UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company |
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If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On September 1, 2023, Alexander A. Sannikov, Chief Financial Officer of Luvu Brands, Inc. (the “Company”), notified the Company of his intention to resign from his position as Chief Financial Officer and remain a consultant of the Company. The resignation of Mr. Sannikov did not involve any disagreement with the Board of Directors, the Company or its management on any matter relating to the Company’s operations, policies, or practices.
Effective September 1, 2023, the Company appointed Martin Scott as Chief Financial Officer of the Company. Biographical information for Mr. Scott is as follows:
Mr. Scott, age 55, has served as founder and executive officer of Martin Scott CFO Consulting Services Inc. since 2002. From March 2022 to January 2023, Mr. Scott served as chief financial officer of MGO Global, Inc. From 2018 to 2020, Mr. Scott served as principal accounting and financial officer of Puradyn Filter Technologies, Inc. Mr. Scott is a Certified Public Accountant. Mr. Scott graduated from Florida State University with a Bachelor of Science degree in Accounting and Finance.
The Company’s wholly owned subsidiary, One Up Innovations Inc., has entered into a one year employment agreement with Mr. Scott effective September 1, 2023, providing for a base salary of $126,000 per year. The agreement may be terminated by either party with or without cause on 30 day notice. In addition, Mr. Scott is eligible for Company benefits and will be entitled to indemnification to the maximum extent permitted by applicable law. In addition; Mr. Scott entered into a Stock Option Agreement pursuant to the Company’s 2015 Equity Incentive Plan granting him an incentive stock option for an aggregate of 200,000 shares of our common stock,100,000 shares exercisable commencing on September 1, 2024 and the remaining 100,000 shares exercisable commencing on September 1, 2025, at an exercise price of $$0.0812 per share. The options shall immediately vest upon the Company uplisting to a national exchange or in the event of a “change of control” of the Company, as defined under the Stock Option Agreement. The option is exercisable for a period of 5 years from the initial grant date.
The foregoing descriptions of each agreement are not complete and are qualified in their entirety by reference to the full text of such agreements, filed as Exhibit 10.1 and as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
Exhibit |
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| Stock Option Agreement between Luvu Brands, Inc. and Martin Scott dated September 1, 2023* | |
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10.4 |
| Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* | Management contract or compensatory plan or arrangement. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Luvu Brands, Inc. |
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Date: September 7, 2023 | By: | /s/ Louis S. Friedman |
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| Louis S. Friedman, Chief Executive Officer |
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EXHIBIT 10.1
Executive Employment Agreement Term Sheet
This term sheet (“Term Sheet”) dated September 1, 2023 sets forth the principal terms and conditions governing the employment relationship between Martin Scott (the “Executive”) and One Up Innovations, Inc., a Georgia corporation (the “Company”).
Position | The Executive shall serve as chief financial officer of the Company, faithfully and to the best of his ability, and shall devote reasonable time and attention to the business and affairs of the Company. subject to reasonable absences for vacation and illness in accordance with Company policies. The Company acknowledges that the Executive provides consulting services during normal business hours to third party entities. During the Term (as defined below) the Executive shall also serve as Chief Financial Officer of Luvu Brands, Inc., the parent company of the Company (the “Parent”). The Executive shall abide by all corporate governance and employment policies of the Parent and the Company which may be adopted or modified from time to time including, but not limited to, the Company’s insider trading and code of ethics policies. |
Effective Date | September 1, 2023 (“Effective Date”). |
Employment Term | Initial term of 12 months (the “Term”), unless otherwise terminated as provided herein. This Term Sheet may be terminated by either party with or without cause on 30 day prior written notice. For clarity, upon termination, with or without cause, there shall be no severance payable if either party provides the required notice to terminate. |
Principal Place of Employment | Executive shall work remotely, subject to reasonably necessary business travel. Executive shall travel to the Company’s executive offices as reasonable required for the scope of his engagement. The Company shall be responsible for the Employee’s reasonable costs and expenses for travel to the Company’s executive offices. |
Base Salary | $126,000 per year, payable in accordance with the Company’s standard payroll practices. |
Bonus | Bonus may be determined by the Board of Directors of the Parent from time to time. In addition, the Executive shall receive an option to purchase up to 200,000 shares of the Parent’s common stock, subject to the terms and conditions of the Option Agreement granted to the Executive on the Effective Date. |
Benefits and Perquisites | The Executive will be eligible for the same benefits, as may be available from time to time, as similarly situated executive officers of the Company, including health insurance commencing 60 days from the Effective Date. In addition, the Executive shall be entitled to reimbursement of all pre approved expenses. |
