Item
11. Executive Compensation.
Compensation
of Named Executive Officers
Summary
Compensation Table
The
following table sets forth, for the years ended December 31, 2022 and 2021, a summary of the compensation paid to or earned by the named
executive officers (“NEOs”). Note that, as a “smaller reporting company” and pursuant to the rules of the SEC,
the Company is providing compensation information for 2022 and 2021 for Marc Fogassa, our Chief Executive Officer, Gustavo Pereira de
Aguiar, our Chief Financial Officer and Brian Bernier, Vice President of our Corporate Development, as the two most highly compensated
executive officers of the Company, other than Mr. Fogassa.
Name and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards ($) | | |
Option Awards ($) (1) | | |
Non-Equity Incentive Plan Compensation ($) | | |
Non-Qualified Deferred Compensation Earnings ($) | | |
All Other Compensation ($) | | |
Total ($) | |
Marc Fogassa, Chairman and | |
| 2022 | | |
| - | | |
| - | | |
| 177,751 | (2) | |
| 743,414 | | |
| 235,043 | (3) | |
| - | | |
| 33,643 | (4) | |
| 1,189,851 | |
Chief Executive Officer | |
| 2021 | | |
| - | | |
| - | | |
| - | | |
| 901,940 | | |
| 177,751 | (3) | |
| - | | |
| 11,582 | (4) | |
| 1,091,273 | |
Gustavo Pereira de Aguiar, | |
| 2022 | | |
| 80,903 | | |
| - | | |
| - | | |
| - | | |
| 70,000 | (5) | |
| - | | |
| - | | |
| 150,903 | |
Chief Financial Officer (6) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Brian Bernier, | |
| 2022 | | |
| - | | |
| 24,900 | (7) | |
| 30,000 | (8) | |
| - | | |
| - | | |
| - | | |
| 100,000 | (9) | |
| 154,900 | |
VP, Corporate Development (10) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
(1) |
The
amounts in this column reflect the aggregate grant date fair value of stock options granted in 2021 and 2022 to our Chief Executive
Officer calculated in accordance with FASB ASC Topic 718. Please see Note 6 to the consolidated financial statements for the year
ended December 31, 2021 and 2022 contained in our Annual Report for the assumptions used in the calculation of grant date fair value
pursuant to FASB ASC Topic 718. For fiscal years 2021 and 2022, Mr. Fogassa received options to purchase shares of Series D Preferred
Stock. |
(2) |
The
amounts in this column reflect the aggregate grant date fair value of stock awards granted in 2022 calculated. in accordance with
FASB ASC Topic 718 to our Chief Executive Officer. Pursuant to the terms of Mr. Fogassa’s amended and restated employment agreement,
he received half of his 2021 performance bonus as fully vested shares of common stock of the Company (the “Common Stock”),
which was granted in early 2022. |
(3) |
Pursuant
to the terms of Mr. Fogassa’s amended and restated employment agreement, his performance bonus for each calendar year is earned
when the level of achievement is determined by the Board in the calendar year following the corresponding performance year. Such
amount is paid half in cash and half in fully-vested shares of Common Stock granted on or about the same date the performance bonus
is determined. |
(4) |
All
Other Compensation for Mr. Fogassa includes disability insurance coverage for Mr. Fogassa for 2021 and 2022, and medical, dental
and vision insurance coverage for Mr. Fogassa and his dependents for part of 2022. |
(5) |
Pursuant
to the terms of his March 15, 2022 agreement with the Company, Mr. Pereira de Aguiar receives specific performance bonuses tied to
successful completion and timely filing of our periodic reporting obligations with the SEC. |
(6) |
Mr.
Pereira de Aguiar was elected as our Chief Financial Officer on March 16, 2022. |
(7) |
Mr.
Bernier receives discretionary performance bonus. |
(8) |
Pursuant
to the terms of his October 28, 2019 consulting services agreement with the Company, Mr. Bernier does is not entitled to cash compensation.
Mr. Bernier is granted monthly fully vested shares equal to $2,500 in value, with the price per share calculated as the average closing
price for the applicable monthly period. |
(9) |
In
fiscal year 2022, Mr. Bernier received cash payments for a total amount of $100,000 in connection with his expanded role and time
commitment required to achieve the Company’s listing on the Nasdaq Capital Markets. |
(10) |
Mr.
Bernier was retained and elected Vice President, Corporate Development in 2019 but did not become an NEO until 2022. |
Narrative
to Summary Compensation Table
Mr.
Fogassa’s Amended and Restated Employment Agreement
On
December 31, 2020, our Board approved an amendment and restatement of the employment agreement between the Company and Marc Fogassa,
our Chief Executive Officer (the “A&R Employment Agreement”). Under the A&R Employment Agreement, Mr. Fogassa is
not entitled to a salary payable in cash, which under the terms of his prior employment agreement was for an amount of $250,000 per annum.
