Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
¨
Employment Agreements
The Company has employment agreements with its Chairman, President and Chief Executive Officer, Robert H. Lorsch, and its Vice President of Finance and Chief Financial Officer, Ingrid
Safranek. Under each employment agreement, the executive officers receive a base salary, subject to annual increases as determined by the board of directors, certain benefits as set forth in
the employment agreements, and an annual bonus at the discretion of the board of directors.
On January 29, 2009 we entered into an employment agreement with our Chairman, President and Chief Executive Officer, Robert H. Lorsch, with an initial term ending on December 31,
2011, subject to successive automatic extension unless we or Mr. Lorsch elect not to extend. Under the terms of his agreement, Mr. Lorsch shall serve as both our President and Chief
Executive Officer and President and Chief Executive Officer of our wholly-owned subsidiary, MMR. The agreement provides for a base salary of $15,000 per month, subject to an upward
increase of no less than 5% per year and with an annual bonus and stock option grants in such amounts, if any, as the Board of Directors may determine in its sole discretion. Mr. Lorsch
receives a monthly auto allowance, reimbursement of certain life insurance premiums, and reimbursement for certain other insurance coverage, and is entitled to participate in benefits
generally made to our senior executives.
Page 6
On December 28, 2011, the Board of Directors agreed to renew Mr. Lorsch's employment agreement effective January 1, 2012 for an additional three year term ending on December 31,
2014. The term of the Renewal expires on December 31, 2014, but may be extended automatically for successive additional one-year periods at the expiration of the then-current term unless
written notice of non-extension is provided to Mr. Lorsch with at least 90 days prior notice to the expiration of such term. On May 13, 2013, the Board of Directors approved a salary increase
for Mr. Lorsch to $20,000 per month effective May 16, 2013. In addition, on December 31, 2013, the Board of Directors agreed to extend Mr. Lorsch's employment term to December 31, 2015
under the same terms. Mr. Lorsch's current annual base salary will remain unchanged, and authorized a one-time catch up accrual for the minimum 5% annual increase as called under the
agreement which had not been previously booked, with the understanding that, as in the past, portions of the payments could be deferred into future periods. Mr. Lorsch may terminate the
agreement upon 30 days written notice without reason or for good reason (as defined in the agreements) if we fail to cure acts or omissions constituting good reason within 30 days. If Mr.
Lorsch's employment is terminated by us for cause or voluntarily by Mr. Lorsch without good reason, he will not be entitled to receive any severance payments or benefits under the
employment agreement. If Mr. Lorsch's employment is terminated by us without cause or voluntarily by Mr. Lorsch for good reason, Mr. Lorsch will be entitled to one year of salary at his then
current rate of pay, including all monthly benefits, and the pro rata portion of the annual bonus otherwise due Mr. Lorsch. In the event of his disability, Mr. Lorsch would be entitled to receive
compensation equal to 60% of his base salary as then in effect. Mr. Lorsch's employment agreement includes provisions that prohibit Mr. Lorsch from disclosing our confidential information and
trade secrets and competing with us during the term of his employment agreement or soliciting our employees for 12 months following termination of employment.
We also have entered into a consulting agreement with The RHL Group, Inc., which is wholly-owned by Mr. Lorsch that provides for a monthly fee of $25,000 plus reimbursement of
expenses including medical insurance. The RHL Group provides consulting, operational and technical services to the Company, which we refer to as the RHL Services. As part of the RHL
Services, the RHL Group provides the Company with unrestricted access to its internal business and relationship contact database of more than 10,000 persons and entities, which includes
clients of the RHL Group and other individuals which may hold value to the Company. The RHL Group also provides infrastructure support to the Company, including allowing the Company
unlimited access to its facilities, equipment, and data, information management and server systems. The RHL Group has also consented to allow the Company to utilize the full-time services of
Mr. Lorsch as the Company's President, Chairman and Chief Executive Officer, which requires substantial time and energy away from his required duties as The RHL Group's Chairman and
Chief Executive Officer. In addition, The RHL Group has made its President, Kira Reed, available as the Company's spokesperson. Ms. Reed, who is Mr. Lorsch's spouse, also manages the
Company's social networking activities.
