Outstanding
Equity Awards at Fiscal Year-End
The
following table provides information regarding equity awards held by the NEOs that were outstanding as of December 31, 2022:
| |
Option awards | | |
Stock awards | |
Name | |
Number of securities underlying unexercised options (#) exercisable | | |
Number of securities underlying unexercised options (#) unexercisable | | |
Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) | | |
Option exercise price ($) | | |
Option expiration date | | |
Number of shares or units of stock that have not vested (#) | | |
Market value of shares of units of stock that have not vested ($) | | |
Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) | | |
Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) | |
Marc Fogassa | |
| 151,141 | (1) | |
| | | |
| | | |
$ | 0.0075 | | |
| 02/19/2024 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 12/31/2030 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 01/31/2031 | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 02/28/2031 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 03/31/2031 | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 04/30/2031 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 05/31/2031 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 06/30/2031 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 07/31/2031 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 08/31/2031 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 09/30/2031 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 10/31/2031 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 11/30/2031 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 12/31/2031 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 01/31/2032 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 02/28/2032 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 03/31/2032 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 04/30/2032 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 05/31/2032 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 06/30/2032 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 07/31/2032 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 08/31/2032 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 09/30/2032 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 10/31/2032 | | |
| | | |
| | | |
| | | |
| | |
Marc Fogassa | |
| 2,500 | (2) | |
| | | |
| | | |
$ | 0.10 | (2) | |
| 11/30/2032 | | |
| | | |
| | | |
| | | |
| | |
Gustavo Pereira de Aguiar | |
| 85,019 | (3) | |
| | | |
| | | |
$ | 1,483,582 | | |
| | | |
| | | |
| | | |
| | | |
| | |
(1) |
Fully-vested
option to purchase up to 151,141 shares of our Common Stock at $0.0075 per share. |
(2) |
In
accordance with the terms of the A&R Employment Agreement, Mr. Fogassa agreed to receive awards of stock options on a monthly
basis in lieu of base salary. All options vested 100% on the grant date and have a ten-year term expiring on the tenth anniversary
of the corresponding grant date. For fiscal year 2022, Mr. Fogassa pursuant to his election, received monthly fully-vested
options to purchase up to 2,500 shares of our Series D Preferred Stock for $0.10 per share. Refer to disclosure about Series
D Options under the “Mr. Fogassa’s Amended and Restated Employment Agreement” heading above. |
(3) |
On
March 16, 2022, Mr. Pereira de Aguiar was granted restricted shares of Company Common Stock which will vest over four years
in four equal tranches. |
Director
Compensation
The
following table sets forth a summary of compensation for the fiscal year ended December 31, 2022, that we paid to each director other
than its Chief Executive Officer, whose compensation is fully reflected in the Summary Compensation Table set forth above. We do
not sponsor a pension benefits plan, a non-qualified deferred compensation plan, or a non-equity incentive plan for directors; therefore,
these columns have been omitted from the following table. No other or additional compensation for services were paid to any of the directors.
Name | |
Fees Earned or Paid in Cash ($) | | |
Stock Compensation ($) | | |
Option Compensation ($) (1) | | |
| | |
Total ($) |
Ambassador Roger Noriega | |
| | | |
| | | |
$ | 147,557 | (2) | |
| | | |
$147,557 |
Cassiopeia Olson, Esq. | |
| | | |
$ | 6,000 | (3) | |
$ | 23,585 | | |
$ | | | |
$29,585 |
Stephen R. Petersen, CFA | |
| | | |
$ | 6,000 | (3) | |
$ | 47,975 | | |
$ | | | |
$53,975 |
(1) |
The
amounts in this column reflect the aggregate grant date fair value of stock options granted in 2022 to each director calculated in
accordance with FASB ASC Topic 718. Please see Note 6 to the consolidated financial statements for the year ended December 31, 2021
contained in our 2022 Annual Report for the assumptions used in the calculation of grant date fair value pursuant to FASB ASC
Topic 718. |
|
|
(2) |
On
December 31, 2020, our Board approved an amendment to Ambassador Roger Noriega’s compensation arrangement, an
independent director. Under the prior arrangement, Ambassador Noriega had the right to receive an annual compensation
of $50,000 payable quarterly through the issuance of such number of five-year options to purchase shares of our Common Stock
as needed to make their Black-Scholes aggregate valuation equal to $12,500. Such options had a strike price equal to the average
market price of the Common Stock during such quarter. Under the amended arrangement, Ambassador Noriega receives, on
a quarterly basis, ten-year non-qualified stock options to purchase up to 20,000 shares of our Common Stock at an exercise price
equal to $0.0075 per share, such price and shares being subject to customary adjustments for any dividends, etc. If and when such
options are exercised, the stock to be received may represent restricted securities as such term is defined by the
provisions of Rule 144, which currently limits any sales of affiliates with respect to the Company to 1% of the total outstanding
shares per every 90-day period. |
|
|
|
On
September 17, 2021, we filed a Current Report on Form 8-K indicating that on September 15,
2021, our Board approved resolutions that allow Ambassador Noriega the choice to direct the option compensation described
in the Board resolutions dated December 31, 2020 (the “2020 Resolutions,” reported in the Form 8-K filed with the SEC
on January 7, 2021) to either options to purchase our Common Stock as originally described in the 2020 Resolutions or to an equivalent
number of options divided by 13 and 1/3 (to reflect the reverse stock split effective December 22, 2022) to purchase our Series
D Preferred Stock. |
|
|
(3) |
Mr.
