INFORMATION STATEMENT
PURSUANT TO SECTION 14 OF THE SECURITIES
EXCHANGE ACT OF 1934,
AS AMENDED, AND REGULATION 14C AND SCHEDULE
14C THEREUNDER
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
INTRODUCTION
This notice and information
statement (the “Information Statement”) will be mailed on or about November 27, 2019 to the stockholders of record,
as of November 25, 2019 to shareholders of Life On Earth, Inc., a Delaware corporation (the “Company”) pursuant to
Section 14(c) of the Exchange Act of 1934, as amended. This Information Statement is circulated to advise the shareholders
of action already approved and taken without a meeting by written consent of four stockholders (including management) holding a
total of 1,200,000 Series A Preferred Shares and 7,774,301 common shares (The 1,100,000 shares of Series A Preferred Shares
held by management with each shares of Series A Preferred Shares having fifty (50) votes per share on all matters presented to
the common stockholders). The Series A Preferred Shares would carry 60,000,000 of which management controls 55,000,000 votes; thus,
combined with the 43,759,558 issued and outstanding shares of common stock and outstanding preferred shares, there would be a total
of 103,759,558 voting capital shares of which 55,000,000 voting shares of preferred stock and common arising from the Series A
Preferred shares and 6,545,238 (a total of 61,545,238 voting shares) arising from common stock holdings (59.3%) have voted in favor
of the action.
Please review the
Information Statement included with this Notice for a more complete description of this matter. This Information Statement is being
sent to you for informational purposes only.
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT
TO SEND US A PROXY.
The actions approved are as follows:
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(1)
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The re-election of the Company’s Board of Directors, consisting
of Fernando Oswaldo Leonzo, Robert Gunther , John Romagosa, Michael Bloom and Sonia Luna, as the members of the Board of Directors, to
hold office until our next annual meeting of shareholders or until their successors have been duly elected and qualified ; and
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(2)
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the reappointment of Friedman LLP as the Company’s independent
certified public accountant for the fiscal year ending May 31, 2019 and May 31, 2020; and.
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(3)
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to increase the authorized shares from One Hundred
million (100,000,000) to Two Hundred million (200,000,000) (“Increase in Authorized”); and
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(4)
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to effectuate a 5:1 Reverse Stock Split (pro-rata
decrease of outstanding shares) of our issued and outstanding shares of Common Stock (the "Reverse Stock Split"); and
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(5)
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to approve an advisory vote on executive compensation;
and
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(6)
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to approve the frequency of every three years
for executive compensation advisory votes.
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Both the Reverse
Stock Split and the Increase in Authorized (separate and distinct actions such that the Increase in Authorized will be retained
following the Reverse Stock Split) as described in the accompanying Information Statement, effective as of the filing of amendment
to the Company's Certificate of Incorporation with the Delaware Secretary of State, have been duly authorized and approved by the
written consent of the holders of a majority of the voting capital shares of the Company’s issued and outstanding voting
securities and your vote or consent is not requested or required. The action herein will serve as the Company’s Annual meeting
for the 2019-2020 fiscal year. The accompanying Information Statement is provided solely for your information. The accompanying
Information Statement also serves as the notice required by the Delaware General Corporation Law of the taking of a corporate action
without a meeting by less than unanimous written consent of the Company’s stockholders.
This Information Statement, which describes
the above corporate actions in more detail, is being furnished to our shareholders for informational purposes only pursuant to
Section 14(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations
prescribed thereunder. Pursuant to Rule 14c-2 under the Exchange Act, the corporate actions will not be effective until no fewer
than twenty (20) calendar days after the initial mailing of the Information Statement to our shareholders, on or about December
9, 2019.
By order of the Board of Directors,
Fernando Oswaldo Leonzo
Chief Executive Officer
November 12, 2019
The elimination of the need for a meeting
of stockholders to approve this action is made possible by Delaware General Corporation Law which provides that the written consent
of the holders of outstanding shares of voting capital stock, having not less than the minimum number of votes which would be necessary
to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, may be substituted
for such a meeting. In order to eliminate the costs involved in holding a special meeting of our stockholders, our Board of Directors
voted to utilize the written consent of the holders of a majority in interest of our voting securities. This Information Statement
is circulated to advise the shareholders of action already approved by written consent of the shareholders who collectively hold
a majority of the voting power of our capital stock.
THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995 PROVIDES A “SAFE HARBOR” FOR FORWARD LOOKING STATEMENTS. This Information Statement contains statements
that are not historical facts. These statements are called “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve important known
and unknown risks, uncertainties and other factors and can be identified by phrases using “estimate,” “anticipate,”
“believe,” “project,” “expect,” “intend,” “predict,” “potential,”
“future,” “may,” “should” and similar expressions or words. Our future results, performance
or achievements may differ materially from the results, performance or achievements discussed in the forward-looking statements.
There are numerous factors that could cause actual results to differ materially from the results discussed in forward-looking statements,
including:
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Changes in relationships and market for the development of the business of the Company that would
affect our earnings and financial position.
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Considerable financial uncertainties that could impact the profitability of our business.
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•
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Factors that we have discussed in previous public reports and other documents filed with the Securities
and Exchange Commission.
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This list provides examples of factors
that could affect the results described by forward-looking statements contained in this Information Statement. However, this list
is not intended to be exhaustive; many other factors could impact our business and it is impossible to predict with any accuracy
which factors could result in which negative impacts. Although we believe that the forward-looking statements contained in this
Information Statement are reasonable, we cannot provide you with any guarantee that the anticipated results will be achieved. All
forward-looking statements in this Information Statement are expressly qualified in their entirety by the cautionary statements
contained in this section and you are cautioned not to place undue reliance on the forward-looking statements contained in this
Information Statement. In addition to the risks listed above, other risks may arise in the future, and we disclaim any obligation
to update information contained in any forward-looking statement.
TABLE OF CONTENTS
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Page
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THIS INFORMATION STATEMENT
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5
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General
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5
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Board and Shareholder Approval of the Annual Meeting Matters and the Increase of Authorized Shares and the Reverse Split
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5
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The Action by Written Consent
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10
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No Further Voting Required
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Notice Pursuant to Section the Delaware General Corporation Law
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10
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INFORMATION ON CONSENTING SHAREHOLDERS
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29
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DELIVERY OF INFORMATION STATEMENT
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30
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WHERE YOU CAN FIND MORE INFORMATION
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Life On Earth, Inc.
575 Lexington Ave,
4th Floor, New York, NY 10022
(646) 844-9897
Email: fleonzo@lifeonearthinc.com
This Information Statement is being furnished
by Life On Earth, Inc., a Delaware corporation (“we,” “us,” “our” or the “Company”),
in connection with action taken by the holders of a majority of the voting power of the Company’s issued and outstanding
voting securities. By written consent dated November 11, 2019, the holders of a majority of the voting power approved a resolution
to re-elect the current Board of Directors, ratify the appointment of Friedman LLP as the Company’s independent certified
public accountant for the fiscal year ending May 31, 2019 and May 31, 2020, increase in authorized Shares of Common Stock from
One Hundred million (100,000,000) to Two Hundred million (200,000,000) shares of Common Stock, $0.001 par value, of the Company,
effectuate a 5:1 Reverse Stock Split, approve an advisory vote on executive compensation, and approve the frequency of every three
years for executive compensation advisory votes. Under this Reverse Stock Split each 5 shares of our Common Stock will
be automatically converted into 1 share of Common Stock. We are first sending or giving this Information Statement on or about
November 27, 2019 to our stockholders of record as of the close of business on November 25, 2019 (the “Record Date”).
Our principal executive offices are located at 575 Lexington Ave, 4th Floor, New York, NY 10022 and our main telephone
number is (646) 844-9897.
