Business Context and Reporting Period
This Form 8-K Current Report was filed by Conversion Labs, Inc. (trading symbol: CVLB) on December 28, 2020, reporting events that occurred on December 21, 2020. The filing addresses unregistered sales of equity securities and the execution of an amended employment agreement with the Company's Chief Operating Officer.
Key Financial Metrics
The filing text does not provide a clear value for revenue, profit, cash flow, margins, debt, or liquidity. This report focuses exclusively on corporate governance and executive compensation arrangements rather than financial performance.
Material Changes and Executive Compensation
On December 21, 2020, Conversion Labs, Inc. entered into an Amended and Restated Employment Agreement with Brad Roberts, Chief Operating Officer. Key terms include:
- Base Salary: $96,000.00 annually.
- Performance Bonus: Eligible for a bonus in cash or stock options, determined solely by the Board.
- Stock Options: Grant of 200,000 options.
- 35,000 options vest upon shareholder approval of a bona fide employee stock option plan.
- 165,000 options vest in equal monthly tranches over 30 months following plan approval.
- Restricted Stock Units (RSUs): Grant of 10,000 RSUs upon plan approval, vesting one year after the agreement date.
- Severance: Six months of base salary and continued benefits if terminated without cause.
Unregistered Securities and Legal Exemptions
The Company reported the issuance of the aforementioned Stock Options and RSUs as unregistered sales of equity securities. The Company asserts these securities qualify for exemption under Section 4(a)(2) and/or Regulation D of the Securities Act of 1933 because the transaction did not involve a public offering. The securities are restricted pursuant to Rule 144 to prevent immediate redistribution into the market.
Investor Verification Checklist
- Verify the status of the "bona fide employee stock option plan" required for the vesting of 35,000 options and the issuance of 10,000 RSUs.
- Confirm the total number of outstanding shares and the potential dilution impact of the 200,000 options and 10,000 RSUs granted to Mr. Roberts.
- Review the full text of the Amended and Restated Employment Agreement (Exhibit 10.1) for additional termination clauses or performance metrics not detailed in the summary.
- Check subsequent filings to determine if the shareholder vote for the stock option plan has been scheduled or completed.