Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
Appointment
of George O’Leary
On
October 10, 2019, in accordance with Nevada state law, the Board expanded the number of members of the Board to two and appointed
George O’Leary to the Board.
On
October 21, 2019, the Board removed Alan Lien as Chairman of the Board effective immediately, appointing Mr. O’Leary as
his replacement.
George
O’Leary has been the Chief Financial Officer and a member of the board of directors of HealthLynked Corp., a publicly-listed
company, since August 2014. Mr. O’Leary is also Co-Founder and Managing Director of InLight Capital Partners LLC since January
2014. Mr. O’Leary is currently the Vice-Chairman of the Board of Directors of Timios Holdings Corp. since March 2014 and
on the Board of Directors of MedOfficeDirect since October 2013. From June 2009 to May 2013, Mr. O’Leary was Chairman of
the Board and Chief Financial Officer of Protection Plus Securities Corporation until it was sold to Universal Protection Services.
From February 2007 to June 2015, Mr. O’Leary was a member of the Board of Directors of NeoMedia Technologies. Mr. O’Leary
is founder and President of SKS Consulting of South Florida Corp. (“SKS”) since June 2006 where he works with
public and private companies in board representation and/or under consulting agreements providing executive level management expertise,
as well as helping the implementation and execution of their companies’ strategic & operational plans. From 1996 to
2000, Mr. O’Leary was Chief Executive Officer and President of Communication Resources Incorporated (“CRI”).
Prior to CRI, Mr. O’Leary was Vice President of Operations of Cablevision Industries, where he ran $125 million of business
until it was sold to Time Warner. Mr. O’Leary started his professional career as a senior accountant with Peat Marwick and
Mitchell (KPMG). Mr. O’Leary holds a B.B.A. degree in Accounting with honors from Siena College. Our board of directors
believes Mr. O’Leary’s extensive business experience provides him with the qualifications and skills to serve as a
director.
Mr.
O’Leary will hold office until the next annual meeting of shareholders and until his successor shall have been elected and
qualified or until his earlier death, resignation or removal. The Board has determined that Mr. O’Leary satisfies the definition
of “independent” director, including, without limitation, the applicable requirements of the NASDAQ Listing Rules
and the Securities Exchange Act of 1934, as amended.
On
October 31, 2019, the Company entered into an executive chairman agreement (the “Chairman Agreement”) with
SKS.
Pursuant
to the Chairman Agreement, Mr. O’Leary received 500,000 shares of common stock of the Company upon his appointment to the
Board. In addition, he will receive equity compensation of $15,000 of shares per quarter as well as $5,000 per month as set forth
in the Chairman Agreement.
Appointment
of Tiffany Davis
On
October 21, 2019, in accordance with Nevada state law, the Board expanded the number of members of the Board to three and appointed
Tiffany Davis to the Board. In addition, the Board removed Alan Lien as Chief Executive Officer effective immediately, appointing
Ms. Davis as his replacement, as well as appointing Ms. Davis to the position of Chief Financial Officer.
Tiffany
Davis served as the Company’s Chief Operating Officer between February 2018 until her resignation in September 2019, and
as a member of the Board between August 2018 and September 2019. Ms. Davis has had 19 years of experience as a financial professional
working in both Management Consulting and Private Equity. She has held several key leadership positions in accounting, finance,
and operations. She has extensive experience in supply chain functionality, financial and operational due diligence, cash flow
forecasting, financial statement analysis, development and value retention in a number of industries including most recently in
the cannabis industry. Since September, 2019, Ms. Davis has been the founder and Chief Executive Officer of Trilogy Wellness Brands,
Inc., a company manufacturing premium products from hemp CBD. From 2016 through 2017, Ms. Davis has worked as a senior executive
for a US based cannabis consulting group supporting legal grows, assisting in license applications, developing programs for cultivators,
business structuring for medical dispensaries including developing M&A opportunities and initiation of several start-up ventures.