On January 26, 2010, we entered into an employment agreement with Ingrid Safranek as our Vice President, Chief Financial Officer and Secretary. Under the employment agreement, Ms.
Safranek receives a base salary, subject to annual increases as determined by the Board of Directors but in no event lower than 5%, certain benefits as set forth in the employment agreement,
and an annual bonus at the discretion of the board of directors. Ms. Safranek's employment agreement was effective until June 15, 2010, but was extended until June 15, 2011. On December
10, 2010, the Board approved Ms. Safranek's employment agreement to be amended to extend the term for an additional one year commencing on January 1, 2011. On December 28, 2011,
the Board extended the current employment agreement for an additional two years term and approved an increase in her base salary with the understanding that, from time to time, it could be
necessary to defer certain payments or benefits into future periods. On May 13, 2013, the Board approved a salary increase for Ms. Safranek to $16,667 per month, with the understanding that,
as in the past, portions of the payments could be deferred into future periods. Furthermore, on December 31, 2013, the Board elected to renew Ms. Safranek's agreement for an additional two
year term under the same terms as before.
The current term of Ms. Safranek's employment agreement is effective until December 31, 2015 and will automatically renew for successive 12 month periods unless terminated at least 30
days prior to the end of the term. The employment agreement may be terminated by the Company without cause (as defined in the agreement) upon 90 days written notice or for cause if Ms.
Safranek fails to cure the acts or omissions constituting cause within 30 days. If Ms. Safranek's employment is terminated by the Company for cause or voluntarily by Ms. Safranek without
good reason, she will not be entitled to receive any severance payments or benefits under the employment agreement. If Ms. Safranek's employment is terminated by the Company without
cause or voluntarily by Ms. Safranek for good reason, Ms. Safranek will be entitled to one year of salary at her then current rate of pay, including all monthly benefits, and the pro rata portion of
the annual bonus otherwise due Ms. Safranek. In the event of her disability, Ms. Safranek would be entitled to receive compensation equal to 60% of her base salary as then in effect. Ms.
Safranek's employment agreement includes provisions that prohibit her from disclosing our confidential information and trade secrets and competing with us during the term of his employment
agreement or soliciting our employees for 12 months following termination of employment.
Page 7
Outstanding Equity Awards at Fiscal Year-End
The following table provides information on all outstanding equity awards held by our named executive officers as of December 31, 2014.
|
|
Option/Warrant Awards |
|
|
Number of Securities Underlying Unexercised Options/Warrant Exercisable (#) |
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Option/Warrant (#) |
|
Option/Warrant Exercise Price ($) |
|
Option/Warrant Expiration Date |
|
|
|
|
|
|
|
|
|
Robert Lorsch |
|
14,180,000 |
|
- |
|
$0.0319 - $0.125 |
|
8/6/2014, |
Chief Executive Officer |
|
|
|
|
|
|
|
1/27/2020, |
|
|
|
|
|
|
|
|
4/6/2017, |
|
|
|
|
|
|
|
|
& 4/6/2022 |
|
|
|
|
|
|
|
|
|
Ingrid Safranek |
|
3,350,000 |
|
- |
|
$0.06 - $0.18 |
|
1/21/2020, |
Chief Financial Officer |
|
|
|
|
|
|
|
6/15/2020, |
|
|
|
|
|
|
|
|
1/3/2021 |
|
|
|
|
|
|
|
|
& 4/6/2022 |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information as of April 27, 2015, as to shares of our common stock beneficially owned by: (1) each person known by us to beneficially own five percent
or more of the outstanding shares of our common stock; (2) each of our named executive officers listed in the summary compensation table; (3) each of our directors; and (4) all of our named
executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. Except as otherwise noted in the footnotes below, we believe, based upon
information furnished to us, that each of the stockholders named in the tables have sole voting and investment power with respect to all shares of common stock shown as beneficially owned
by them, subject to applicable community property laws.
Shares of common stock subject to options, warrants and convertible notes exercisable or convertible within 60 days from April 27, 2015, are deemed outstanding for computing the
ownership percentage of the person holding such options, warrants or notes, but are not deemed outstanding for computing the ownership percentage of any other person.
