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INFORMATION STATEMENT
Relating to the amendment of our Articles
of Incorporation and our Annual Meeting
FreeButton, Inc.
7040 Avenida Encinas
Suite 104-159
Carlsbad, CA 92011
(760) 487-7772
NOTICE OF ACTION TAKEN BY
WRITTEN CONSENT OF A MAJORITY OF STOCKHOLDERS
Dear Stockholders:
The enclosed information statement (the
“Information Statement”) is provided on or about June 26, 2014 to the stockholders of record on June 13, 2014 of FreeButton,
Inc., a Nevada corporation (“Company”) to advise the stockholders that our Board of Directors and stockholders holding
a majority of our outstanding voting capital stock (the “Majority Stockholders”) have authorized: (i) a Certificate
of Amendment to our Articles of Incorporation to amend the Company’s Articles of Incorporation to change the Company’s
name to “A1 Group, Inc.” (the “Name Change”); (ii) a reverse stock split (the “Reverse Split”)
of our issued and outstanding voting capital stock, par value $0.001 per share (“Common Stock”) at a ratio of 4-for-1;
and (iii) to approve the ratification of Bedinger & Company as our outside auditors.
We believe the reverse stock split will
enhance the ability of the Company to attract investors and secure additional capital in future offerings and the ability to market
and publicize performance and other relevant information to a larger audience.
On May 23, 2014, the Board of Directors
of the Company approved the Name Change and the Reverse Split, subject to stockholder approval. The Majority Stockholders approved
the Name Change and Reverse Split by written consent in lieu of a meeting on June 19, 2014, in accordance with Section 78.320 of
the Nevada Revised Statues. Accordingly, your consent is not required and is not being solicited in connection with the approve
of the Name Change, Reverse Split, election of Directors and ratification of Bedinger & Company as our outside auditors (the
“Actions”).
We are not asking you for a Proxy and you are requested not to send us a Proxy.
No action is required by you. Pursuant
to Rule 14(c)-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the proposals will not
be adopted until a date at least twenty (20) days after the date of the Definitive Information Statement is filed and mailed
to our stockholders of record on the Record Date. This Information Statement will be mailed to you on or about June 26, 2014.
Please feel free to call us at 760-487-7772
should you have any questions on the enclosed Information Statement.
For the Board of Directors of
FREEBUTTON, INC.
By:
/s/ James Lynch
Name: James Lynch
Title: President and Chief Executive Officer
INFORMATION STATEMENT
PURSUANT TO SECTION 14(C) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
WE ARE NOT ASKING YOU FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
This information statement (the “Information
Statement”) is being mailed on or about June 26 to the holders of record of FreeButton, Inc. a Nevada corporation (the “Company,”
“we,” “our,” or “us”), as of June 13, 2014 (the “Record Date”) in connection with
the approval of : (i) a Certificate of Amendment to our Articles of Incorporation to amend the Company’s Articles of
Incorporation to change the Company’s name to “A1 Group, Inc.” (the “Name Change”); (ii) a reverse
stock split (the “Reverse Split”) of our issued and outstanding voting capital stock, par value $0.001 per share (“Common
Stock”) at a ratio of 4-for-1; and (iii) to approve the ratification of Bedinger & Company as our outside auditors.
Pursuant to Sections 78.390 and 78.2055
of the Nevada Revised Statutes (“NRS”), the Name Change and the Reverse Split are required to be approved by the vote
of stockholders holding a majority of the voting power of the affected class or series. Section 78.320 of the NRS provides
that any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if a written
consent thereto is signed by stockholders holding at least a majority of the voting power. Each share of Common Stock is entitled
to one vote per share on any matter requiring stockholder vote. Our Board of Directors obtained the written consent of the Majority
Stockholders in order to eliminate the costs and management time involved in holding a special meeting.
On May 23, 2014, the Board of Directors
(the “Board”) of the Company approved the Name Change and Reverse Split. On June 19, 2014, stockholders holding approximately
62% of our outstanding capital stock (the “Majority Stockholders”) approved the Name Change and Reverse Split by written
consent, in accordance with Section 78.320 of the NRS and the Company’s Bylaws then in effect. Accordingly, all necessary
approvals in connection with the above corporate actions have been obtained and this Information Statement is furnished solely
for the purpose of informing our stockholders, in the manner required under the Securities and Exchange Act of 1934, as amended,
(the “Exchange Act”) regarding these corporate actions pursuant to Rule 14c-2 under the Exchange Act.
The Record Date for determining stockholders
entitled to receive this Information Statement is June 13, 2014, the date that the Company’s Majority Stockholders approved
the Name Change and Reverse Split by written consent. As of the close of business on the Record Date, we had 33,844,260 shares
of Common Stock outstanding and entitled to vote on the matters acted upon in the action by written consent of our Majority Stockholders.
Each share Common Stock outstanding as of the close of business on the Record Date was entitled to one vote.
In accordance with the rules and regulations
of the Securities and Exchange Commission (“SEC”), the proposals approved by written consent of our Majority Stockholders
will become effective approximately 20 calendar days after we send or give this Information Statement to our stockholders
of record as of the Record Date. It is expected that the Name Change will become effective on or about June 19, 2014 upon its filing
with the Secretary of State of the State of Nevada and that the Reverse Split may become effective upon the determination of Board
of Directors, in its discretion, at any time prior to July 31, 2014.