This Information Statement, which describes
the above corporate actions in more detail, is being furnished to our shareholders for informational purposes only pursuant to
Section 14(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations
prescribed thereunder. Pursuant to Rule 14c-2 under the Exchange Act, the corporate actions will not be effective until no fewer
than twenty (20) calendar days after the initial mailing of the Information Statement to our shareholders, on or about December
9, 2019.
BOARD AND SHAREHOLDER APPROVAL OF THE ANNUAL
MEETING MATTERS AND THE REVERSE STOCK SPLIT AND INCREASE OF AUTHORIZED STOCK
On November 11, 2019, the Board of
Directors and the holders of a majority of the voting power approved a resolution to effectuate a 5:1 Reverse Stock Split. Under
this Reverse Stock Split each 5 shares of our Common Stock will be automatically converted into 1 share of Common Stock. To
avoid the issuance of fractional shares of Common Stock, the Company will issue an additional share to all holders of fractional
shares. The effective date of the reverse stock split will be on or after December 8, 2019, twenty days after the mailing
of this Information Statement. In addition, as discussed below, the Board of Directors and the holders of a majority of the voting
power approved a resolution to effectuate an increase in authorized Shares of Common Stock from t One Hundred million (100,000,000)
to Two Hundred million (200,000,000) shares of common stock, $0.001 par value.
PLEASE NOTE THAT THE REVERSE STOCK SPLIT WILL
NOT CHANGE YOUR PROPORTIONATE EQUITY INTERESTS IN THE COMPANY, EXCEPT AS MAY RESULT FROM THE ISSUANCE OF SHARES PURSUANT TO THE
FRACTIONAL SHARES.
PLEASE NOTE THAT THE REVERSE STOCK
SPLIT WILL HAVE THE EFFECT OF SUBSTANTIALLY INCREASING THE NUMBER OF SHARES THE COMPANY WILL BE ABLE TO ISSUE TO NEW OR EXISTING
SHAREHOLDERS BECAUSE THE NUMBER OF AUTHORIZED SHARES WILL BE INCREASED WHILE THE NUMBER OF SHARES ISSUED AND OUTSTANDING WILL BE
DECREASED.
PURPOSE AND MATERIAL EFFECTS OF THE REVERSE STOCK SPLIT
The Board of Directors believes that the
low stock price and the large number of outstanding shares of our Common Stock have reached a difficult time for clients and investors
for the Company. The Board of Directors also believes that the timing is now right in light of our Company’s enactment of
its business plan and prospective investors that are engaged with our company which we believe will see an increase in revenues
and investments in 2020. As a result, the Board of Directors has
5
proposed the Reverse Stock Split to maintain the business momentum
going forward through 2020, when we expect, but cannot guarantee, to achieve our goals for revenues and investors.
The
number of authorized, issued and outstanding, and available shares of common and preferred shares are disclosed in the tables below:
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Authorized Shares of Common Stock
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Number of Issued and Outstanding Shares of Common Stock
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Number of Shares of Common Stock Available in Treasury for Issuance
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Pre-Increase in Authorized and Reverse Stock Split
(as of November 22, 2019)
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100,000,000 shares of Common Stock
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43,759,558 shares of Common Stock
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56,240,442 shares of Common Stock
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Post- Increase in Authorized and Reverse Stock Split
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200,000,000 shares of Common Stock
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8,751,911 shares of Common
Stock(1)
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191,248,089 shares of Common Stock(1)
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(1)
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Depending on the number of fractional shares that are issued.
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There will be no adjustments to the
authorized or the issued and outstanding shares of preferred shares.
There are no plans, arrangements, understandings,
etc. for the newly authorized but unissued shares that will become available following our 1-for-5 reverse stock split.
When a company engages in a Reverse Stock Split,
it substitutes one share of stock for a predetermined amount of shares of stock. It does not increase the market capitalization
of the company. An example of a reverse split is the following. A company has 5,000,000 shares of common stock outstanding. Assume
the market price is $0.01 per share. Assume that the company declares a 1 for 5 reverse stock split. After the reverse split, that
company will have 1/5 as many shares outstanding or 1,000,000 shares outstanding. The stock will have a market price of $0.10 If
an individual investor owned 5,000 shares of that company before the split at $0.01 per share, he will own 1,000 shares at $0.10
after the split. In either case, his stock will be worth $100. He is no better off before or after. Except that such company hopes
that the higher stock price will make that company look better and thus the company will be a more attractive investor or merger
or purchase target for potential business. There is no assurance that that company's stock will rise in price after a reverse split
or that a suitable investor, merger or purchaser candidate will emerge.
The Board of Directors believes that the
Reverse Stock Split may improve the price level of our Common Stock and that the higher share price could help generate interest
in the Company among investors and other business opportunities. However, the effect of the reverse split upon the market price
for our Common Stock cannot be predicted, and the history of similar stock split combinations for companies in like circumstances
is varied. There can be no assurance that the market price per share of our Common Stock after the reverse split will rise in proportion
to the increase in the number of shares of Common Stock outstanding resulting from the reverse split. The market price of our Common
Stock may also be based on our performance and other factors, some of which may be unrelated to the number of shares outstanding.
The reverse split will affect all of our
stockholders uniformly and will not affect any stockholder's percentage ownership interests in the Company or proportionate voting
power, except to the extent that the reverse split results in any of our stockholders owning a fractional share. All stockholders
holding a fractional share shall be issued an additional share. The principal effect of the Reverse Stock Split will be that the
number of shares of Common Stock issued and outstanding will be
6
reduced from 43,759,558 shares of Common
Stock as of November 11, 2019 to approximately 8,751,911 shares of Common Stock, $0.001 par value (depending on the number of
fractional shares that are issued) upon effectuation of the reverse stock split. The Reverse Stock Split will affect the shares
of common stock outstanding. Currently, the Company also has 1,200,000 shares of Series A Preferred Shares that are not affected.
These Preferred Series A Shares are not convertible to shares of Common Stock other than for their voting rights as defined in
the Bylaws. The Reverse Stock Split will not affect the par value of our Common Stock. As a result, on the effective date of the
Reverse Stock Split, the stated capital on our balance sheet attributable to our Common Stock will be reduced to less than the
present amount, and the additional paid-in capital account shall be credited with the amount by which the stated capital is reduced.
The per share net income or loss and net book value of our Common Stock will be increased because there will be fewer shares of
our Common Stock outstanding.
The Reverse Stock Split will not change
the proportionate equity interests of our stockholders, nor will the respective voting rights and other rights of stockholders
be altered. The Common Stock issued pursuant to the Reverse Stock Split will remain fully paid and non-assessable. The Reverse
Stock Split is not intended as, and will not have the effect of, a “going private transaction” covered by Rule 13e-3
under the Securities Exchange Act of 1934. We will continue to be subject to the periodic reporting requirements of the Securities
Exchange Act of 1934.
Stockholders should recognize that they will
own fewer numbers of shares than they presently own (a number equal to the number of shares owned immediately prior to the filing
of the certificate of amendment divided by 10). While we expect that the Reverse Stock Split will result in an increase in the
potential market price of our Common Stock, there can be no assurance that the Reverse Stock Split will increase the potential
market price of our Common Stock (which is dependent upon many factors, including our performance and prospects). Also, should
the market price of our Common Stock decline, the percentage decline as an absolute number and as a percentage of our overall market
capitalization may be greater than would pertain in the absence of a reverse split. Furthermore, the possibility exists that potential
liquidity in the market price of our Common Stock could be adversely affected by the reduced number of shares that would be outstanding
after the reverse split. In addition, the Reverse Split will increase the number of stockholders of the Company who own odd lots
(less than 100 shares). Stockholders who hold odd lots typically will experience an increase in the cost of selling their shares,
as well as possible greater difficulty in effecting such sales. Consequently, there can be no assurance that the reverse split
will achieve the desired results that have been outlined above.