Page 8
|
|
|
|
|
|
Number of Shares of Common |
|
|
|
Name and Address of Beneficial Owner (1) |
|
|
|
|
|
Stock Beneficially Owned (2) |
|
|
Percentage |
Directors and Named Executive Officers |
|
|
|
|
|
|
|
|
|
Robert H Lorsch (3) |
|
|
|
|
|
110,370,667 |
|
|
13.1% |
Bernie Stolar |
|
|
|
|
|
17,077,894 |
|
|
2.2% |
Ingrid Safranek |
|
|
|
|
|
10,375,000 |
|
|
1.3% |
Doug Helm (**) |
|
|
|
|
|
8,875,624 |
|
|
1.1% |
Jack Zwissig |
|
|
|
|
|
8,220,375 |
|
|
1.0% |
Mike Finley |
|
|
|
|
|
4,125,000 |
|
|
* |
Ivor Royston |
|
|
|
|
|
3,010,558 |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Executive Officers and Directors as a group |
|
|
|
|
|
162,055,118 |
|
|
19.7% |
(7 People) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5% Stockholders |
|
|
|
|
|
|
|
|
|
RHL Group (3) |
|
|
|
|
|
86,871,913 |
|
|
10.5% |
Robert H Lorsch (3) |
|
|
|
|
|
23,498,754 |
|
|
3.0% |
David Loftus |
|
|
|
|
|
58,247,323 |
|
|
7.2% |
Sherry Hackett |
|
|
|
|
|
37,252,242 |
|
|
4.7% |
(1) |
|
The business address of each director and executive officer listed is c/o MMRGlobal, Inc., 4401 Wilshire Blvd.,
Suite 200, Los Angeles, CA 90010. |
(2) |
|
This table is based upon information supplied by officers, directors, principal stockholders, and Schedules 13D
and 13G filed with the SEC. Beneficial ownership is determined in accordance with the rules of the SEC. Applicable percentage
ownership is based on 778,972,739 shares of common stock outstanding as of April 30, 2015. Shares of common stock subject to
options, warrants and convertible notes exercisable or convertible within 60 days after April 30, 2014, are deemed outstanding for
computing the ownership percentage of the person holding such options, warrants or notes, but are not deemed outstanding for
computing the ownership percentage of any other person. Except as otherwise noted, we believe that each of the stockholders named
in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them,
subject to applicable community property laws. |
(3) |
|
Consists of (i) 9,318,754 shares of common stock held directly by Mr. Lorsch and 37,454,892 shares of common
stock held directly by The RHL Group, which is wholly owned and controlled by Mr. Lorsch, and Mr. Lorsch also has voting and/or
investment power over such shares, (ii) fully vested warrants and/or options held by The RHL Group to purchase 49,417,021 shares of
common stock, and (iii) fully vested option and/or warrants held by Mr. Lorsch to purchase 14,180,000 shares of common
stock. |
(**) |
|
Mr. Helm resigned from the Board on March 17, 2015.
|
Securities Authorized for Issuance Under Equity Compensation Plans
The information regarding securities authorized for issuance under our equity compensation plans is set forth in Item 5 of the Original Filing.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
Our Board of Directors adopted a related party transaction policy, under which all related party transactions shall be presented to the disinterested directors of the Board for review and
approval in advance of such transactions. If it is not feasible to obtain advance approval of a related party transaction, such transaction shall be subject to the ratification of the disinterested
directors of the Board, and the Company may enter into such transaction prior to obtaining the approval of the disinterested directors only if the terms of such transaction allow it to be rescinded
at no cost to the Company in the event it is not ratified by the disinterested directors of the Board.
Other than the agreements and other arrangements set forth below, since January 1, 2013, there have not been any transactions or series of similar transactions to which we were or are a
party in which the amount involved exceeded or exceeds $120,000 and in which any director, executive officer, holder of more than 5% of any class of our voting securities, or any member of
the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest.
Page 9
Our Chairman and Chief Executive Officer, Robert H. Lorsch, is also the Chief Executive Officer of The RHL Group, Inc. and has full voting power over all of the capital stock of The RHL
Group, Inc. Mr. Lorsch directly and indirectly through The RHL Group, Inc., beneficially owns approximately 13% our total outstanding voting stock. The RHL Group, Inc. has loaned us money
pursuant to the Ninth Amended Note and any predecessor notes. See Note 3 - Related Party Note Payable above.