Olson and Mr. Petersen had the right to receive $6,000 in cash each for services as director during the year 2022. Both were given
a choice and opted to receive shares of our Common Stock at then public market price instead of cash. |
PAY
VERSUS PERFORMANCE
As
required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are
providing the following information about the relationship between executive compensation actually paid and certain financial performance
of the Company. Fair value amounts below are computed in a manner consistent with the fair value methodology used to account for share-based
payments in our financial statements under generally accepted accounting principles. Total shareholder return has been calculated in
a manner consistent with Item 402(v) of Regulation S-K.
The
disclosure included in this section is prescribed by SEC rules and does not necessarily align with how we or our Compensation Committee
views the link between company performance and our NEOs’ pay. The Compensation Committee did not consider
the pay versus performance disclosure below in making its pay decisions for any of the years shown.
The
“Compensation Actually Paid”, which is presented in the table below, is defined by the SEC and does not reflect amounts
actually paid, earned or received by our NEOs. A significant portion of the Compensation Actually Paid amounts shown relate to
changes in values of unvested awards over the course of the applicable reporting year. Any unvested awards remain subject to significant
risk from forfeiture conditions and possible future declines in value based on changes in our share price. The ultimate values actually
realized by our NEOs from unvested equity awards, if any, cannot be determined until the awards fully vest and are exercised or
settled, as the case may be.
Year (1) | |
Summary compensation table total for PEO ($)(2)(3) | | |
Compensation actually paid to PEO ($)(4) | | |
Average summary compensation table total
for non-PEO NEOs ($)(2)(5) | | |
Average compensation actually paid to non-PEO
NEOs ($)(6) | | |
Value of initial fixed $100 investment based on total shareholder return ($)(7) | | |
Net loss ($) | |
2022 | |
$ | 1,189,851 | | |
$ | 1,189,851 | | |
$ | 197,381 | | |
$ | 492,186 | | |
$ | 666.67 | | |
($ | 4,628,520 | ) |
2021 | |
$ | 1,091,273 | | |
$ | 1,091,273 | | |
| N/A | | |
| N/A | | |
$ | 542.86 | | |
($ | 2,772,358 | ) |
|
(1) |
In
accordance with the transitional relief under the SEC rules for smaller reporting companies, only two years of information is required
as this is the Company’s first year of disclosure under Item 402(v) of Regulation S-K. |
|
|
|
|
(2) |
The
values reflected in this column reflect the “Total” compensation set forth in the Summary Compensation Table (“SCT”)
set forth herein. See the footnotes to the SCT for further detail regarding the amounts in this column. |
|
|
|
|
(3) |
For
all years in question, our PEO was the Company’s Chairman and Chief Executive
Officer, Marc Fogassa. |
|
|
|
|
(4) |
The
following tables set forth the adjustments made during each year represented in the Pay Versus Performance Table to arrive at compensation
“actually paid” to our PEO during each of the years in question: |
Adjustments to determine compensation “actually paid” for PEO | |
Deduction for amounts reported under the “stock awards” and “option awards” column in the summary compensation table | | |
Increase for fair value of awards granted during the year that remain unvested as of year end | | |
Increase for fair value of awards granted during the year that vest during year | | |
Increase / deduction for change in Fair value from prior year-end to current year-end of awards granted prior to year that were outstanding and unvested as of year-end | | |
Increase / deduction for Change in fair value from prior year-end to vesting date of awards granted prior to year that vested during year | | |
Deduction of fair value of awards granted prior to year that were forfeited or modified during year | | |
Dollar value of dividends or other earnings paid on stock awards prior to vesting date not otherwise included in total compensation | | |
Total adjustments | |
2022 | |
$ | (921,165 | ) | |
$ | 0 | | |
$ | 921,165 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
2021 | |
$ | (901,940 | ) | |
$ | 0 | | |
$ | 901,940 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
|
(5) |
During
2022, our remaining NEOs consisted of Gustavo Pereira de Aguiar (Chief Financial Officer) and Brian Bernier (Vice President,
Corporate Development). Mr. Pereira de Aguiar was elected as our Chief Financial Officer on March 16, 2022. During 2021, the
Company did not employ any non-PEO NEOs because none of our executive officers, other than the CEO, received compensation in excess
of $100,000. |
|
|
|
|
(6) |
The
following tables set forth the adjustments made during each year represented in the Pay Versus Performance Table to arrive at the
average compensation “actually paid” to our non-PEO NEOs during each of the years in question: |
Adjustments to determine average compensation “actually paid” for non-PEO NEOs | |
Deduction for amounts reported under the “stock awards” column in the summary compensation table | | |
Increase for fair value of awards granted during the year that remain unvested as of year end | | |
Increase for fair value of awards granted during the year that vest during year | | |
Increase / deduction for change in fair value from prior year-end to current year-end of awards granted prior to year that were outstanding and unvested as of year-end | | |
Increase / deduction for change in fair value from prior year-end to vesting date of awards granted prior to year that vested during year | | |
Deduction of fair value of awards granted prior to year that were forfeited or modified during year | | |
Dollar value of dividends or other earnings paid on stock awards prior to vesting date not otherwise included in total compensation | | |
Total adjustments | |
2022 | |
$ | (59,479 | ) | |
$ | 339,284 | | |
$ | 15,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 354,284 | |
2021 | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | |
|
(7) |
Total
shareholder return is calculated for each year based on a fixed investment of $100 from the beginning of the earliest year in the
table (December 31, 2020) through the end of each applicable year in the table, assuming reinvestment of dividends. |
Pay
Versus Performance Relationship Disclosures
Compensation
Actually Paid and Cumulative Total Shareholder Return
The
graph below compares the compensation actually paid to our PEO and the average of the compensation actually paid to our remaining NEOs,
with our cumulative total stockholder return for the fiscal years ended December 31, 2022 and 2021. Total stockholder return amounts
reported in the graph assume an initial fixed investment of $100 on December 31, 2020.