Indemnification | To the maximum extent permitted by applicable law, the Executive will be entitled to indemnification and to receive payment of expenses in advance by the Company in connection with all proceedings and losses arising from the performance of his duties or otherwise acting in his capacity as an employee, officer and/or director of the Company and the Parent, except in the circumstances under which the Executive’s proceedings and losses are the result of his being named as a defendant to litigation by the Company or the Parent. |
Governing Law | The Executive’s employment with the Company and all written agreements entered into between the Executive and the Company will be governed by and construed in accordance with the laws of the State of Georgia, without regard to any conflict of law principles. |
Prevailing Party | If any party institutes any legal suit, action, or proceeding against the other party arising out of or relating to this Term Sheet, including, but not limited to, contract, equity, tort, fraud, and statutory claims, the prevailing party in the suit, action or proceeding is entitled to receive, and the non-prevailing party shall pay, in addition to all other remedies to which the prevailing party may be entitled, the costs and expenses incurred by the prevailing party in conducting or defending the suit, action, or proceeding, including reasonable attorneys' fees and expenses. |
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Severability | In the event that any portion or clause of this Term Sheet is held unenforceable, it is agreed that such holding shall not affect any other part of this Term Sheet, and the remaining covenants and restrictions, or portions thereof, shall remain in full force and effect. If any portion, section, subsection, or clause is determined to be invalid for any reason but would be valid if revised, a court of competent jurisdiction shall revise or fix the provision to the minimum extent necessary to make it enforceable. |
Headings | The captions and headings in this Term Sheet are solely for the convenience of reference and will not limit or otherwise alter the meaning of any of the terms or provisions of this Term Sheet. |
No Waiver | The failure of the Company to enforce any right arising under this Term Sheet or any similar agreement on one or more occasions shall not operate as a waiver of that right. |
The foregoing represents a legally binding agreement between the parties hereto regarding the principal terms of the Executive’s employment. This Term Sheet may be executed in separate counterparts and electronic or .pdf format, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
EXECUTIVE |
| ONE UP INNOVATIONS, INC. |
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/S/ Martin Scott |
| /S/ Louis Friedman |
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Name: Martin Scott |
| Louis Friedman Chief Executive Officer |
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Address: |
| Address: 2745 Bankers Industrial Drive Atlanta, GA 30360 |
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ACKNOWLEDGED:
LUVU BRANDS, INC.
/S/ Louis Friedman |
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Louis Friedman
Chief Executive Officer
Address: | 2745 Bankers Industrial Drive |
| Atlanta, GA 30360 |
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EXHIBIT 10.2
LUVU BRANDS, INC.
2745 Bankers Industrial Drive
Atlanta, Georgia 30360
September 1, 2023
Martin Scott
MSCOTTCFO@aol.com
Re: Stock Option Award
Dear Martin:
I am pleased to advise you that, on September 1, 2023 (the “Effective Date”), the Board of Directors of Luvu Brands, Inc., a Florida corporation (the “Company”) authorized the Award to you of an option to purchase 200,000 shares of our common stock, par value $0.01 per share (the “Option”), upon the following terms and conditions:
1. The Option is granted in accordance with and subject to the terms and conditions of the Company’s 2015 Equity Incentive Plan (the “Plan”).
2. The Option is an incentive stock option.
3. The Option vests and is exercisable at 50% per year beginning September 1, 2024 and expires at 5:00 pm New York time on September 1, 2028, if not exercised prior to that date. The Options shall immediately vest upon the “Change of Control” of the Company or the uplisting of the Company in the NYSE American or Nasdaq Capital Market or other national exchange. A “Change of Control” shall be deemed to have occurred if, after the Effective Date, (i) the beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of securities representing more than 50% of the combined voting power of the Company is acquired by any “person” as defined in sections 13(d) and 14(d) of the Exchange Act (other than the Company, any subsidiary of the Company, or any trustee or other fiduciary holding securities under an employee benefit plan of the Company), (ii) the merger or consolidation of the Company with or into another corporation where the shareholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, shares representing in the aggregate 50% or more of the combined voting power of the securities of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any) in substantially the same proportion as their ownership of the Company immediately prior to such merger or consolidation, or (iii) the sale or other disposition of all or substantially all of the Company’s assets to an entity, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned directly or indirectly by shareholders of the Company, immediately prior to the sale or disposition, in substantially the same proportion as their ownership of the Company immediately prior to such sale or disposition.