The RHL Group is an investment holding company which provides consulting, operational and technical services to the Company, which we refer to as the RHL Services. As part of the
RHL Services, the RHL Group provides the Company with unrestricted access to its internal business and relationship contact database of more than 10,000 persons and entities, which
includes clients of the RHL Group and other individuals which may hold value to the Company. The RHL Group also provides infrastructure support to us, including allowing us unlimited access
to its facilities, equipment, and data, information management and server systems. In addition to allowing us the use of its office support personnel, the RHL Group has also consented to allow
us to utilize the full-time services of Mr. Lorsch as the Company's President, Chairman and Chief Executive Officer, which requires substantial time and energy away from his required duties as
The RHL Group's Chairman and Chief Executive Officer. In addition, The RHL Group has made its President, Kira Reed, available as the Company's spokesperson. Ms. Reed, who is Mr.
Lorsch's spouse, also manages our social networking activities.
In consideration for the above, The RHL Group, Inc. has a consulting arrangement with MMR. A copy of the consulting agreement is filed as an Exhibit in our current report on Form 8-K
filed with the SEC on May 4, 2009 and is hereby incorporated by reference.
We incurred $50,000 each year during the years ended December 31, 2014 and 2013, toward marketing consulting services from Bernard Stolar, a director. We included $174,273 and
$109,756 in related party payables as of December 31, 2014, and 2013, respectively, in connection with these services.
We contract with a significant vendor for the development and maintenance of the software applications necessary to run our MyMedicalRecords PHR, MyEsafeDepositBox and
MyMedicalRecords Pro products. Our outside developer supports our software development needs through a team of software engineers, programmers, quality control personnel and testers,
who work with our internal product development team on all aspects of application development, design, integration and support of our products. This vendor is also a stockholder. For the year
ended December 31, 2014 and 2013, the total expenses relating to this stockholder amounted to $120,000 and $120,000, respectively. In addition, we capitalized $107,050 of software
development costs for the year ended December 31, 2014. As of December 31, 2014 and 2013, the total amounts due to the stockholder and included in related party payables amounted to
$10,000 and $396,800, respectively.
On September 15, 2009, we entered into a five year agreement with E-Mail Frequency, LLC and David Loftus, Managing Partner of E-Mail Frequency, LLC, a significant stockholder of the
Company. We will license an existing 80 million person direct marketing database (the "Database") of street addresses, cellular phone numbers, e-mail addresses and other comprehensive
data with E-Mail Frequency. The agreement allows us to market, through the use of the Database, our MyMedicalRecords PHR, MyEsafeDepositBox virtual vault, and MMRPro document
management system to physicians and their patients. Under the terms of the Agreement, we paid $250,000 to David Loftus as a one-time consulting fee in the form of 2,777,778 shares of our
common stock. We recorded the $250,000 one-time licensee fee as a prepaid consulting fee. Amortization expense for the years ended December 31, 2014 and 2013 was $50,000 per year. In
addition, we incurred a total of $0 and $15,020 during the years ended December 31, 2014 and 2013, respectively, toward convertible notes interest to Mr. Loftus. We included in related party
payables at December 31, 2014 and December 31, 2013 of $64,615 and $64,615, respectively, in respect to these services. Furthermore, Mr. Loftus is a value-added-reseller of MMRPro
systems. We recognized $0 and $18,421 in revenue from E-Mail Frequency for the sale of MMRPro systems, during 2014 and 2013, respectively. On July 19, 2012, we entered into a 6%
Convertible Promissory Note with Mr. Loftus for a principal amount of $157,422 and warrants to purchase our common stock. Effective September 1, 2011, we signed an Amendment to the
Agreement dated September 15, 2009 to provide licensor a non- exclusive right to target, market and exploit the Employee Benefits market.