Compensation
Actually Paid and Net Loss
The
graph below compares the compensation actually paid to our PEO and the average of the compensation actually paid to our remaining NEOs,
with our net loss for the fiscal years ended December 31, 2022 and 2021.
Corporate
Action 2: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit Committee of the Board recommended the appointment of BF Borgers CPA, PC (“Borgers”) as public auditors
for the fiscal year ending as of December 31, 2023 and the Board approved that appointment on May 25, 2023. Pursuant to the Majority
Stockholder Written Consent, the Majority Stockholder ratified and confirmed the appointment of Borgers as the public auditors of the
Company for fiscal year 2023.
Audit
Fees
Audit
fees consist of fees billed for professional services rendered in connection with the audit of our annual financial statements, review
of our quarterly financial statements, and services that are normally provided by Borgers in connection with statutory and regulatory
filings or engagements.
The
fees billed by Borgers for the audit of the Company’s financial statements as of December 31, 2021 and for quarterly reviews during
such year were $44,820. The fees billed by Borgers for the audit of the Company’s financial statements and for quarterly reviews
during the year ended December 31, 2022 were $44,820.
Audit-Related
Fees
Audit-related
fees consist of fees billed for professional services for assurance and related services that are reasonably related to the performance
of the audit or review of our consolidated financial statements and are not reported under “Audit Fees” above.
During
2021 or 2022, there were no fees paid to Borgers in connection with our compliance with Section 404 of the Sarbanes-Oxley Act of 2002.
No other fees were billed by Borgers for the last two years that were reasonably related to the performance of the audit or review of
our financial statements and not reported under “Audit Fees” above.
Tax
Fees
Tax
fees consist of fees billed for professional services rendered by Borgers for tax compliance, tax advice and tax planning.
There
were no fees billed by Borgers during the last two fiscal years for professional services rendered for tax compliance, tax advice, or
tax planning. Accordingly, none of such services were approved pursuant to pre-approval procedures or permitted waivers thereof.
All
Other Fees
All
other fees consist of fees billed for products and services other than the services reported under “Audit Fees,” “Audit
Related Fees” and “Tax Fees.” There were no other non-audit-related fees billed to us by Borgers in 2021 or 2022.
Pre-Approval
Policies and Procedures
Engagement
of accounting services by us is not made pursuant to any pre-approval policies and procedures. Rather, we believe that our accounting
firm is independent because all of its engagements by us are approved by the Audit Committee prior to any such engagement.
Our
Audit Committee will meet periodically to review and approve the scope of the services to be provided to us by our independent registered
public accounting firm, as well as to review and discuss any issues that may arise during an engagement. The Audit Committee is responsible
for the prior approval of every engagement of our independent registered public accounting firm to perform audit and permissible non-audit
services for us, such as quarterly financial reviews, tax matters, and consultation on new accounting and disclosure standards.
Before
the auditors are engaged to provide those services, our Chief Financial Officer will make a recommendation to the Audit Committee regarding
each of the services to be performed, including the fees to be charged for such services. At the request of the Audit Committee, the
independent registered public accounting firm and/or management shall periodically report to the Audit Committee regarding the extent
of services being provided by the independent registered public accounting firm, and the fees for the services performed to date.
All
services performed by and fees paid to Borgers for our fiscal years ended December 31, 2022 and 2021 were pre-approved by our audit committee.
Corporate
Action 3: RATIFICATION OF 2023 STOCK INCENTIVE PLAN
General
On
May 25, 2023, the Board approved the 2023 Stock Incentive Plan (alternatively referred to as the “Plan” in this section)
in the form attached hereto as Exhibit 1. Pursuant to the Majority Stockholder Written Consent, the Majority Stockholder ratified and
confirmed the adoption of the Plan effective on May 25, 2023. The Plan offers eligible employees, consultants, and non-employee directors
cash and stock-based compensation and/or incentives to compensate, attract, retain, or reward such individuals.
