holders of shares of our pre-Reverse Stock Split Common Stock in certificated form will not be required to surrender their stock
certificates. Instead, we will give notice to our transfer agent of the relevant Reverse Stock Split and the effective date thereof
in order to reflect the number of our issued and outstanding shares of capital stock and the number of shares of our Common Stock
that are then held.
Effect
on Beneficial Stockholders of Our Common Stock.
If shares of our Common Stock are held in an account at a brokerage firm or
financial institution, which is commonly referred to as shares being held in “street name,” then the holder of that
account is the beneficial owner of those shares. We intend to treat Stockholders holding our Common Stock in street name in the
same manner as registered Stockholders whose shares are registered in their names. Banks, brokers, or other nominees will be instructed
to effect a Reverse Stock Split for their beneficial holders holding shares of our Common Stock in street name. However, these
banks, brokers, or other nominees may have different procedures than registered Stockholders for processing a Reverse Stock Split.
If shares of Common Stock are held with a bank, broker, or other nominee and if a holder has any questions in this regard, we
encourage the holder to contact the bank, broker, or nominee.
Effect
on Registered “Book-Entry” Stockholders of Our Common Stock.
If a Reverse Stock Split is effected, and the shares
of our Common Stock are held electronically in book-entry form shares (
i.e.
, shares held in book-entry form and not represented
by a physical certificate) with our transfer agent, stock certificates will not be issued evidencing ownership after that Reverse
Stock Split, and the holder will not need to take action to receive post-Reverse Stock Split shares. The holdings will be electronically
adjusted by our transfer agent to give effect to that Reverse Stock Split.
Accounting
Consequences.
We expect that the par value of our Common Stock will remain unchanged at $0.0001 per share after each Reverse
Stock Split, if any. As a result, our “stated capital,” which consists of the par value per share of our Common Stock
multiplied by the aggregate number of issued and outstanding shares of our Common Stock, will be reduced proportionately at the
effective time of each Reverse Stock Split. Correspondingly, our “additional paid-in capital,” which consists of the
difference between our stated capital and the aggregate amount paid to us upon the issuance of all currently outstanding shares
of our Common Stock, will be increased by a number equal to the decrease in stated capital. Further, net loss per share, book
value per share, net income, and other per-share amounts will be proportionately increased as a result of each such Reverse Stock
Split because there will be fewer shares of our Common Stock then issued and outstanding.
Potential
Anti-Takeover Effect.
Although in certain circumstances, the increased proportion of authorized but unissued shares to issued
shares could have an anti-takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person
seeking to effect a change in the composition of our Board or contemplating a tender offer or other transaction for the combination
of us and another company), our Board’s acceptance of
authority
for the filing, within its discretion, of one or more Certificates
to implement one or more
Reverse Stock Splits was not proposed or accepted in that context. We are not aware of any third-party’s effort to accumulate
shares of our Common Stock or obtain control of us, and it is not part of a plan by management to recommend a series of similar
actions to our Board and Stockholders. Our Board currently does not contemplate recommending the adoption of any other actions
that could be construed to affect the ability of third parties to effect a change control of us.
No
Appraisal Rights.
Under the Nevada
General
Corporation Law
, our Stockholders are not entitled to appraisal rights with respect to our
proposal to implement one or more Reverse Stock Splits, and we will not independently provide our Stockholders with any such rights.
No
Going Private Transaction.
Notwithstanding the decrease in the number of outstanding shares of Common Stock following the
implementation of one or more Reverse Stock Splits, our Board does not intend for this transaction to be the first step in a “going
private transaction” within the meaning of Rule 13e-3 of the Exchange Act and the implementation of any proposed Reverse
Stock Split to the maximum ratio requested will not cause us to go private.
Certain
Material U.S. Federal Income Tax Considerations of a Reverse Stock Split.
The
following is a summary of certain material U.S. federal income tax consequences of a Reverse Stock Split to holders of our Common
Stock. It addresses only U.S. Stockholders who hold pre-Reverse Stock Split shares of Common Stock and post-Reverse Stock Split
shares of Common Stock as “capital assets” within the meaning of Section 1221 of the IRC. This discussion does not
purport to be a complete discussion of all of the possible federal income tax consequences of a Reverse Stock Split and does not
account for or consider the federal income tax consequences to Stockholders in light of their individual investment circumstances
or to Stockholders subject to special treatment under the federal income tax laws, including, but not limited to:
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banks,
financial institutions, thrifts, mutual funds, or trusts;
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tax-exempt
organizations;
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insurance
companies;
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dealers
in securities or foreign currency;
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real
estate investment trusts, personal holding companies, regulated investment companies, or passive foreign investment companies;
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foreign
or United States expatriate Stockholders;
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Stockholders
who are not “United States persons,” as defined in Section 7701 of the IRC;
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controlled
foreign corporations;
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Stockholders
with a functional currency other than the U.S. dollar;
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Stockholders
who hold pre-Reverse Stock Split shares of Common Stock as part of a straddle, hedge, constructive sale, conversion transaction,
or other integrated investment;
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Stockholders
who hold pre-Reverse Stock Split shares of Common Stock as “qualified small business stock” within the meaning
of Section 1202 of the IRC;
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common
trusts;
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traders,
brokers, or dealers in securities who elect to apply a mark-to-market method of accounting;
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partnerships
or other pass-through entities or investors in such entities;
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Stockholders
who are subject to the alternative minimum tax provisions of the IRC;
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Stockholders
who acquired their pre-Reverse Stock Split shares of Common Stock pursuant to the exercise of employee stock options, through
a tax-qualified retirement plan, or otherwise as compensation; or
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holders
of warrants or stock options.