SUMMARY OF REVERSE STOCK SPLIT
Below is a brief summary of the Reverse Stock
Split:
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The issued and outstanding Common Stock shall be reduced on
the basis of one post-split share of the Common Stock for every 10 pre-split shares of the Common Stock outstanding. The consolidation
shall not affect any rights, privileges or obligations with respect to the shares of the Common Stock existing prior to the consolidation.
· Stockholders
of record of the Common Stock shall have their total shares reduced on the basis of one post-split share of Common Stock for every
5 pre-split shares outstanding and shares beneficially owned from the conversion of debt and the execution of warrants shall be
adjusted to reflect the reverse stock split in accordance with their terms and conditions.
As a result
of the increase of the Common Stock, the pre-split total of issued and outstanding shares of 43,759,558 shall be consolidated to
a total of approximately 8,751,911 issued and outstanding shares (depending on the number of fractional shares that are be issued
or cancelled).
The authority for the Reverse Split of the
Common Stock is expected to become effective after we file Articles of Amendment to our Articles of Incorporation (the “Effective
Date”). Upon the Effective Date, the Company will notify FINRA and request an ex-dividend date. The Reverse Split will take
place on the Effective Date without any action on the part of the holders of the Common Stock and without regard to current certificates
representing shares of Common Stock being physically surrendered for certificates representing the number of shares of Common Stock
each shareholder is entitled to receive as a result of the Reverse Split. New certificates of Common Stock will not be issued at
this time.
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We do not have any provisions in our Articles,
by laws, or employment or credit agreements to which we are party that have anti-takeover consequences. We do not currently have
any plans to adopt anti-takeover provisions or enter into any arrangements or understandings that would have anti-takeover consequences.
In certain circumstances, our management may issue additional shares to resist a third party takeover transaction, even if done
at an above market premium and favored by a majority of independent shareholders. There are no adverse material consequences or
any anti-takeover provisions in either our Articles of Incorporation or Bylaws that would be triggered as a consequence of the
Reverse Split. The Articles of Incorporation or Bylaws do not address any consequence of the Reverse Split. See below for a discussion
on the federal Income Tax consequences of the Reverse Split.
FEDERAL INCOME TAX CONSEQUENCES
The following summary of material federal income
tax consequences of the Reverse Split does not purport to be a complete discussion of all of the possible federal income tax consequences.
Further, it does not address any state, local, foreign or other income tax consequences, nor does it address the tax consequences
to shareholders that are subject to special tax rules, such as banks, insurance companies, regulated investment companies, personal
holding companies, foreign entities, nonresident alien individuals, broker-dealers and tax-exempt entities. The discussion is based
on the United States federal income tax laws as of the date of this Information Statement. Such laws are subject to change retroactively
as well as prospectively. This summary also assumes that the shares of Common Stock are held as “capital assets,” as
defined in the Internal Revenue Code of 1986, as amended. The tax treatment of a shareholder may vary depending on the facts and
circumstances of such shareholder.
EACH SHAREHOLDER IS URGED TO CONSULT WITH SUCH SHAREHOLDER’S
TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE REVERSE SPLIT.
No gain or loss will be recognized by a shareholder
as a result of the Reverse Split. The aggregate tax basis of the shares received in the Reverse Split will be the same as the shareholder’s
aggregate tax basis in the shares exchanged. The shareholder’s holding period for the shares received in the Reverse Split
will include the period during which the shareholder held the shares surrendered as a result of the Reverse Split. The Company’s
views regarding the tax consequences of the Reverse Split are not binding upon the Internal Revenue Service or the courts, and
there is no assurance that the Internal Revenue Service or the courts would accept the positions expressed above. The state and
local tax consequences of the Reverse Split may vary significantly as to each shareholder, depending on the state in which such
shareholder resides.
This summary of the tax consequences of the
Reverse Split is not binding on the Internal Revenue Service or the courts, and the tax treatment to particular stockholders may
vary depending upon each stockholder’s particular facts and circumstances. Accordingly, each stockholder should consult with
the stockholder’s own tax advisor with respect to all of the potential tax consequences of the Reverse Split.
SUMMARY OF THE INCREASE IN AUTHORIZED
On November 11, 2019, the Board of Directors
and holders of a majority of the voting power approved a resolution for an Increase in Authorized Shares from One Hundred million
(100,000,000) to Two Hundred million (200,000,000) shares of Common Stock, $0.001 par value, of the Company.
We have no present understandings
or agreements that will involve the issuance of capital stock. However, we are engaged in negotiations with respect to transactions,
including financings and acquisitions, which could involve the issuance of capital stock. As of the date herein, there are no definitive
agreements, letters of intent of memorandums of understanding with respect to any transactions, financings or acquisitions.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
In July 2015, the
Company engaged Raich Ende Malter & Co. LLP as its independent registered public accounting firm. Effective as of January
23, 2019, Raich Ende Malter & Co. LLP, Melville, New York (“Raich”) was
dismissed as the
8
independent registered public accounting firm for the Company. The Dismissal was approved by our
Board of Directors effective as of January 23, 2019. The Dismissal was not due to any disagreements with Raich regarding
any matter of accounting principles or practices, financial statement disclosures, audit scope, or audit procedure.
Effective January 24,
2019, our Board of Directors appointed Friedman LLP, (“Friedman”) as our independent registered public accounting firm,
to audit our financial statements for the year ended May 31, 2019.
The aggregate fees billed to the Company for
services rendered in connection with the years ended May 31, 2019 and 2018 are set forth in the table below:
Fee category
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2019
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2018
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Audit fees (1 )(2)
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$
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143,259
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$
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98,770
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Audit related
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—
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Tax fees
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—
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Total fees
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$
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143,259
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$
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98,770
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___________
(1)
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Audit fees consist of fees incurred for professional services rendered for the audit of financial statements, for reviews of our interim financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements. Total fees billed by Raich Ende Malter & Co. LLP for the audit of our fiscal year ended May 31, 2019 and 2018 financial statements were $0 and $50,000, respectively. Total fees billed by Raich Ende Malter & Co. LLP the review of our quarterly financial statements, and other fees was $43,338 and $48,770 for the fiscal years ended May 31, 2019 and 2018, respectively.
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(2)
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Audit fees consist of fees incurred for professional services rendered for the audit of financial statements, for reviews of our interim financial statements included in our quarterly reports on Form 10-Q, Form 10-K and for services that are normally provided in connection with statutory or regulatory filings or engagements. Total fees billed by Friedman LLP, for 2019 are $99,921 covering restatement of prior filings, Form 10-Q and the Form 10-K for the year ended May 31, 2019.
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ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Company believes that its compensation
policies are designed to attract, motivate and retain talented executive officers and are aligned with the long-term interests
of its stockholders. If such compensation were to be modified, the Company runs the risk of both being unable to retain and unable
to attract qualified and competent people to fill rolls necessary for the advancement and betterment of the Company.
The
Company provided its stockholders the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our
named executive officers (“NEO”) as disclosed in this Information Statement in accordance with the SEC’s rules.
This proposal, which is commonly referred to as “say-on-pay,” is required by the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010, which added Section 14A to the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Section 14A of the Exchange Act also requires that stockholders have the opportunity to cast an advisory vote with
respect to whether future executive compensation advisory votes will be held every one, two or three years, which is the approved
vote for Proposal 6. The holders of a majority
of the Voting Shares approved, on an advisory, non-binding
basis, compensation of our named executive officers. Our full Board of Directors value the opinions expressed by our stockholders
in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for named executive
officers.
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ADVISORY VOTE ON THE FREQUENCY
OF FUTURE EXECUTIVE COMPENSATION ADVISORY VOTES
In Proposal 5, the Company provided its stockholders
the opportunity to vote to approve, on an advisory, non-binding basis, compensation of our named executive officers. In this Proposal
6, we asked our stockholders to cast a non-binding advisory vote regarding the frequency of future executive compensation advisory
votes. The holders of a majority of the Voting Shares approved a frequency of every three years (the maximum allowed) to hold the
advisory vote to approve executive compensation . However, because this vote is advisory and non-binding, the Board of Directors
may decide that it is in the best interests of our stockholders and the Company to hold the advisory vote to approve executive
compensation more or less frequently.