The
following is a summary of the principal features of the Plan. This summary does not purport to be a complete description of all of the
provisions of the Plan. It is qualified in its entirety by reference to the full text of the Plan, which is included as Exhibit 1 to
this Information Statement.
The
Plan will provide an opportunity for any employee, officer, director, or consultant of the Company, subject to limitations provided by
federal or state securities laws, to receive (i) incentive stock options (to eligible employees only); (ii) nonqualified stock options;
(iii) stock appreciation rights; (iv) restricted stock; (v) performance-based shares; (vi) stock units; (vii) other stock-based
awards; (viii) performance-based cash awards; or (ix) any combination of the foregoing.
Summary
of the 2023 Stock Incentive Plan
The
Plan
The
purpose of the Plan is to enhance our ability to attract, retain and motivate persons who make (or are expected to make) important contributions
by providing these individuals with equity ownership opportunities and/or equity-linked compensatory opportunities. Equity awards and
equity-linked compensatory opportunities are intended to motivate high levels of performance and align the interests of directors, employees
and consultants with those of stockholders by giving directors, employees and consultants the perspective of an owner with an equity
or equity-linked stake in the Company and providing a means of recognizing their contributions to our success. The Board believes that
equity awards are necessary to remain competitive in its industry and are essential to recruiting and retaining the highly qualified
employees who help us meet our goals.
This
section summarizes certain principal features of the Plan. The summary is qualified in its entirety by reference to the complete text
of the Plan.
Eligibility
and Participation
The
Board selects the individuals who will participate in the Plan. Eligibility to participate is open to officers, directors, consultants
and employees of, and other individuals who provide bona fide services to or for, the Company or any of the Company subsidiaries. The
Board may also select as participants prospective officers, employees and service providers who have accepted an offer of employment
or another service relationship from Company or any of the Company subsidiaries. Any awards granted to such a prospect before the individual’s
start date may not become vested or exercisable, and no shares may be issued to such individual, before the date the individual first
commences performance of services with the Company. As of the Record Date, the Company has approximately 35 employees, 3 non-employee
directors and other individual service providers who will be eligible to receive awards under the Plan.
Administration
The
Board will be the administrator of the Plan. Except as provided otherwise under the Plan, the administrator has plenary authority to
grant awards pursuant to the terms of the Plan to eligible individuals, determine the types of awards and the number of shares covered
by the awards, establish the terms and conditions for awards and take all other actions necessary or desirable to carry out the purpose
and intent of the Plan.
The
Board may delegate to a committee of the Board or the officers and employees of the Company limited authority to perform administrative
actions under the Plan to assist in its administration to the extent permitted by applicable law and stock exchange rules. With respect
to any award to which Section 16 of the Exchange Act applies, the administrator shall consist of our Board. Any member of the Board who
does not meet the foregoing requirements shall abstain from any decision regarding an award and shall not be considered a member of the
Board for purposes of serving as administrator of the Plan to the extent required to comply with Rule 16b-3 of the Exchange Act.
Shares
Available Under the Plan
On
the effective date of the Plan (the “Effective Date”), the number of shares of Company common stock (“Shares”)
issuable pursuant to awards granted under the Plan (the “Share Pool”) will be equal to 2,000,000 Shares.
Adjustments
to Share Pool
Following the Effective Date, the Share Pool will be adjusted as follows:
|
● |
The
Share Pool will be reduced by one Share for each Share made subject to an award granted under the Plan; |
|
|
|
|
● |
The
Share Pool will be increased by the number of unissued Shares underlying or used as a reference measure for any award or portion
of an award granted under the Plan that is cancelled, forfeited, expired, terminated for any reason, or settled in cash, including
Shares withheld or reacquired by the Company in satisfaction of payment of an exercise price or tax withholding obligations,
other than with respect to incentive stock options; and |
In
the event of any change in the capital structure of the Company by reason of any stock split reverse stock split, stock dividend, subdivision,
combination or reclassification of shares that may be issued under the Plan, any recapitalization, any merger, any consolidation, any
spin off, any reorganization or any partial or complete liquidation, or any other corporate transaction or event affecting the capital
structure of the Company, the Board will adjust the Share Pool proportionately to reflect the transaction or event. Similar adjustments
will be made to the terms of outstanding awards.
Types
of Awards
The
Plan enables the grant of stock options, stock appreciation rights, restricted stock, performance shares, stock unit awards, other stock-based
awards, and performance-based cash awards, each of which may be granted separately or in tandem with other awards.
Restricted
Stock
Awards of restricted stock are actual Shares that are issued to a participant, but that are subject to forfeiture if the participant
does not remain employed by us for a certain period of time and/or if certain performance goals are not met. Except for these restrictions
and any others imposed by the administrator, the participant will generally have all of the rights of a stockholder with respect to the
restricted stock, including the right to vote the restricted stock, but will not be permitted to sell, assign, transfer, pledge or otherwise
encumber shares of restricted stock before the risk of forfeiture lapses.
