Commitments and Contingencies

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 6 – Commitments and Contingencies

Amended and Restated Employment Agreement

On September 16, 2014, the Company entered into an amended and restated employment agreement (the “Employment Agreement”) with Mr. John Macaluso (“Mr. Macaluso”) pursuant to which Mr. Macaluso shall continue to serve as the Company’s President and Chief Executive Officer. The initial term of the Employment Agreement commenced on September 16, 2014 (the “Commencement Date”) and shall expire on March 18, 2018 (the “Initial Term”). The Initial Term will be automatically extended for additional terms of one (1) year each (each a “Renewal Term” and together with the Initial Term, the “Term”), unless either the Company or Mr. Macaluso gives prior written notice of non-renewal to the other party no later than sixty (60) days prior to the expiration of the then current Term.

During the Term, the Company will pay Mr. Macaluso a base salary of $41,667 per month (the “Base Salary”). In addition, subject to the terms and conditions of the Employment Agreement, Mr. Macaluso will receive an annual bonus equal to the following, calculated cumulatively: (i) when the Company achieves annual Adjusted EBITDA (as defined in the Employment Agreement) of between $1.00 and $1,000,000, Mr. Macaluso shall receive a cash bonus of 30% of such annual Adjusted EBITDA; (ii) when the Company achieves annual Adjusted EBITDA of between $1,000,001 and $2,000,000, Mr. Macaluso shall receive an additional cash bonus of 20% of such annual Adjusted EBITDA which exceeds $1,000,000; and (iii) when the Company achieves annual Adjusted EBITDA greater than $2,000,000, Mr. Macaluso shall receive an additional cash bonus of 10% of such annual Adjusted EBITDA which exceeds $2,000,000. Mr. Macaluso shall also be entitled to a monthly car allowance of $1,200. There was no bonus accrued as of March 31, 2016 and December 31, 2015.

The Company also granted to Mr. Macaluso 2,700,000 options to purchase shares of the Company’s common stock, par value $0.0001 per share. The options are allocated into three tranches with the following attributes:

(i)	900,000 options to purchase shares of the Company’s common stock with quarterly vesting over the period beginning March 19, 2015 and ending March 18, 2016 at an exercise price of $1.00 per share;
(ii)	900,000 options to purchase shares of the Company’s common stock with quarterly vesting over the period beginning March 19, 2016 and ending March 18, 2017 at an exercise price of $1.25 per share; and
(iii)	900,000 options to purchase shares of the Company’s common stock with quarterly vesting over the period beginning March 19, 2017 and ending March 18, 2018 at an exercise price of $1.50 per share.

Non-Compete Agreement

In conjunction with the Employment Agreement, Mr. Macaluso entered into a non-compete, non-solicitation and non-disclosure agreement, dated September 16, 2014, with the Company (the “Non-Compete Agreement”). Under the Non-Compete Agreement, Mr. Macaluso must keep the Company’s confidential and proprietary information confidential and is prohibited from inducing or attempting to induce any employee of the Company from terminating his or her employment with the Company, and soliciting the business of any client or customer of the Company, during the period commencing on the Commencement Date and ending on the termination of Mr. Macaluso’s employment with the Company for any reason. Further, Mr. Macaluso is prohibited from engaging in a venture or business substantially similar to that of the Company or that is in direct or indirect competition with the Company in the United States during the period commencing on the Commencement Date and ending on the termination of Mr. Macaluso’s employment with the Company for any reason.

On April 19, 2016, Mr. Macaluso resigned as the Chief Executive Officer and President of the Company, and as a member of the Board, effective immediately. The resignation is not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Employment Agreement

Effective as of March 2, 2016, the Company entered into an employment agreement (the “Malinoff Employment Agreement”) with Randall S. Malinoff in connection with his appointment as the Company’s Interim Chief Operating Officer. The initial term of the Malinoff Employment Agreement is for ninety (90) days from the date of execution. Such term may be extended by mutual agreement for successive ninety (90) day periods. The Company shall pay Mr. Malinoff an annual base salary of $150,000.

Operating Lease

Effective July 17, 2014, the Company entered into a sublease, as lessee, with Ironclad Performance Wear Corporation, for new space located in El Segundo, California (the “Sublease”). The term of the Sublease is for one year and ten (10) months commencing on September 1, 2014. Pursuant to the Sublease, the Company shall pay base rent of $11,132 per month and an initial security deposit of $11,466 is required.

Future minimum lease payments inclusive of related tax required under the non-cancelable operating lease are as follows:

Fiscal year ending December 31:
2016	$	34,398