THE ACTION BY WRITTEN CONSENT
On November 11, 2019, Board of Directors
and the holders of a majority of the voting power approved the following:
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(1)
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The re-election of the Company’s Board of Directors, consisting
of Fernando Oswaldo Leonzo, Robert Gunther , John Romagosa, Michael Bloom and Sonia Luna as the members of the Board of Directors, to
hold office until our next annual meeting of shareholders or until their successors have been duly elected and qualified ; and
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(2)
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the reappointment of Friedman LLP as the Company’s independent
certified public accountant for the fiscal year ending May 31, 2019 and May 31, 2020; and.
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(3)
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to increase the authorized shares from One
Hundred million (100,000,000) to Two Hundred million (200,000,000) (“Increase in Authorized”); and
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(4)
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to effectuate a 5:1 Reverse Stock Split (pro-rata
increase of outstanding shares) of our issued and outstanding shares of Common Stock (the "Reverse Stock Split"); and
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(5)
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to approve an advisory vote on executive compensation;
and
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(6)
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to approve the frequency of every three years
for executive compensation advisory votes.
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This Information Statement is circulated
to advise the shareholders of action already approved and taken without a meeting by written consent of three stockholders (management)
holding a total of 1,100,000 Series A Preferred Shares and shares of Common Stock (The 1,100,000 shares of Series A Preferred
Shares held by management with each shares of Series A Preferred Shares having fifty (50) votes per share on all matters presented
to the common stockholders). The Series A Preferred Shares would carry 55,000,000 votes; thus, combined with the 43,759,558 issued
and outstanding shares of common stock and outstanding preferred shares, there would be a total of 98,759,558 voting capital shares
of which 55,000,000 voting shares of preferred stock and common arising from the Series A Preferred shares and 6,545,238 (a total
of 61,545,238 voting shares) arising from common stock holdings (62.3%) have voted in favor of the action.
No Further Voting Required
We are not seeking consent, authorizations,
or proxies from you. The Delaware General Corporation Law and our bylaws provide that actions requiring a vote of the stockholders
may be approved by written consent of the holders of outstanding shares of voting capital stock having not less than the minimum
number of votes which would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. The approval by at least a majority of the outstanding voting power of our voting securities is required
to approve the reverse split and the decrease in the authorized shares of common stock.
Notice Pursuant to the Delaware General
Corporation Law
Pursuant to the Delaware General Corporation
Law, we are required to provide prompt notice of the taking of corporate action by written consent to our stockholders who have
not consented in writing to such action. This Information Statement serves as the notice required by the Delaware General Corporation
Law.
Dissenters’ Rights
Neither Delaware law, the Company’s
Charter, nor the Company’s Bylaws provides for appraisal or other similar rights for dissenting stockholders in connection
with this proposal. Accordingly, the Company’s stockholders will have no right to dissent and obtain payment for their shares.
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“Company,” “our company,”
“us,” “Life On Earth” “LFER” “we” and “our” refer to Life On Earth,
Inc. unless the context requires otherwise
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This Information Statement contains certain
forward-looking statements regarding management’s plans and objectives for future operations including plans and objectives
relating to our planned marketing efforts and future economic performance. The forward-looking statements and associated risks
set forth in the registration statement include or relate to, among other things, acceptance of our proposed services and the products
we expect to market, our ability to establish a customer base, managements’ ability to raise capital in the future, the retention
of key employees and changes in the regulation of our industry. These statements may be found under “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and “Description of Business,” as well as in the
registration statement generally. Actual events or results may differ materially from those discussed in forward-looking statements
as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters
described in the registration statement generally. In light of these risks and uncertainties, there can be no assurance that the
forward-looking statements contained in the registration statement will in fact occur.
The forward-looking statements herein are based
on current expectations that involve a number of risks and uncertainties. Such forward-looking statements are based on assumptions
described herein. The assumptions are based on judgments with respect to, among other things, future economic, competitive and
market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which
are beyond our control. Accordingly, although we believe that the assumptions underlying the forward-looking statements are reasonable,
any such assumption could prove to be inaccurate and therefore there can be no assurance that the results contemplated in forward-looking
statements will be realized. In addition, as disclosed elsewhere in the “Risk Factors” section of the registration
statement, there are a number of other risks inherent in our business and operations which could cause our operating results to
vary markedly and adversely from prior results or the results contemplated by the forward-looking statements. Management decisions,
including budgeting, are subjective in many respects and periodic revisions must be made to reflect actual conditions and business
developments, the impact of which may cause us to alter marketing, capital investment and other expenditures, which may also materially
adversely affect our results of operations. In light of significant uncertainties inherent in the forward-looking information included
in the registration statement, the inclusion of such information should not be regarded as a representation by us or any other
person that our objectives or plans will be achieved.
Any statement in the registration statement
that is not a statement of an historical fact constitutes a “forward-looking statement”. Further, when we use the words
“may”, “expect”, “anticipate”, “plan”, “believe”, “seek”,
“estimate”, “internal”, and similar words, we intend to identify statements and expressions that may be
forward- looking statements. We believe it is important to communicate certain of our expectations to our investors. Forward-looking
statements are not guarantees of future performance. They involve risks, uncertainties and assumptions that could cause our future
results to differ materially from those expressed in any forward-looking statements. Many factors are beyond our ability to control
or predict. You are accordingly cautioned not to place undue reliance on such forward-looking statements. Important factors that
may cause our actual results to differ from such forward-looking statements include, but are not limited to, the risks outlined
under “Risk Factors” herein. The reader is cautioned that our company does not have a policy of updating or revising
forward-looking statements and thus the reader should not assume that silence by management of our company over time means that
actual events are bearing out as estimated in such forward-looking statements.
Corporate History and Business
Life On Earth, Inc. (“LFER”) is
an innovative brand incubator and accelerator focused on building and scaling concepts in the natural consumer products category.
Our mission is to bring our strategic focus and long-term forward-looking vision to
11
consumers in the health, wellness and active
lifestyle spaces through superior branding, product quality, targeted acquisitions and retail experience in the functional beverage
category.
Our objective is to grow as rapidly as possible
(both organically and via strategic alliances and acquisitions) using the public capital markets for access to capital. The companies
and assets sought by us will be those that already have market penetration in the following segments: (1) Sales (2) Marketing (3)
Distribution network and (4) Manufacturing infrastructure in place;
Our management team has over 50 years of combined
experience in the food and beverage industry. To further enhance the product portfolio of LFER we have acquired additional brands.
In October 2017 LFER acquired Victoria’s Kitchen, LLC (“VK”) and on August 2, 2018 the Company acquired the Just
Chill brand through an acquisition of the Chill Group LLC. While LFER also had Direct Store Delivery (“DSD”) companies
with the previous acquisitions of the Energy Sources Distributors, Inc. and the Giant Beverage Company the revised focus of the
Company is on our brands. To allow the Company to focus its resources on their brands, LFER executed a sale of the Giant Beverage
Company effective March 1, 2019. In June 2019, LFER made the decision to discontinue the ESD operation to further concentrate its
efforts and available resources to its core brands and any additional brands it acquires.
Corporate Overview
Life On Earth, Inc. was incorporated in April
2013.
In October 2013, we signed a distribution agreement
with Gran Nevada Beverage , Inc. (“Gran Nevada”), an entity related through common management and ownership. The agreement
provides us with the right to sell and distribute Gran Nevada’s beverages in the United States with purchase prices at the
then applicable wholesale prices charged to Gran Nevada’s distributors. The agreement was for an initial term of five years
with automatic renewals of successive five-year terms unless terminated. We initiated sales and distribution operations in March
2014. This agreement was renewed for an additional 5 years as per the agreement. During the three months ended August 31, 2019
and August 31, 2018, the Company sold $0 and $40,877 respectively. These products were produced by a third party copacker and were
not purchased from Gran Nevada. The availability of third party copackers that can produce an Horchata are limited and it directly
impacts sales. As there is currently no copacking available for this product the Company does not know if they will be able to
produce this product again in the future.