The
Board may, in its sole discretion, determine at the time of grant that the payment of dividends shall be deferred until, and conditioned
upon, the expiration of the applicable restriction period applicable to such restricted stock award.
Stock
Units
An award of stock units represents a contractual obligation of the Company to deliver a number of Shares, an amount in cash
equal to the fair market value of the specified number of shares subject to the award, or a combination of shares and cash. Until Shares
are issued to the participant in settlement of stock units, the participant shall not have any rights of a stockholder of the Company
with respect to the stock units or the shares issuable thereunder. Vesting of restricted stock units may be subject to performance goals,
the continued service of the participant or both. The administrator may provide that dividend equivalents will be paid or credited with
respect to restricted stock units, but such dividend equivalents will be held by us and made subject to forfeiture at least until any
applicable performance goal related or other service-based restriction to such restricted stock units has been satisfied.
Performance
Shares and Performance-Based Cash Awards
An award of performance shares, as that term is used in the Plan, refers to Shares or stock
units that are expressed in terms of Shares, the issuance, vesting, lapse of restrictions or payment of which is contingent on performance
as measured against predetermined objectives over a specified performance period. A grant of a performance-based cash award, as that
term is used in the Plan, refers to dollar-denominated units valued by reference to designated criteria established by the administrator,
other than Shares, whose issuance, vesting, lapse of restrictions or payment is contingent on performance as measured against predetermined
objectives over a specified performance period. The applicable award agreement will specify whether performance shares will be settled
or paid in cash or Shares or a combination of both, or will reserve to the administrator or the participant the right to make that determination
prior to or at the payment or settlement date.
The
administrator will, prior to or at the time of grant, condition the grant, vesting or payment of, or lapse of restrictions on, an award
of performance shares or performance units upon (A) the attainment of performance goals during a performance period or (B) the attainment
of performance goals and the continued service of the participant. The length of the performance period, the performance goals to be
achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained will
be conclusively determined by the administrator in the exercise of its absolute discretion. Performance goals may include minimum, maximum
and target levels of performance, with the size of the award or payout of performance shares or performance units or the vesting or lapse
of restrictions with respect thereto based on the level attained. An award of performance shares or performance-based cash awards will
be settled as and when the award vests or at a later time specified in the award agreement or in accordance with an election of the participant,
if the administrator so permits, that meets the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).
Performance
goals applicable to performance-based awards are based on performance metrics selected by the administrator. For this purpose, performance
metrics mean any criteria established by the administrator. The Board shall establish the objective Performance Goals for the earning
of Performance Shares based on a Performance Period applicable to each Participant or class of Participants in writing prior to the beginning
of the applicable Performance Period and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals
may incorporate, provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar type events or circumstances. The measurements used in Performance Goals
set under the Plan shall be determined in accordance with U.S. GAAP, except, to the extent that any objective Performance
Goals are used, if any measurements require deviation from U.S. GAAP, such deviation shall be at the discretion of the Board at
the time the Performance Goals are set.
Other
Stock-Based Awards
The administrator may from time to time grant to eligible individuals awards in the form of Shares or any other
award that is valued in whole or in part by reference to, or is otherwise based upon, Shares, including without limitation dividend equivalents
and convertible debentures (“Other Stock-Based Awards”). Other Stock-Based Awards in the form of dividend equivalents may
be (A) awarded on a free-standing basis or in connection with another award other than a stock option or stock appreciation right, (B)
paid currently or credited to an account for the participant, including the reinvestment of such credited amounts in Share equivalents,
to be paid on a deferred basis, and (C) settled in cash or Shares as determined by the administrator; provided, however, that dividend
equivalents payable on Other Stock-Based Awards that are granted as a performance award or restricted award shall, rather than be paid
on a current basis, be accrued and made subject to forfeiture at least until the applicable performance goal or service-based restrictions
related to such Other Stock-Based Awards has been satisfied, as applicable. Any such settlements, and any such crediting of dividend
equivalents, may be subject to such conditions, restrictions and contingencies as the administrator may establish.