4. The price at which the Option may be exercised is $.0.0812 per share.
5. The Option is non-transferable and may be exercised, in whole or in part, during the exercise period, only by you, except that upon your death, the Option may be exercised strictly in accordance with the terms and conditions of the Plan.
Martin Scott
September 1, 2023
Page 2 of 3
6. The exercise price and number of shares issuable upon exercise of the Option (the “Option Shares”) are subject to adjustment in accordance with the Plan in the event of stock splits, dividends, reorganizations and similar corporate events.
7. If, neither the Option nor the Option Shares have been registered under the Securities Act of 1933, as amended (the “Act”), and the Option Shares may not be sold, assigned, pledged, transferred or otherwise disposed of absent registration under the Act or the availability of an applicable exemption from registration. All certificates evidencing the Option Shares will contain a legend describing this restriction on resale of the Option Shares. There is no assurance that there will be a public market into which you may sell the Option Shares or that you will be able to sell your Option Shares at a profit or at all.
8. In order to exercise the Option, you must provide us with written notice that you are exercising all or a portion of your Option. The written notice must specify the number of Option Shares that you are exercising your Option for, and must be accompanied by the exercise price described in paragraph 4, above. Your Option Shares will be issued to you within approximately one week following our receipt of your exercise notice and cleared funds evidencing the exercise price.
9. No rights or privileges of a shareholder of the Company are conferred by reason of the grant of the Option to you. You will have no rights of a shareholder until you have delivered your exercise notice to us and we have received the exercise price of the Option in cleared funds.
You understand that the Plan contains important information about your Option and your rights with respect to the Option. The Plan includes terms relating to your right to exercise the Option; important restrictions on your ability to transfer the Option or Option Shares; provisions relating to adjustments in the number of Option Shares and the exercise price; and early termination of the Option following the occurrence of certain events; including the termination of your relationship with us. By signing below, you acknowledge your receipt of a copy of the Plan. By acceptance of your Option, you agree to abide by the terms and conditions of the Plan.
10. Our business is subject to many risks and uncertainties. You acknowledge you have reviewed the periodic, quarterly and annual reports filed by the Corporation with the Securities and Exchange Commission. The exercise of your Option is a speculative investment and there is no assurance that you will realize a profit on the sale of Option Shares received upon exercise of your Option.
11. The Option will become effective upon your acknowledgment of the terms and conditions of this Agreement and your delivery to us of a signed counterpart of this Agreement.
12. This Agreement and Plan contain all of the terms and conditions of your Option and supersedes all prior agreements or understandings relating to your Option. This Agreement shall be governed by the laws of the State of Florida without regard to the conflicts of law provisions thereof.
13. This Agreement may not be amended orally.
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| Very truly yours, |
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| /s/ Louis S. Friedman |
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| Louis S. Friedman Chief Executive Officer |
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Martin Scott
September 1, 2023
Page 3 of 3
AGREED TO AND ACCEPTED THIS
1 DAY OF September_ 2023
/s/ Martin Scott |
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(Signature) |
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Martin Scott |
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Cover |
Sep. 01, 2023 |
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Cover [Abstract] | |
Entity Registrant Name | Luvu Brands, Inc. |
Entity Central Index Key | 0001374567 |
Document Type | 8-K |
Amendment Flag | false |
Entity Emerging Growth Company | false |
Document Period End Date | Sep. 01, 2023 |
Entity Incorporation State Country Code | FL |
Entity File Number | 000-53314 |
Entity Tax Identification Number | 59-3581576 |
Entity Address Address Line 1 | 2745 Bankers Industrial Drive |
Entity Address City Or Town | Atlanta |
Entity Address State Or Province | GA |
Entity Address Postal Zip Code | 30360 |
City Area Code | 770 |
Local Phone Number | 246-6400 |
Written Communications | false |
Soliciting Material | false |
Pre Commencement Tender Offer | false |
Pre Commencement Issuer Tender Offer | false |
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