In July, 2016, we entered into a Stock Purchase
and Sale Agreement to acquire all of the issued and outstanding common stock of Energy Sources Distributors, Inc. (“ESD”)
from its three founding shareholders. On June 21, 2019, LFER made the determination to discontinue the operations of ESD and further
focus on the brand portfolio. The operations of ESD was discontinued in fiscal 2020 and has been reflected in the financial statements.
In October 2017, LFER acquired Victoria’s
Kitchen, LLC (“VK”). VK is a specialty beverage company that makes exceptional European-inspired drinks. VK’s
beverages are natural and all the beverages are Gluten-Free, GMO-Free, Dairy-Free, Vegan and contain no artificial ingredients
or preservatives.
On April 30, 2018 , LFER acquired The Giant
Beverage Company Inc. (“Giant” or “GBC”). Giant is a Direct Store Delivery (DSD) business that covers the
five boroughs of New York City under an eight-route distribution system. GBC serviced over 600 accounts in the five boroughs.
Giant services mainly independent retailers but was expanding to service authorized chain accounts.
On May 7, 2019, Life On Earth, Inc. (“LFER”),
Giant Beverage, Inc. (“Giant”), and Frank Iemmiti and Anthony Iemmiti (“Frank and Anthony Iemmiti”) entered
into a Dispute Resolution and Resale agreement that resolved all existing disputes between the two parties and resulted in the
sale of the ownership of Giant to Frank and Anthony Iemmiti. On July 4, 2019, LFER and Frank and Anthony Iemmiti executed the amended
Dispute Resolution and Resale Agreement. Under the terms of the agreement, LFER deposited $50,000 into an Attorney’s Trust
Account, this was accrued for as of May 31, 2019. Frank and Anthony Iemmiti had a continuing obligation to provide LFER with all
financial information of Giant (the “Giant Financial Information”) that LFER needed to complete its SEC reporting requirements.
Having successfully filed of all SEC documents
12
this money was released from the Attorney’s Trust account to Frank and Anthony
Iemmiti. In addition, LFER paid to Frank and Anthony Iemmiti the additional stated consideration in the Settlement Agreement, specifically
391,988 shares of LFER stock which was valued at $62,718. The number of shares of which was determined by the closing price, $.16
per share, the day prior to execution of the Settlement Agreement (the “LFER Shares”). This amount was accrued for
as of May 31, 2019. This released all current and future causes of actions and claims against LFER. At the closing, LFER sold the
Giant Company to Frank and Anthony Iemmiti in exchange for their transfer to LFER of 1,455,000 Common Stock Shares previously held
by Frank and Anthony Iemmiti. During the year ended May 31, 2019, the Company incurred a loss of $733,557 on the resale of GBC
and recorded a charge of $169,942 related to the loss on discontinued operations.
Sales and Distribution
The Company currently markets and sells mainstream
functional beverage products through third party Direct Store Delivery platforms as well as through other distributors including
KeHe Distributors, LLC (“KeHe”) and United Natural Foods, Incorporated “UNFI”. KeHe has a distribution
network in more than 30,000 stores across North America. UNFI is a distributor of natural and organic foods, specialty foods, and
related products in the United States and Canada.
The Company also sells it Victoria’s
Kitchen brands and Just Chill brands direct to consumers via Amazon online. LFER is also actively seeking additional brands for
its portfolio that are primarily engaged in the business of developing, manufacturing, marketing and selling unique, premium, natural
nonalcoholic functional beverages that are targeted towards LFER’s active lifestyle consumers.
Production
The Company does not directly manufacture our
products, as we outsource the manufacturing process to third-party bottlers and independent contract manufacturers (co-packers).
After the product is manufactured, the finished products are stored in third-party warehouses. Other than minimum case volume requirements
per production run, we do not have annual minimum production commitments with our co-packers. As we are using third party co-packers
and do not have minimum production contracts in place, we could experience disruptions in our ability to deliver products to our
customers. We continually review our contract packing needs in light of regulatory compliance and logistical requirements and may
add or change co-packers based on those needs. These co-packers are located in different geographic locations throughout the United
States and currently the Company uses multiple co-packers. The material terms of these relationships are typically negotiated annually
and include pricing, quality standards, delivery times and conditions, purchase orders, and payment terms. Payment terms are typically
net 30, meaning that the total invoiced amount is expected to be paid in full within 30 days from the date the products or services
are provided. We believe that we have sufficient options for each of our raw and packaging material needs, as well as our third-party
distribution needs and also have long-term relationships with each of our suppliers and distributors, resulting in consistency
in quality and supply. We also believe that we have sufficient breadth of retail relationships with distribution in both large
and small retailers and independents and across multiple channels (mass, club, pharmacies, convenience, and small and large format
retailers) throughout the United States.
The contractual arrangements with all third
parties, including suppliers, manufacturers, distributors, and retailers are typical of the beverage industry with standard terms.
We have no long-term obligations with any of the third parties nor do any of them have long-term obligations with us. The third-party
supplier, manufacturing and distribution agreements were entered into in the normal course of business within the guidelines of
industry practices and are not deemed material and definite.
Competition
LFER is a Consumer-Packaged Goods (“CPG”)
company primarily focused in the beverage category. What sets us apart in the industry, is our consolidated corporate structure
that handles all aspects of sales, marketing and proprietary distribution from a centralized location. The LFER platform is built
for accelerating emerging growth brands in the United States by leveraging sales, supply chain, and distribution relationships.
At LFER, we are forward-thinking. We have identified ways to build out distribution channels that are more flexible and responsive
to today’s needs.
13
We realize that by sharing resources and capabilities
in novel ways with new products in new situations, we can take advantage of profit-making opportunities that individual companies
could not exploit alone. Our creation of a more flexible and responsive distribution system is not only a concept; we have applied
the practice through implementation with our own functional beverage brands.
The beverage industry, specifically the healthy
beverage industry, and the direct selling industries are multi-billion-dollar industries which are highly competitive. We face
intense competition from very large, international corporations, as well as from local and national companies. In addition, we
face competition from well-known companies that have large market share.
The intensity of competition in the future
is expected to increase, and no assurance can be provided that we can sustain our market position or expand our business.
Many of our current and potential competitors
are well established and have longer operating histories, significantly greater financial and operational resources, and name recognition
than we have. However, we believe that, with our diverse product line, we will have the ability to obtain a large market share,
and continue to generate sales and compete in the industry.
Government Regulation
Packaged beverage and juice products are governed
by the U.S. Food and Drug Administration. As such, it is necessary for the Company to ensure its products establish, maintain and
make available for inspection, records and labels with nutrition information that meet food labeling requirements. The Company’s
products are manufactured by contracted production facilities that are subject to many regulations, including Food Facility Registration,
recordkeeping, Good Manufacturing Practice Requirements, reporting, preventive controls and inspections.
Research and Development Activities
Our research and development efforts are focused
on two primary paths. The first is to continually review our existing formulas and production processes and structure to evaluate
opportunities for cost of goods sold improvements, without degrading the quality or fundamentally changing the consumer appeal
taste profile of our existing products. The second major research and development effort is in the development of fundamentally
new and differentiated products, based on consumer insights and trends and competitive intensity in those segments. The Company’s
mission to provide healthy functional beverages governs our development efforts.
On October 3, 2019 the Company announced its
intention to expand its business as a Consumer Packaged Goods (CPG) company into the business to consumer (B2C) space of the cannabis
marketplace. The Company believes having a direct relationship with consumers in the cannabis industry will allow it the best opportunity
to leverage its brands such as Just Chill and continue to grow as a CPG company. There are no guarantees that the Company
can successfully enter the cannabis marketplace and currently is in the exploratory stages of identifying potential acquisition
targets.