Stock
Options and Stock Appreciation Rights
Stock
options represent a right to purchase a specified number of Shares from us at a specified price during a specified period of time. Stock
options may be granted in the form of incentive stock options, which are intended to qualify for favorable treatment for the recipient
under U.S. federal tax law, or as nonqualified stock options, which do not qualify for this favorable tax treatment. Only employees of
the Company or its subsidiaries may receive tax-qualified incentive stock options within the U.S. The administrator may establish sub-plans
under the Plan through which to grant stock options that qualify for preferred tax treatment for recipients in jurisdictions outside
the U.S. Stock appreciation rights represent the right to receive an amount in cash, Shares or both equal to the fair market value of
the shares subject to the award on the date of exercise minus the exercise price of the award. All stock options and stock appreciation
rights must have a term of no longer than ten years’ duration. Stock options and stock appreciation rights have an exercise
or base price as determined by the Board on the grant date, provided however that any incentive stock options must have an exercise
price equal to or above the fair market value of our Shares on the date of grant, except as provided under applicable law or with
respect to stock options and stock appreciation rights that are granted in substitution of similar types of awards of a company acquired
by us or an affiliate or with which we or our affiliate combine (whether in connection with a corporate transaction, such as a merger,
combination, consolidation or acquisition of property or stock, or otherwise) to preserve the intrinsic value of such awards. The Board
may, in its sole discretion, grant tandem and non-tandem Stock appreciation rights either as a general stock appreciation right
or as a limited stock appreciation right. Limited stock appreciation rights may be exercised only upon the occurrence of a Change
in Control (as defined herein) or such other event as the Board may, in its sole discretion, designate at the time of grant or
thereafter. Tandem stock appreciation rights may be granted in conjunction with all or part of any stock option (a “Reference
Stock Option”) granted under this Plan. In the case of a non-qualified stock option, such rights may be granted either at or
after the time of the grant of such Reference Stock Option. In the case of an incentive stock option, such rights may be granted only
at the time of the grant of such Reference Stock Option. As of the Record Date, the fair market value of one Share was $21.04 as reported
on the Nasdaq.
Prohibition
on Repricing
Except
in connection with a change in the capital structure or a corporate transaction involving the Company and in compliance
with Section 409A of the Code, the terms of stock options and stock appreciation rights granted under the Plan may not be amended, after the date of grant,
to reduce the exercise price of such stock options or stock appreciation rights, nor may outstanding stock options or stock
appreciation rights be canceled in exchange for (i) cash, (ii) stock options or stock appreciation rights with an exercise price
that is less than the exercise price of the original outstanding stock options or stock appreciation rights, or (iii) other awards,
unless such action is approved by the Company’s stockholders.
Award
Limitations
The maximum number of Shares that may be issued in connection with awards granted under the Plan that are intended to qualify
as incentive stock options under Section 422 of the Code is equal to the Share Pool as of the Effective Date.
Adjustments
to Awards for Corporate Transactions and Other Events
Mandatory
Adjustments
In the event of a merger, consolidation, stock rights offering, statutory share exchange, a stock dividend, stock split,
reverse stock split, separation, spinoff, reorganization, extraordinary dividend of cash or other property, share combination or subdivision,
or recapitalization or similar event affecting the capital structure of the Company (a “Corporate Event”), the administrator
will make such equitable and appropriate substitutions or proportionate adjustments to:
|
● |
the
aggregate number and kind of Shares or other securities on which awards under the Plan may be granted to eligible individuals; |
|
● |
the
number of Shares or other securities covered by each outstanding award and the exercise price, base price or other price per share,
if any, and other relevant terms of each outstanding award; and |
|
● |
all
other numerical limitations relating to awards, whether contained in the Plan or in award agreements. |
Discretionary
Adjustments
In addition to the adjustments specified above, in the case of Corporate Events, the administrator may make such other
adjustments to outstanding awards as it determines to be appropriate and desirable, in such manner as the Board may, in its sole discretion,
deem appropriate and equitable to prevent substantial dilution or enlargement of the rights granted to, or available for, participants
under the Plan. The Board may, in its discretion, adjust the performance goals applicable to any awards to reflect any unusual or non-recurring
events and other extraordinary items.
Treatment
of Awards upon Dissolution or Liquidation or a Change in Control
Dissolution
or Liquidation
Unless the administrator determines otherwise, all awards outstanding under the Plan will terminate upon the dissolution
or liquidation of the Company.
Change
in Control
Outstanding
Awards will terminate upon the effective time of a Change in Control (as defined herein) unless provision is made in connection
with the transaction for the continuation or assumption of such awards by, or for the issuance therefor of substitute awards of, the
surviving or successor entity or a parent thereof.
Under
the terms of the Plan, unless otherwise determined by the Board, a “Change in Control” is generally defined as (i)
any acquisition by a person or entity of more than 50% of the total voting power of the Company’s capital stock, with certain exceptions,
(ii) a contested change in the majority of the Board members within a 2-year period, (iii) the sale or other disposition of all or substantially
all of the assets of the Company by a person or entity, or (iv) a complete liquidation or dissolution of the Company. For purposes of
any award or subplan that constitutes a “nonqualified deferred compensation plan,” within the meaning of Section 409A of
the Code, the Board, in its discretion, may specify a different definition of change in control in order to comply with or cause an award
to be exempt from the provisions of Section 409A of the Code.