Instead, he is granted each month ten-year non-qualified stock options to purchase up to 33,334 shares of our Common Stock at an exercise
price equal to $0.0075 per share (the “Common Stock Option Grant”), such price and shares being subject to customary adjustments
for any dividends, stock splits, reorganization or similar events. In 2021, the Board approved Mr. Fogassa’s right to elect to
receive instead of the Common Stock Option Grant, an equivalent option award for shares of Series D Preferred Stock calculated by dividing
the number of shares of Common Stock underlying the Common Stock Option Grant by 13 and 1/3 (as adjusted to reflect the post reverse
stock split effective on December 22, 2022) (the “Series D Options”). If and when such options are exercised, the stock to
be received will be restricted 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. Following the approval of the Plan (as defined
herein), future Common Stock Option Grants may be made to Mr. Fogassa under the Plan. Mr. Fogassa is also entitled to incentive compensation
payable half in cash and half in fully vested shares of Common Stock upon achieving of certain book value metrics, as set forth in the
A&R Employment Agreement. On May 25, 2023, the Board determined that for fiscal year 2022, the incentive compensation performance
metrics under the A&R Employment Agreement were met and Mr. Fogassa was entitled to his incentive compensation payable half in cash
and half in shares of Common Stock. As a result, Mr. Fogassa received a cash incentive compensation of $235,043 for his performance in
fiscal year 2022, and 29,678 restricted shares of Common Stock granted on May 26, 2023.
Under
the A&R Employment Agreement, Mr. Fogassa is entitled to a housing benefit of up to $5,000 per month for a primary or secondary residence
out of the United States, The Company shall pay all costs of reasonable medical, dental, vision, long-term disability, and short-term
disability to Mr. Fogassa, and to his spouse or partner and children under the age of 21, at reasonable plans chosen by Mr. Fogassa.
Unless declined by Mr. Fogassa, the Company shall pay the annual premium costs of a life insurance policy for Mr. Fogassa in the amount
of $5,000,000 for payment to his designated beneficiaries. Upon termination by the Company, the Company shall immediately make a payment
to Mr. Fogassa equal to $500,000. If upon the completion of a change of control, or other corporate event, Mr. Fogassa is no longer the
Chief Executive Officer of the Company, or the Chief Executive Officer of the new controlling person of the Company, as the case may
be, then the Company shall immediately make a payment to Mr. Fogassa equal to $2,000,000.
Mr.
Pereira De Aguiar’s Agreement
On
March 15, 2022, the Company and Gustavo Pereira de Aguiar, our Chief Financial Officer, entered into an agreement, effective March 16,
2022 (the “Start Date”), pursuant to with Mr. Pereira de Aguiar is providing services to us (the “GPA Agreement”).
Under
the GPA Agreement, Mr. Pereira de Aguiar received a signing bonus totaling $25,000, all payable in 2022 in two equal tranches. Mr. Pereira
de Aguiar is entitled to a base monthly cash compensation of $9,500 as well as a maximum annual cash incentive compensation of $45,000,
with the amount received conditioned on the filing by the Company, on an annual basis, of one Form 10-K and three Forms 10-Q with the
SEC. Further, on the Start Date, Mr. Pereira de Aguiar was granted 85,019 shares of Common Stock (the “GPA Grant”), for the
purchase price of $1.00 (discounted from the first base compensation), which will vest over four years in four equal tranches.
The
agreement is terminable at any time by mutual agreement of the parties and at any time for any reason or no reason by one party, with
prior written notice of thirty days to the other party, provided that if Mr. Pereira de Aguiar’s employment is terminated for any
reason by the Company other than gross negligence or willful malfeasance, the GPA Grant shall be deemed to be fully vested immediately
upon such termination. If such termination occurs after the first anniversary, but before the second anniversary of the Start Date, the
Company shall be required to make a $30,000 payment to Mr. Pereira de Aguiar within thirty days of said termination. If the Company terminates
the GPA Agreement for gross negligence or willful malfeasance, then the portion of the GPA Grant which is not yet vested shall be deemed
to be forfeited.
Mr.
Bernier’s Consulting Services Agreement
On
October 28, 2019, the Company and Brian Bernier, our Vice President of Corporate Development, entered into a Consulting Services Agreement
(the “Consulting Agreement”) pursuant to which Mr. Bernier is entitled to receive on a monthly basis restricted shares of
Common Stock calculated by dividing $2,500 by the average closing price per share of the Company’s Common Stock as now reported
on the Nasdaq Stock Market. Pursuant to the terms of the Consulting Agreement, the Company and Mr. Bernier every three months shall agree
on a set of certain performance goals and Mr. Bernier may be entitled to a bonus if the performance by Mr. Bernier materially exceeds
the agreed upon goals as determined in the sole discretion of the Company. In 2022, Mr. Bernier received $24,900 in discretionary bonuses
in connection with his performance of various workstreams in connection with the Company’s listing on the Nasdaq Capital Markets,
a year-long process.
The
Consulting Agreement may be terminated at any time for any or no reason and does not constitute employment of Mr. Bernier.
In
fiscal year 2022, pursuant to a verbal agreement between the Company and Mr. Bernier, he received cash payments for a total of $100,000
in connection with his expanded role and time commitment required to achieve the Company’s listing on the Nasdaq Capital Markets.
Outstanding
Equity Awards at Fiscal Year-End
The
following table provides information regarding equity awards held by the NEOs that were outstanding as of December 31, 2022:
| |
Option awards | | |
Stock awards |
Name | |
Number of securities underlying unexercised options (#) exercisable | | |
Number of securities underlying unexercised options (#) unexercisable | | |
Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) | | |
Option exercise price ($) | | |
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 Convertible 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 Convertible Preferred Stock.
|
(3) |
Ms.
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. |