Employees
The Company currently has 5 full-time employees.
Certain positions are being filled with paid independent contractors or insider owners who do not receive cash compensation but
may receive stock compensation. In certain regions of the United States, we utilize the services of direct sales and distribution
companies, which sell our products through their distribution channels. This can mitigate the need for a large sales and merchandising
force. The Company also outsources its logistics to third-parties, which can reduce the need for employees in these roles.
DESCRIPTION OF PROPERTY
We maintain our principal office at 575 Lexington
Avenue, 4th Floor, New York, NY 10022. Our telephone number at that office is (646) 844-9897.
14
In connection with the acquisition of ESD,
the Company assumed a lease for approximately 13,000 square feet of warehouse space located in Gilroy, California at a base rent
of $5,248 per month. The lease terminates on June 30, 2021. In June 2019 the Company made the decision to discontinue the operations
of ESD. The warehouse space has been leased by a third party and the company’s obligations under the lease terminated as
of August 1, 2019.
We maintain a website at http://www.lifeonearthinc.com/
and the information contained on that website is not deemed to be a part of this Information Statement.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
Management's Discussion and Analysis of Financial
Condition is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted
in the United States of America. When preparing our financial statements, we make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements,
along with the amounts of revenues and expenses during the reported period. Significant estimates include, but are not limited
to, the estimated useful lives of property and equipment and website development costs. Actual results could differ from those
estimates.
Results of Operations
Life On Earth, Inc. was incorporated in April
2013 as Hispanca International Delights of America, Inc. as a Delaware company and changed its name to Life On Earth, Inc. in February
2018 and is engaged in the distribution of its own proprietary functional beverages throughout the United States.
Life On Earth, Inc. is an innovative brand
accelerator and incubator and is focused on building and scaling concepts in the natural consumer products category. Our mission
is to bring our strategic focus and long-term forward-looking vision to consumers in the health, wellness and active lifestyle
spaces through superior branding, product quality, targeted acquisitions and retail experience in the functional beverage category.
Our objective
is to grow as rapidly as possible (both organically and via strategic alliances and acquisitions) using the public capital markets
for access to capital. The companies and assets sought by us will be those that already have market penetration in the following
segments: (1) Sales (2) Marketing (3) Established Distribution network and
(4) Manufacturing infrastructure in place.
Our management
team has over 50 years of combined experience in the food and beverage industry. In July 2016, we acquired Energy Source Distributors
to establish a presence on the West Coast in an all cash purchase. Since then, we have also acquired the Victoria’s Kitchen
brand, the Just Chill brand and The Giant Beverage Company, Inc. During fiscal 2019, LFER needed to prioritize its available resources
and made the decision to focus on growing the brands in its portfolio. As a result of this, LFER sold the Giant Beverage Company
back to the original owners of the company effective March 1, 2019. The results of operations for Giant Beverage Companies from
the acquisition through February 28, 2019 have been
reclassified as a discontinued operation in the consolidated statements of LFER. Subsequent to year end LFER further decided to
discontinue the operations of ESD and is moving away from the DSD business. This will allow LFER to focus all its resources on
its current and future portfolio of brands.
15
The following table shows the Company's unaudited proforma results of operations for the years ended May 31, 2019 and 2018, had the sale of GBC and the discontinued operations of ESD occurred on June 1, 2017:
|
|
|
For the year ended May 31,
|
|
|
2019
|
|
2018
|
|
|
|
|
|
Sales, net
|
|
$
|
125,537
|
|
|
$
|
569,482
|
|
Cost of goods sold
|
|
|
206,082
|
|
|
|
386,591
|
|
Gross profit
|
|
|
(80,545
|
)
|
|
|
182,891
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
4,152,620
|
|
|
|
800,885
|
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
|
|
|
|
|
|
Change in fair value of contingent consideration
|
|
|
(382,582
|
)
|
|
|
—
|
|
Interest and financing costs
|
|
|
(1,871,108
|
)
|
|
|
(1,961,114
|
)
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(6,486,855
|
)
|
|
|
(2,579,108
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
|
(0.21
|
)
|
|
|
(0.12
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average number
|
|
|
|
|
|
|
|
|
of shares outstanding
|
|
|
30,680,471
|
|
|
|
20,782,736
|
|
FOR THE THREE MONTHS ENDED AUGUST 31, 2019
AND AUGUST 31, 2018:
Sales
Sales for the three months ended August 31,
2019 were approximately $32,000 compared to $75,000 for the three months ended August 31, 2018. The reduction in sales in 2019
of $43,000 related to the sale of Horchata in the LFER division. During the three months ended August 31, 2019 and 2018 the sales
for LFER were $0 and $41,000 respectively. During the three months ended August 31, 2019 the Company did not have any inventory
of the Horchata product available to sell resulting in the $0 of sales for the period. The sales figures for both periods do not
reflect sales from the ESD division as they were included in discontinued operations for both periods.
16
Gross Profit
Gross profit during the three months ended
August 31, 2019 was 37% compared to 14% for the three months ended August 31, 2018. The improvement in profit related to write
offs of obsolete inventory being recorded during the three months ended August 31, 2018.
Operating Expenses
Operating expenses for the three months ended
August 31, 2019 were approximately $704,000 as compared to approximately $312,000 for the period ended August 31, 2018. The
increase in operating expenses of approximately $390,000 was primarily related to an increase of approximately $111,000 in salary
and benefits, an increase of approximately $118,000 of professional fees and an increase of approximately $171,000 of share based
compensation in 2019 compare to 2018.
Other Expense
During the three months ended August 31, 2019,
the Company recorded interest and finance costs of approximately $210,000, as compared to $647,000 during the three months ended
August 31, 2018. Interest and financing costs primarily result from the amortization of deferred financing cost balances that were
incurred by the Company to finance operations.
The Company also incurred expenses of approximately
$72,000 related to the discontinuance of the ESD operation for the three months ended August 31, 2019. For the three months ended
August 31, 2018 the Company incurred approximately $223,000 of expenses related to discontinued operations of which approximately
$76,000 related to ESD and approximately $147,000 related to GBC.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended August 31, 2019
the Company did not raise any capital from external investors. Subsequent to the three months ended August 31, 2019 the Company
entered into a convertible promissory note agreement with an accredited investor for the principal amount of $110,000. The convertible
note has a maturity date of September 10, 2020 with an original issue discount rate of 10% or $11,000. The Company received net
proceeds of $99,000 for this transaction. On September 23, 2019, the Company entered into a convertible promissory note agreement
with an accredited investor for the principal amount of $287,500. The convertible note has a maturity date of September 23, 2020
with an annual interest rate of 10%. The Company incurred legal fees of $12,500 and broker fees of $25,000 and received net proceeds
of $250,000 for this transaction. During the three months ended August 31, 2018, the Company received $670,000 under the terms
of the 2nd Note Offering.
CASH FLOW
Our primary sources of liquidity have been
cash from sales of shares, the issuance of convertible promissory notes and line of credit. We plan on continuing to raise capital
and borrow funds to finance current operations and future growth.
WORKING CAPITAL
As of August 31, 2019, the Company had total
current assets of approximately $264,000 and total current liabilities of approximately $4,357,000 resulting in negative working
capital of approximately $4,093,000.
Off-Balance Sheet Arrangements
We do not have any off balance sheet arrangements
that are reasonably likely to have a current or future effect on our financial condition, revenues, result of operations, liquidity
or capital expenditures.
17
GOING CONCERN QUALIFICATION
Several conditions and events cast substantial
doubt about the Company’s ability to continue as a going concern. The Company incurred a net losses from inception of approximately
$15,848,000, has limited revenues and requires additional financing in order to finance its business activities on an ongoing basis.