Solely
with respect to awards that will terminate as a result of the immediately preceding sentence and except as otherwise provided in the
applicable award agreement: (i) the outstanding awards of stock options and stock appreciation rights that will terminate upon the effective
time of the Change in Control will, immediately before the effective time of the Change in Control, become fully
exercisable and the holders of such Awards will be permitted, immediately before the Change in Control, to exercise the
Awards; (ii) the outstanding shares of restricted stock the vesting or restrictions on which are then solely time-based and not subject
to achievement of performance goals will, immediately before the effective time of the Change in Control, become fully
vested, free of all transfer and lapse restrictions and free of all risks of forfeiture; (iii) the outstanding shares of restricted stock
the vesting or restrictions on which are then subject to and pending achievement of performance goals shall, immediately before the effective
time of the Change in Control and unless the award agreement provides for vesting or lapsing of restrictions in a greater
amount upon the occurrence of a Change in Control, become vested, free of transfer and lapse restrictions and risks of forfeiture
in such amounts as if the applicable performance goals for the unexpired performance period had been achieved at the target level set
forth in the applicable award agreement; (iv) the outstanding restricted stock units, performance shares and performance units the vesting,
earning or settlement of which is then solely time-based and not subject to or pending achievement of performance goals shall, immediately
before the effective time of the Change in Control, become fully earned and vested and shall be settled in cash or Shares
(consistent with the terms of the award agreement after taking into account the effect of the Change in Control transaction on
the shares) as promptly as is practicable, subject to any applicable limitations imposed thereon by Section 409A of the Code; and (v)
the outstanding restricted stock units, performance shares and performance units the vesting, earning or settlement of which is then
subject to and pending achievement of performance goals shall, immediately before the effective time of the Change in Control
and unless the award agreement provides for vesting, earning or settlement in a greater amount upon the occurrence of a Change
in Control, become vested and earned in such amounts as if the applicable performance goals for the unexpired performance
period had been achieved at the target level set forth in the applicable award agreement and shall be settled in cash or Shares (consistent
with the terms of the award agreement after taking into account the effect of the Change in Control transaction on the shares)
as promptly as is practicable, subject to any applicable limitations imposed thereon by Section 409A of the Code.
Amendment
and Termination
The
Board may terminate, amend or modify the Plan or any portion of it at any time, subject to such restrictions on amendments and modifications
as may apply under applicable laws or listing rules. However, no such amendment may be made without the approval of the stockholders
to the extent such amendment would (i) materially increase the benefits accruing to participants under the Plan, (ii) materially increase
the number of Shares which may be issued under the Plan or to a participant, (iii) materially expand the eligibility for participation
in the Plan, (iv) eliminate or modify the prohibition on repricing of stock options and stock appreciation rights, or (v) lengthen
the maximum term permitted for stock options and stock appreciation rights.
The
Board may amend the terms of any award theretofore granted, prospectively or retroactively, but, subject to the Plan’s adjustment
provisions or as otherwise specifically provided in the Plan, no such amendment or other action by the Board shall impair the rights
of any award holder without the holder’s consent.
The
Plan is scheduled to expire on May 24, 2033.
Compliance
with Listing Rules
While
shares are listed for trading on any stock exchange or market, our Board agrees that it will not make any amendments, issue any awards
or take any action under the Plan unless such action complies with the relevant listing rules.
Material
U.S. Federal Income Tax Consequences of the Plan
The
following discussion is intended only as a general summary of the material U.S. federal income tax consequences of awards issued under
the Plan, based upon the provisions of the Code as of the date of this proxy statement, for the purposes of stockholders considering
how to vote on this proposal. It is not intended as tax guidance to participants in the Plan. This summary does not take into account
certain circumstances that may change the income tax treatment of awards for individual participants, and it does not describe the state
income tax consequences of any award or the taxation of awards in jurisdictions outside of the U.S.
Stock
Options and Stock Appreciation Rights
The grant of a stock option or stock appreciation right generally has no income tax consequences
for a participant or the Company. Likewise, the exercise of an incentive stock option generally does not have income tax consequences
for a participant or the Company, except that it may result in an item of adjustment for alternative minimum tax purposes for the participant.
A participant usually recognizes ordinary income upon the exercise of a nonqualified stock option or stock appreciation right equal to
the fair market value of the shares or cash payable (without regard to income or employment tax withholding) minus the exercise price,
if applicable. The Company should generally be entitled to a deduction for federal income tax purposes equal to the amount of ordinary
income recognized by the participant as a result of the exercise of a nonqualified stock option or stock appreciation right.
If
a participant holds the shares acquired under an incentive stock option for the time specified in the Code (at least two years measured
from the grant date and one year measured from the exercise date), any gain or loss arising from a subsequent disposition of the shares
will be taxed as long-term capital gain or loss. If the shares are disposed of before the holding period is satisfied, the participant
will recognize ordinary income equal to the lesser of (1) the amount realized upon the disposition and (2) the fair market value of such
shares on the date of exercise minus the exercise price paid for the shares. Any ordinary income recognized by the participant on the
disqualifying disposition of the shares generally entitles us to a deduction by us for federal income tax purposes. Any disposition of
shares acquired under a nonqualified stock option or a stock appreciation right will generally result only in capital gain or loss for
the participant, which may be short- or long-term, depending upon the holding period for the shares.
Full
Value Awards
Any cash and the fair market value of any Shares received by a participant under a full value award are generally includible
in the participant’s ordinary income. In the case of restricted stock awards, this amount is includible in the participant’s
income when the awards vest, unless the participant has filed an election with the IRS to include the fair market value of the restricted
shares in income as of the date the award was granted. In the case of restricted stock units, performance shares and performance units,
generally the value of any cash and the fair market value of any Shares received by a participant are includible in income when the awards
are paid.
