XML 67 R22.htm IDEA: XBRL DOCUMENT v3.20.1
16. Subsequent Events
12 Months Ended
Dec. 31, 2019
Subsequent Events [Abstract]  
Subsequent Events

Note 16 – Subsequent Events

 

The Company evaluates events that have occurred after the balance sheet date through the date hereof, which these financial statements were issued. No events occurred of a material nature that would have required adjustments to or disclosure in these financial statements except as follows:

 

On February 26, 2020, the Company’s Board of Directors granted an aggregate amount of 240,000 stock options pursuant to the 2020 Equity Plan to purchase shares of the Company’s common stock to several officers, directors, and employees at an exercise price of $5.41 per share, which represents the closing price of the Company’s shares on the OTCQB marketplace on February 20, 2020. The officers and directors receiving grants and the amounts of such grants were as follows:

 

   Stock Option 
Name and Title  Shares Granted 
Ken DeCubellis, Chief Executive Officer and Interim Chief Financial Officer   60,377 
Michael Eisele, Chief Operating Officer   42,264 
Bradley Berman, Chairman of the Board and Director   24,151 
Joseph Lahti, Director   24,151 
Benjamin Oehler, Director   24,151 
Lyle Berman, Director   24,151 
Total:   199,245 

 

All of the stock options granted under the 2020 Equity Plan presented in the table above will vest in five equal installments, commencing one year from the date of grant on February 26, 2021, and continuing for the next four anniversaries thereof until fully vested.

 

On February 18, 2020, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to effect the Company’s previously announced 300-for-one reverse stock split of the Company’s issued and outstanding common stock, par value $0.0001 per share. The Reverse Stock Split, effective as of February 21, 2020, converts every 300 shares of the Company’s issued and outstanding Common Stock into one share of Common Stock.

 

Pursuant to the Amended Articles, no fractional shares will be issued for any fraction of a share of common stock that would otherwise have resulted from the Reverse Stock Split. Following the Effective Date:

 

  · Stockholders owning 300 or more shares of Common Stock will receive (1) one share of Common Stock for every 300 shares owned and (2) cash in lieu of fractional shares upon the surrender of such stockholder’s shares;

 

  · Stockholders owning between 25 and 300 shares of Common Stock will have their ownership of shares of Common Stock rounded up to one share; and

 

  · Stockholders owning fewer than 25 shares of Common Stock will receive cash in lieu of fractional shares upon the surrender of such stockholders’ shares and will no longer own shares of Common Stock.

 

Any cash payment in lieu of fractional shares are based on the volume weighted average of the closing sales prices of the Company’s Common Stock on the OTCQB operated by OTC Markets Group Inc. during regular trading hours for the five consecutive trading days immediately preceding the Effective Date.

 

On January 2, 2020, the Company deposited 500,000 shares of its holdings of Allied Esports Entertainment Inc. (NASDAQ: AESE) pursuant to its brokerage account agreement with RBC Capital Markets, LLC. Under this standard brokerage agreement, the Company will be able to borrow funds secured by the value of the AESE shares pursuant to a standard margin account arrangement. The current value of the deposited AESE shares is $1,200,000 based on a closing price of $2.40 as of March 5, 2020.

 

On March 12, 2020, the Company entered into a business loan agreement with Cadence Bank, N.A. (“Cadence”), as lender encompassing a $700,000 Promissory Note issued to Cadence (the “Note”), a Security Agreement by the Company in favor of Cadence and limited commercial guarantees by the Company’s Chief Executive Officer and Interim Chief Financial Officer and members of the Company’s Board of Directors (the “Guarantors”) (collectively, the “Cadence Loan”). The Note bears interest at a rate of 0.500 percentage points over the prime rate as published in the Wall Street Journal, currently 4.25% per annum, payable monthly, and is due on March 9, 2021. The Note may be repaid at any time without penalty. The Note is secured by all of the Company’s rights, title and interests in and to 500,000 shares of the common stock of Allied Esports Entertainment Inc. (NASDAQ: AESE) currently owned by the Company and held in the Company’s brokerage account with RBC Capital Markets, LLC.

 

In consideration for their willingness to serve as guarantors of the Cadence Loan, the Company issued warrants to each of the Guarantors (the “Guarantor Warrants”) for the purchase of the Company’s common stock. The Guarantor Warrants entitle each Guarantor to purchase 26,250 shares of the Company's common stock (the “Warrant Shares”) at an exercise price of $4.00 per share. The Guarantor Warrants expire on March 12, 2030.