The Company’s future capital requirements will depend on numerous factors including, but not limited to, continued progress
in finding business opportunities.
At August 31, 2019, we had cash on hand of
approximately $6,449 and an accumulated deficit of approximately $15,848,000. See “Liquidity and Capital Resources.”
MARKET INFORMATION
We have two classes of stock outstanding, Common
Stock and Series A Preferred shares. Our Common Stock is quoted on the OTC Markets under the symbol “LFERQB.” The
table below sets forth the high and low reported closing prices per share of Common Stock for the period’s indicated. There
is no established public trading market for the Series A Preferred shares for fiscal 2018 and fiscal 2019 (our fiscal year ended
May 31 of each year).
|
|
Fiscal May 2018-2019
|
|
Fiscal May 2017-2018
|
|
|
High
|
|
Low
|
|
High
|
|
Low
|
First quarter (June 1-August 31)
|
|
$
|
0.53
|
|
|
$
|
0.25
|
|
|
$
|
0.12
|
|
|
$
|
0.07
|
|
Second quarter (Sept. 1 –Nov.30)
|
|
$
|
0.45
|
|
|
$
|
0.20
|
|
|
$
|
0.49
|
|
|
$
|
0.09
|
|
Third quarter (Dec 1-Feb 28)
|
|
$
|
0.63
|
|
|
$
|
0.15
|
|
|
$
|
0.74
|
|
|
$
|
0.33
|
|
Fourth quarter (Mar 1-May 30)
|
|
$
|
0.57
|
|
|
$
|
0.21
|
|
|
$
|
0.53
|
|
|
$
|
0.33
|
|
The first quarter of Fiscal 2019-2020 has a high of $0.33 and a
low of $11.
The Company has not declared dividends and
does not intend to in the foreseeable future. The amount and frequency of future dividends will be determined by the Company’s
Board of Directors in light of the earnings and financial condition of the Company at such time, and no assurance can be given
that dividends will be declared or paid in the future.
Holders
As of September
11, 2019, there were 43,759,558 shares of
Common Stock issued and outstanding held by 310 shareholders of record. As of November 11, 2019, there were 1,200,000 shares of
Preferred shares issued and outstanding held by 4 shareholders of record. Preferred shares are not convertible and do not receive
dividends but have fifty votes for each one vote by common shareholders.
Dividends
We have never declared any cash dividends with
respect to our Common Stock. Future payment of dividends is within the discretion of the Board of Directors and will depend on
earnings, capital requirements, financial condition and other relevant factors. Although there are no material restrictions limiting
or that are likely to limit, our ability to pay dividends on our Common Stock, we presently intend to retain future earnings, if
any, for use in our business. We have no present intention to pay cash dividends on our Common Stock.
18
DIRECTORS AND EXECUTIVE OFFICERS
Below are the names and certain information
regarding our current executive officers and directors:
Name
|
|
|
Title
|
|
Date first appointed
|
|
Fernando Oswaldo Leonzo
|
|
|
|
|
Chief Executive Officer, Chief Financial Officer, Chairman and Director
|
|
April 15, 2013 (inception)
|
Robert Gunther
|
|
|
|
|
Chief Operations Officer, Treasurer,
Secretary and Director
|
|
April 15, 2013 (inception)
|
John Romagosa
|
|
|
|
|
President and Director
|
|
October 10, 2014
|
Michael Bloom
|
|
|
|
|
Director
|
|
June 7, 2019
|
Sonia Luna
|
|
|
|
|
Director
|
|
November 8, 2019
|
|
|
|
|
|
|
|
|
|
|
|
Directors are elected to serve until
the next annual meeting of stockholders and until their successors are elected and qualified. Biographical information of each
current officer and director is set forth below.
The Chairman, Chief Executive Officer, and
Chief Financial Officer, Mr. Fernando “Oswaldo” Leonzo, is a founder of, and has been employed by LFER
since its inception in April of 2013. Mr. “Oswaldo” Leonzo has over 13 years’ experience in the Food and
Beverage industry both from the distribution side as well as the brand side. He has also been working with contract manufacturers
and suppliers as well as logistics companies for transshipments both in the U.S. and overseas for both Export and Imports- primarily
in Latin America. For the past 15 years Fernando Oswaldo Leonzo has worked for the following companies: Deep River Snacks (NYC
Regional Sales Manager from February to December, 2011), Reeds, Inc. (New York Metropolitan Area Sales Manager from January
to December, 2010), Cheeseworks, Inc. (Sales Director from December 2008 to December 2009), Presto Food & Beverage, Inc. (President
& CEO from July 2001 to December 2008).; Gran Nevada Beverage, Inc. (President from November 2011 to present). He served
on the board of directors and founded Presto Food & Beverage, Inc. in 2001. Presto’s LFER beverage brand, SolMaya,
grew from zero to over $2 million in sales. This is primarily why he was selected as a director of LFER. Previously, he worked
for almost a decade in the financial industry, initially as a sales executive with regional financial firms and later for a major
clearinghouse on Wall Street. Prior to his financial service industry experience, he successfully operated a business that distributed
recorded music to retailers in the U.S., Mexico and Colombia. He received his undergraduate degree (B.A.) in International Studies
from New York University (NYU). He currently serves on the board of directors of LFER.
The Chief Operations Officer, Treasurer and
Director, Robert Gunther is a founder of LFER since its inception in April of 2013. He has 26 years’ experience
in manufacturing. For the past five years, he has managed his own sales business under his own name specializing in products for
apparel and construction. From December 1988 to December 2008 he was a Sr. Account Executive with Georgia Narrow Fabrics / Premier
Narrow Fabrics in New York City. As the one of the firm's producing Account Executives, he generated sales to major accounts including
Jockey, Fruit of the Loom, Warner, and VF. The product line included a broad range of knit and woven elastic products. In the mid-80s,
he helped develop new apparel customers and manufacturing facilities for Hewlett Manufacturing. From July 1971 to April 1986, he
was vice president at Gunther & Sharfman, a family-owned apparel manufacturing business. He participated in design, merchandising,
sales, purchasing and manufacturing. His background includes 25 years of experience managing in purchasing and negotiation contracts
for materials. Gunther has a BS from Long Island University. Mr. Gunther’s extensive business experience combined with his
personal interest in the business is expected to provide the Board with insight and guidance in matters of corporate finance, business
development and industry strategy.
19
President and Director, John Romagosa, is
currently the managing director and founder of Latin Sales & Marketing, LLC. (“LSM“), founded in 2012. LSM is a
leading brokerage/marketing/consulting firm innovating the retail, foodservice and private label sector of the Hispanic consumer
packed goods industry. LSM facilitates the emergence of major Latin manufacturers and US manufacturers for the steadily growing
Hispanic market in the USA. Mr. Romagosa's extensive experience and relationships, within the Hispanic and Ethnic Food industry,
will benefit the Board of LFER as it positions the company, its management, its products, and its distribution channels in becoming
a leading-edge company in the fastest growing segment of the food industry. Mr. Romagosa was the managing director and partner
of Falcon International Distributors, LLC, a leading ethnic foods distributor on the east coast, holding a chief procurement role
for over ten years. Mr. Romagosa helped build that company from $9 million in revenues to over $100 million in revenues during
his tenure before successfully selling the business in 2011. He has received Chamber of Commerce awards in New York and New Jersey,
and has been responsible for the contribution of over a million pounds of donated products to food banks in the Northeast of the
US. Mr. Romagosa is an Alumni of Saint John's University where he studied Finance, Business Administration, and Marketing.