Deductibility
of Compensation
The Company generally is entitled to a deduction equal to the amount included in the ordinary income of participants
and does not receive a deduction for amounts that are taxable to participants as capital gain.
New
Plan Benefits
The
following table reflects the awards to be received as of the Record Date, under the Plan by the following listed individuals and specified
groups:
Name and Position | |
Dollar Value
per Month ($) | | |
Number of
Shares per Month | |
Brian Bernier,
Vice President, Corporate Development(1) | |
$ | 2,500 | (2) | |
| 119 | (2) |
Non-Executive Officer Director Group | |
| - | | |
| - | |
Executive Officer Group | |
| - | | |
| - | |
Non-Executive Officer Employee Group | |
| - | | |
| - | |
(1) |
Pursuant
to his agreement with the Company, the Company is obligated to grant Mr. Bernier the equivalent of $2,500 in fully-vested stock awards
(with the price per share calculated as the average closing price for the applicable monthly period) beginning on the effective date
of his services with the Company and on a monthly basis thereafter through the termination of his Consulting Agreement with the Company. |
|
|
(2) |
The
value is calculated using the closing stock price of a share of the Company’s common stock on the Record Date, which was $21.04. |
Other
than the awards under Mr. Bernier’s Consulting Agreement with the Company which have been calculated assuming his services with
the Company continue for such number of months, the benefits or amounts to be received by or allocated to participants and the number
of shares to be granted under the Plan cannot be determined at this time because the amount and form of grants to be made to any eligible
participant in any year is determined at the discretion of the Board. It is contemplated that any annual equity awards to our non-employee
directors or options which was elected to be exercised for shares of our Common Stock by Mr. Fogassa or Ambassador Roger Noriega, if
any, would be made under the Plan.
Securities
Authorized for Issuance Under Equity Compensation Plans
In
2017, our Board approved our 2017 Stock Incentive Plan (the “2017 Plan”) under which we can offer eligible
employees, consultants, and non-employee directors cash and stock-based compensation and/or incentives to compensate, attract, retain,
or reward such individuals. On July 18, 2022, our Board and the Majority Stockholder approved an increase in the number of common
shares allocated to the 2017 Plan from 33,334 to 333,334, adjusted to reflect the reverse stock split effective as of
December 22, 2022. We have no other equity compensation plan. The table below sets forth certain information as of December 31, 2022
with respect to the 2017 Plan.
Plan
Category | |
Number
of securities to be issued upon exercise of outstanding options, warrants, and rights (a) | | |
Weighted-average
exercise price of outstanding options, warrants and rights (b) | | |
Number
of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column “(a)”)
(c) | |
| |
| | |
| | |
| |
Equity
compensation plans approved by security holders | |
| 333,334 | | |
| n/a | | |
| 333,334 | |
| |
| | | |
| | | |
| | |
Equity
compensation plans not approved by security holders (2017 Stock Incentive Plan) | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | |
Total | |
| 333,334 | | |
$ | n/a | | |
| 333,334 | |
Current
Issuance
As
of the Record Date, there were no stock options or other awards issued under the 2017 Plan. As disclosed in this Information
Statement, on May 25, 2023, the Board approved the termination of the 2017 Plan.
INTEREST
OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No
specific awards have been issued under the 2017 Plan. On May 25, 2023 the Board approved the adoption of the Plan, subject to stockholder approval, and termination of the 2017 Plan. Upon the effectiveness of the Plan, officers, directors and other service providers may be granted awards under the Plan as determined
by the Board in its discretion.
ADDITIONAL
INFORMATION and incorporation by reference
We
are subject to the information and reporting requirements of the Exchange Act, and in accordance with such act we file periodic reports,
documents and other information with the SEC relating to our business, financial statements and other matters. The SEC maintains a website
that contains such periodic reports, documents and other information at http://www.sec.gov. Information about us, including our
SEC filings, is also available on our website www.atlas-lithium.com. However, the information on our website is not incorporated
by reference or deemed to be a part of this Information Statement.
DISSENTER’S
RIGHTS OF APPRAISAL
The
stockholders have no right to dissent on any of the Corporation Actions under the NRS, the Articles, or Bylaws.
EFFECTIVE
DATES OF CORPORATE ACTIONS
Under
Rule 14c-2 under the Exchange Act, the Corporate Actions shall not be effective until a date at least 20 days after the date on which
this Information Statement has been mailed to the stockholders.
CONCLUSION
As
a matter of regulatory compliance, we are sending you this Information Statement, which describes the purpose and effect of the above
actions. Your consent to the above actions is not required and is not being solicited. This Information Statement is intended to provide
our stockholders with the information required by the rules and regulations of the Exchange Act.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. THE ATTACHED MATERIAL IS FOR INFORMATIONAL PURPOSES ONLY.
|
On
behalf of the Board of Directors of |
|
ATLAS
LITHIUM CORPORATION |
|
|
|
Date:
June 2, 2023 |
By: |
|
|
|
Marc
Fogassa |
|
|
Chief
Executive Officer and Chairman of the Board |
Exhibit
1. 2023 Stock Incentive Plan.