Beginning in 2012 into 2016 Ms. Davis worked as a Group Vice President for a US based private equity group, performing due diligence
tasks resulting in placing hundreds of millions of dollars in creative investment and debt instruments for appropriate investment
opportunities. From 2009 to 2011 Ms. Davis was a Manger of Corporate Advisory for Grant Thornton, one of the Big 6 worldwide accounting
firms, again in accounting and supply chain services during the automotive crisis in the US, specifically on the Chrysler turnaround
project. From 2005-2008 Ms. Davis worked for an international technology sector company with $500 million in revenues as a Vice
President of Special Projects for an automobile parts sourcing project in India from the company’s headquarters in Chicago,
Il. Ms. Davis received her B.S. from DePaul University in 2002 and a MBA from University of Chicago Graduate School of Business
in 2009.
Ms.
Davis will hold office until the next annual meeting of shareholders and until her successor shall have been elected and qualified
or until his earlier death, resignation or removal. The Board has determined that Ms. Davis does not satisfy the definition of
“independent” director, including, without limitation, the applicable requirements of the NASDAQ Listing Rules and
the Securities Exchange Act of 1934, as amended.
On
October 31, 2019, the Company entered into an employment agreement with Tiffany Davis to serve as our Chief Executive Officer
(the “Employment Agreement”). This Employment Agreement supersedes and replaces the employment agreement entered
into between us and Ms. Davis on August 22, 2018, which was terminated on October 31, 2019.
The
base salary for Ms. Davis under the Employment Agreement is $100,000 per annum. The base salary is subject to review annually
by the Board and/or the Compensation Committee and may be increased but not decreased. The Employment Agreement has an initial
term of one year and automatically renew for successive one year terms unless either party delivers written notice not to renew
at least 60 days prior to the end of the current term. Ms. Davis will receive previously agreed upon sign on bonus of $55,000,
which will be paid as the Company can afford to pay such bonus and should be paid no later than October 31, 2020. Ms. Davis is
entitled to receive performance-based bonuses based on increases in our total gross, top-line revenue compared to the prior year.
These performance-based bonuses are a percentage of her base salary.
Pursuant
to the Employment Agreement, Ms. Davis received options to purchase 833,000 shares of common stock These options are immediately
exercisable, expire five years from issuance, and are exercisable at $0.03 per share. In each quarter of the Company’s fiscal
year following the quarter in which the Employment Agreement became effective, Ms. Davis shall receive options to purchase $25,000
of the Company’s common stock, exercisable for a period of five years, with all such options having an exercise price equal
to the then closing market price on the last trading day at the end of each calendar quarter.
Pursuant
to the Employment Agreement, if the Company terminates Executive’s employment without Cause (as defined in the Agreements)
or Executive resigns for Good Reason (as defined in the Agreement), the Executive is entitled to the following payments and benefits:
(1) Executive’s fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all
other benefits, if any, under any group retirement plan, nonqualified deferred compensation plan, equity award plan or agreement,
health benefits plan or other group benefit plan to which Executive may be entitled to under the terms of such plans or agreements;
(2) a lump sum cash payment in an amount equal to 12 months of Executive’s base salary as in effect immediately prior to
the date of termination; (3) continuation of health benefits for Executive and Executive’s eligible dependents for a period
of 12 months following the date of termination; and (4) the automatic acceleration of the vesting and exercisability of outstanding
unvested stock awards as to the number of stock awards that would have vested over the 12-month period following termination had
such Executive remained continuously employed by the Company during such period.
Pursuant
to the Agreements, if Executive’s employment is terminated as a result of death or permanent disability, Executive or Executive’s
estate, as applicable, is entitled to Executive’s fully earned but unpaid base salary through the end of the month in which
termination occurs at the rate then in effect.
Resignation
of Alan Lien
Effective
November 12, 2019, Mr. Lien resigned as a Director of the Board. Mr. Lien did not resign from the Board as a result of any disagreement
related to the Company’s operations, policies or practices.