Michael Bloom –Director
Effective June 17, 2019 the Company elected
Michael Bloom as an independent member of the Board of Directors. Mr. Bloom has over 38 years of retail experience including drug,
value and drug/value combos. Mr. Bloom is currently the Executive Vice-President, Chief Merchandising and Marketing officer at
GPM Investments LLC, the largest privately held company in the convenience store channel of business. Former President, Chief Operating
Officer, CEO and member of the Board of Directors at Fred’s Inc. in Memphis TN. Former President and Chief Operating Officer
at Family Dollar. Former Executive Vice President of Merchandising, Marketing and Supply Chain at CVS. Mr. Bloom is a seasoned
executive leader with a vast array of experiences including Merchandising, Marketing, Supply Chain, Customer Relationship Marketing,
Acquisitions, Pricing, Private Brands, Direct Importing and developing strong teams and supplier relationships. Mr. Bloom
holds an AA degree from Broward Community College.
Sonia Luna –Director
Since 2004, Sonia Luna has been the
Chief Executive Officer of Aviva Spectrum, a California based compliance and financial transformation consulting firm that provides,
among other services, compliance with the California cannabis market. From 2000 to 2004, Sonia Luna was an Audit Manager
with Ernst & Young, LLP; from 1998 to 2000, she was a Senior Auditor with Singerewak LLP; and from 1996 to 1998, she was a
Staff Auditor with Arthur Andersen. Sonia Luna has been a licensed Certified Public Accountant in California since
1998 and has a bachelor’s degree in Business Administration and Accounting from California State University. Sonia
Luna is the recipient of the “2018 California Cannabis Awards” as “Best Accountant”.
Board Committees
The Company has not established any committees
of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other
committees in the future. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy
with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have
made any such recommendations. Our three directors perform all functions that would otherwise be performed by committees. Given
the present size of our board it is not practical for us to have committees. If we are able to grow our business and increase our
operations, we intend to expand the size of our board and allocate responsibilities accordingly.
20
Shareholder Communications
Currently, we do not have a policy with regard
to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such
recommendations.
Code of Ethics
We have adopted a written code of ethics (the
“Code of Ethics”) that applies to our principal executive officer, principal financial officer, principal accounting
officer or controller, and persons performing similar functions. We believe that the Code of Ethics is reasonably designed to deter
wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public
reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence
to the code. To request a copy of the Code of Ethics, please make written request to our Company at 575 Lexington Ave., 4th
Floor, New York, NY 10022.
Compliance with Section 16(a) of the Exchange
Act
Our Common Stock is not registered pursuant
to Section 12 of the Exchange Act. On July 7th 2015, our common stock became registered pursuant to section 12g
of the exchange act. Accordingly, our officers, directors and principal shareholders are subject to the beneficial ownership reporting
requirements of Section 16(a) of the Exchange Act.
Involvement in Certain Legal Proceedings
To the best of our knowledge, during the past
five years, none of the following occurred with respect to a present or former director or executive officer of our Company: (1)
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject
to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment
or decree, not subsequently reversed, suspended or vacated, of any court of any competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the commodities futures trading commission
to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Indemnification of Officers and Directors
As permitted by Delaware law, our Articles
of Incorporation provide that we will indemnify our directors and officers against expenses and liabilities they incur to defend,
settle, or satisfy any civil or criminal action brought against them on account of their being or having been our directors or
officers unless, in any such action, they are adjudged to have acted with gross negligence or willful misconduct.
Pursuant to the foregoing provisions, we have
been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as
expressed in that Act and is, therefore, unenforceable.
Stockholder Communications with the Board
Stockholders who wish to communicate with the
Board of Directors should send their communications to the Chairman of the Board at the address listed below. The Chairman of the
Board is responsible for forwarding communications to the appropriate Board members.
Life On Earth, Inc.
575 Lexington Ave,
4th Floor, New York, NY10022
Attn: Fernando Oswaldo
Leonzo, CEO
21
EXECUTIVE COMPENSATION
The following table sets forth information
concerning the total compensation paid or earned by each of our named executive officers (as defined under SEC rules) for the fiscal
year ended May 31, 2019.
Summary Compensation Table for Fiscal Year
Ended May 31, 2019
|
|
|
|
|
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|
|
|
|
|
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Non-Equity
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|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
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|
All Other
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Name and principal position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
Fernando Oswaldo Leonzo (1) (2)
|
|
|
2019
|
|
|
$
|
44,750
|
|
|
$
|
—
|
|
|
$
|
150,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,000
|
|
Chief Executive Officer, Chief Financial Officer and Chairman of the Board
|
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|
|
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|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Gunther (1)(3)
|
|
|
2019
|
|
|
$
|
37,500
|
|
|
$
|
—
|
|
|
$
|
100,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,000
|
|
Chief Operations Officer, Treasurer, Secretary & Director
|
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|
|
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|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Romagosa (1)(4)
|
|
|
2019
|
|
|
$
|
37,500
|
|
|
$
|
85,000
|
|
|
$
|
10,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,000
|
|
President & Director
|
|
|
|
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|
|
|
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|
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|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Dacey*
|
|
|
2019
|
|
|
$
|
75,000
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior Chief Financial Officer
|
|
|
|
|
|
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|
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|
|
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|
_*resigned
on October 31, 2019
______
(1)
|
During 2019 Mr. Leonzo, Mr. Gunther and Mr. Romagosa received a travel reimbursement allowance of $24,000.
|
(2)
|
During 2019 Mr. Leonzo was granted a stock award of $150,000 in consideration of personally guaranteeing debt. These shares are accrued for as of May 31, 2019 and will be issued subsequent to year end.
|
(3)
|
During 2019 Mr. Gunther was granted a stock award of $100,000 in consideration of personally guaranteeing debt. These shares are accrued for as of May 31, 2019 and will be issued subsequent to year end.
|
(4)
|
During 2019 Mr. Romagosa was granted a stock award of $85,000 for achievement of bonus targets and $10,000 in consideration of loan exposure. These shares are accrued for as of May 31, 2019 and will be issued subsequent to year end.
|
22
The following table sets forth information
concerning the total compensation paid or earned by each of our named executive officers (as defined under SEC rules) for the fiscal
year ended May 31, 2019.
Summary compensation Table for Fiscal Year Ended May 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
Name and principal position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fernando Oswaldo Leonzo (1)
|
|
|
2018
|
|
|
$
|
44,800
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,000
|
|
Chief Executive Officer, Chief Financial Officer, and Chairman of the Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Gunther (1)
|
|
|
2018
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30,750
|
|
Chief Operations Officer, Treasurer, Secretary & Director
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
John Romagosa (1)
|
|
|
2018
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,000
|
|
President & Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
___________
(1)
|
During 2018 Mr. Leonzo, Mr. Gunther and Mr. Romagosa received a travel reimbursement allowance of $24,000 .
|
|
|
(2)
|
Rent of $6,750 earned by Mr. Gunther is listed in the table above as “All Other Compensation.” The forms of payment are described in Note 7.
|
Outstanding Stock Options and Stock Appreciation
Rights Grants
None.
Option Exercises and Stock Vested Table
None.
23
Pension Benefits Table
None.
Non-Qualified Deferred Compensation Table
None.
All Other Compensation Table
None.
Perquisites Table
None.
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
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.
The Company has no other plans in place and
has never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following
retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified
deferred contribution plans and nonqualified deferred contribution plans.
Employment Agreements
As a result of
our acquisition of GBC during 2018, we retained Mr. Frank Iemmitti, one of the selling founders, as Sales Manager for a term of
twenty-four (24) months at an annual salary of $75,000, pursuant to an employment agreement to manage operations at the GBC facility
in Staten Island, New York. With the sale of GBC, the
employment agreement was terminated.
There are no other employment agreements; however,
the Company anticipates entering into more employment agreements with key management positions as the Company grows. The Company
does not have a standing compensation committee, audit committee, nomination committee, or committees performing similar functions.
We anticipate that we will form such committees of the Board of Directors once we have a full Board of Directors.
Outstanding Equity Awards at Fiscal Year-End
As of May 31,
2019, and 2018, there were no outstanding options or warrants to purchase, or other instruments convertible into, common equity
of the Company, related to equity awards.