The securities described above were issued to each of the foregoing persons or entities in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of
1933, as amended, and the rules promulgated thereunder. At the time of their issuance, the securities granted above were restricted securities for purposes of the Securities Act and the
certificates representing such securities bear legends to that effect, unless a legal opinion has been issued for the removal of such legends. The exercise/conversion prices of the securities
described above were equal to the closing price of our common stock as of the date of grant.
Director Independence
Our Board of Directors has determined that each of the following directors would be deemed "independent" under applicable NASDAQ Stock Market LLC rules: Messrs. Finley, Helm,
Royston, Stolar and Zwissig. These persons represent a majority of our Board of Directors. Mr. Lorsch, the Chairman of our Board of Directors and our Chief Executive Officer would not be
deemed independent. Messrs. Stolar, Zwissig and Finley are members of our Compensation Committee and Mr. Finley is the Chairman of our Compensation Committee. Messrs. Helm and
Zwissig are members of our Nominating and Corporate Governance Committee and Mr. Zwissig is the Chairman. Messrs. Stolar, Royston and Finley are members of our Audit Committee, but
would not be deemed to be independent under the more stringent independence requirements for Audit Committee members set forth in NASDAQ Listing Rule 5605(2). Mr. Stolar is Chairman
of the Audit Committee.
Page 10
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table represents aggregate fees billed for the fiscal years ended December 31, 2014 and 2013 by Rose, Snyder & Jacobs. Rose, Snyder & Jacobs
performed the audit of our financial statements for the year ended December 31, 2014. All fees described below were approved by the Audit Committee pursuant to our pre-approval policy also
discussed below.
|
|
|
Fiscal Years Ended |
|
|
|
2014 |
|
|
2013 |
Audit Fees |
|
$ |
82,000 |
|
$ |
102,000 |
Audit Related Fees |
|
|
- |
|
|
4,000 |
Total Fees |
|
$ |
82,000 |
|
$ |
106,000 |
Audit Fees include the audit of the Company's annual financial statements presented in the Company's Annual Reports on Form 10- K, reviews of interim financial statements presented in
the Company's Quarterly Reports on Form 10-Q and accounting, reporting and disclosure consultations related to those audits and fees related to consents and reports in connection with
regulatory filings.
Audit Related Fees included review and consent of shelf registration statements and related updates.
The Company's Audit Committee has considered whether the provision of non-audit services is compatible with maintaining the independence of Rose, Snyder & Jacobs, and has
concluded that the provision of such services to the degree utilized is compatible with maintaining the independence of the Company's registered public accounting firm. All services provided
by Rose, Snyder & Jacobs in 2014 and 2013 were pre-approved by the Audit Committee after review of each of the services proposed for approval.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
The Audit Committee has adopted a pre-approval policy for auditor services, which allows the Chief Executive Officer and/or the Chief Financial Officer of the Company to engage the
independent registered public accountants, on a case-by-case basis, to consult with our management as to the accounting or disclosure treatment of transactions or events and/or the actual or
potential impact of final or proposed rules, standards or interpretations by the SEC, Financial Accounting Standards Board or other regulatory or standard- setting bodies. In addition, the
Audit Committee may periodically obtain from the independent registered public accountants estimates of anticipated fees for services in the defined categories of audit services, audit-related
services, and tax services for a specified accounting period and pre-approves services in such categories up to specified amounts. Pre-approval may also be given as part of the Audit
Committee's approval of the scope of the engagement of the independent registered public accounting firm or on an individual explicit case-by-case basis before the independent registered
public accountants are engaged to provide each service. The pre-approval of services may be delegated to one or more of the Audit Committee's members, but the decision must be reported
to the full Audit Committee at its next scheduled meeting. The members of the Audit Committee approved the fees during subsequent meetings of the Audit Committee.
PART IV
ITEM 15. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS SCHEDULES
The exhibits filed below are filed as part of this Form 10-K/A.
|
|
|
|
|
|
Exhibit 31.1 |
Rule 13(a)-14(a)/15d-14(a) Certification of Chief Executive Officer. |
|
|
Exhibit 31.2 |
Rule 13(a)-14(a)/15d-14(a) Certification of Chief Financial Officer. |
|
|
Exhibit 32 |
Section 1350 Certifications. |
Page 11
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment #1 to this Annual
Report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized.
MMRGLOBAL, INC.