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In
addition, this discussion does not address any tax considerations under state, local, gift, or foreign tax laws.
This
summary is based upon the IRC, existing and proposed U.S. Treasury Regulations promulgated thereunder, legislative history, judicial
decisions, and current administrative rulings and practices, all as in effect on December [●], 2018 Date and all
of which are subject to differing interpretations. Any of these authorities could be repealed, overruled, or modified at any time.
Any such change could be retroactive and, accordingly, could cause the tax consequences of a Reverse Stock Split to vary substantially
from the consequences described herein. Further, no ruling from the IRS or opinion of legal or tax counsel will be obtained with
respect to the matters discussed herein, and there is no assurance or guarantee that the IRS would agree with the conclusions
set forth in this summary. This information is not intended as tax advice to any person and may not be relied upon to avoid penalties.
EACH
STOCKHOLDER IS ADVISED TO CONSULT HIS OR HER TAX ADVISOR AS TO HIS OR HER OWN SITUATION AND THE PARTICULAR FEDERAL, STATE, LOCAL,
OR FOREIGN INCOME OR OTHER TAX CONSEQUENCES OF A REVERSE STOCK SPLIT.
A
reverse stock split is intended to constitute a “recapitalization” within the meaning of Section 368(a)(1)(E) of the
IRC. Certain filings with the IRS must be made by us and certain “significant holders” of our Common Stock in order
for a Reverse Stock Split to qualify as a recapitalization. The tax consequences discussed below assume that our Reverse Stock
Split is treated as a recapitalization and that our Common Stock is held by each of our Stockholders as a capital asset:
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A
Stockholder generally will not recognize gain or loss as a result of a Reverse Stock Split, except to the extent of cash,
if any, received in lieu of a fractional share interest in the post-Reverse Stock Split shares of Common Stock; however, we
expect that we will round each post-Reverse Stock Split share of our Common Stock to the next whole share. We also expect
that we will issue additional shares of our Common Stock to any record or beneficial holder thereof, who, solely as a result
of a Reverse Stock Split and without any such additional issuance, would otherwise lose the status as a holder of a round-lot.
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A
Stockholder’s aggregate tax basis of the post-Reverse Stock Split shares of Common Stock received in a Reverse Stock
Split will generally be equal to the aggregate tax basis of their pre-Reverse Stock Split shares of Common Stock exchanged
therefor.
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A
Stockholder’s holding period for shares of our Common Stock held after a Reverse Stock Split will include the holding
period of his/her/its pre-Reverse Stock Split shares of Common Stock.
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No
gain or loss for federal income tax purposes will be recognized by us as a result of a Reverse Stock Split.
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The
foregoing discussion is intended only as a summary of certain U.S. federal income tax consequences of a reverse stock split and
does not purport to be a complete analysis or listing of all potential U.S. federal income tax consequences of our Reverse Stock
Split.
No
Meeting of Stockholders Required
The
Company is not soliciting any votes with regard to the Majority Action. The Majority Stockholders that have consented to the Majority
Action hold a majority of the total issued and outstanding shares of voting capital stock and, accordingly, such Majority Stockholders
had sufficient shares to authorize our Board to file, within its discretion, of one or more Certificates for one or more Reverse
Stock Splits at an aggregate ratio of not less than one-for-five and not more than one-for-40 at any time and from time-to-time
prior to September 30, 2019.
PROPOSALS
BY SECURITY HOLDERS
No
security holder has requested the Company to include any additional proposals in this Information Statement.
INTEREST
OF CERTAIN PERSONS IN OR IN OPPOSITION TO MATTERS TO BE ACTED UPON
No
officer or director of the Company has any substantial interest in the matters to be acted upon, other than his role as an officer
or a director of the Company. Our Board unanimously accepted authority for the filing, within its discretion, of one or more Certificates
for one or more Reverse Stock Splits at an aggregate ratio of not less than one-for-five and not more than one-for-40 at any time
and from time-to-time prior to September 30, 2019, all as described in this Information Statement.
ADDITIONAL
INFORMATION
Our
Company files reports with the SEC. These reports include annual and quarterly reports, as well as other information the Company
is required to file pursuant to securities laws. You may read and copy materials the Company files with the SEC at the SEC’s
Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC at
http://www.sec.gov
.
DELIVERY
OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
Only
one Information Statement is being delivered to multiple security holders sharing an address unless the Company received contrary
instructions from one or more of the security holders. The Company shall deliver promptly, upon written or oral request, a separate
copy of the Information Statement to a security holder at a shared address to which a single copy of the document was delivered.
A security holder can notify the Company that the security holder wishes to receive a separate copy of the Information Statement
by sending a written request to the Company at nFüsz, Inc., 344 S. Hauser Blvd., Suite 414, Los Angeles, California 90036
or by calling (855) 250-2300. A security holder may utilize the same address to request either separate copies or a single copy
for a single address for all future information statements, proxy statements, and annual reports.
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BY
ORDER OF THE BOARD OF DIRECTORS
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/s/
Rory J. Cutaia
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Rory
J. Cutaia
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President,
Chief Executive Officer, Secretary, and Director
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December
[●], 2018