THE APPROXIMATE DATE ON WHICH THIS INFORMATION
STATEMENT IS FIRST BEING SENT OR GIVEN TO THE HOLDERS OF OUR COMMON STOCK ON THE RECORD DATE IS JUNE 13, 2014.
This Information Statement is provided
to the Company’s stockholders of record on the Record Date only for informational purposes in connection with the Name Change
and Reverse Split pursuant to and in accordance with Section 14(c) of the Exchange Act, and Rule 14c and Schedule 14C thereunder.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
DESCRIPTION OF THE SHARE EXCHANGE AGREEMENT
AND CHANGE IN CONTROL
On May 23, 2014, the Company entered into
an exchange agreement (the “Exchange Agreement”) with A1 Vapors, Inc. (“A1 Vapors”), a Florida corporation.
Under the terms of the Exchange Agreement, James Lynch and Dallas Steinberger would each transfer 10,500,000 shares of their personal
common stock in the Company, par value $0.001 to the shareholders of A1 Vapors, resulting in the issuance of 21,000,000 shares
of FreeButton’s Common Stock in exchange for all of A1 Vapor’s outstanding Common Stock. The shares of Common Stock
being issued to A1 Vapors represent approximately 62% of the shares of Common Stock outstanding after the closing of the Transaction
(the “Closing”). The closing of the Transaction did not affect the number of shares of Common Stock held by the Company’s
existing stockholders, other than Messrs. Lynch and Steinberger.
A1 Vapors is a product development and
marketing company catering to the electronic vapor cigarette and accessories industry. A1 Vapors offers a variety of options to
choose from to appeal to all smokers including a diverse selection of devices and flavors. The company currently owns and operates
4 retail locations, its’ ecommerce global website, and distribution licenses with accessory manufacturers.
At the closing date of the Transaction
(the “Closing Date”), all of the existing directors of the Company delivered to the Company an irrevocable resignation
(a “Resignation”) of their positions as a director effective as of the expiration of the ten-day period (the “Waiting
Period”) following the later of (i) the filing by the Company with the SEC of a Schedule 14f-1 (the “Schedule 14f-1”)
disclosing the appointment of the new directors to the Company’s board of directors and (ii) the mailing by the Company to
its stockholders of the Schedule 14f-1. Just prior to the end of the Waiting Period, the Company’s board of directors will
appoint Bruce Storrs, Andy Diaz, Moses Lopez and Michelle Evangelista as members of the Company’s board of directors. Immediately
following the Waiting Period, the Company’s board of directors will consist of Bruce Storrs, Andy Diaz, Moses Lopez and Michelle
Evangelista.
In connection with the Transaction, each
of Mr. Lynch and Mr. Steinberger, who constitute all of the Company’s directors and executive officers, have executed
a Termination Agreement and Release, whereby they have agreed to terminate any agreements between themselves or their affiliates
and the Company, and have agreed to release the Company from any claims arising out of their service with the Company. They retain,
however, rights to indemnification as provided by Nevada law and as provided by the Company’s Articles of Incorporation and
Bylaws as of the Closing Date.
In connection with the Transaction, the
Company undertook the following actions with respect to its Common Stock:
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Transferred 10,500,000 shares of Common Stock owned by James Lynch
to Bruce Storrs;
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Transferred 10,500,000 shares of Common Stock owned by Dallas Steinberger
to Andy Diaz
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ACTIONS BY THE BOARD OF DIRECTORS
AND CONSENTING STOCKHOLDERS
In accordance with Section 78.315
and 78.320 of the Nevada Revised Statutes, the following actions were taken based upon the unanimous recommendation and approval
by the Company’s Board of Directors and the written consent of the Majority Stockholders.
ACTION I – NAME CHANGE
CERTIFICATE OF AMENDMENT TO ARTICLES
OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY
The Board of Directors has determined that
since the Company intends to focus on the marketing and sales of electronic cigarettes and related accessories under the A1 Vapors
brand, the Name Change better reflects the nature of the Company’s new business direction.
Purpose of the Name Change
On May 23, 2014, the Company’s Board
of Directors and on June 19, 2014 the Majority Stockholders owning a majority of the Company’s voting securities, believing
it to be in the best interests of the Company and its stockholders, approved a resolution authorizing the Company to amend the
Articles of Incorporation to change the Company’s name to A1 Group, Inc. The Board of Directors believes that the Name Change
better reflects the nature of the Company’s anticipated operations.
Amended Articles of Incorporation
Upon the effectiveness and on the date
that is twenty (20) days following the mailing of this Information Statement, the Board of Directors shall have the Company’s
Certificate of Amendment to the Articles of Incorporation filed with the State of Nevada in order to effect the name change.
ACTION II – REVERSE SPLIT
APPROVAL OF AN AMENDMENT TO OUR ARTICLES
OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT
Description of the Reverse Stock Split
On May 23, 2014, the Company’s Board
of Directors (the “Board”) and on June 19, 2014 the Majority Stockholders owning a majority of the Company’s
voting securities, believing it to be in the best interests of the Company and its stockholders, approved a resolution authorizing
an amendment to our Articles of Incorporation and/or such other action as the Company deems necessary to authorize the Board of
Directors to effect a reverse stock split for the purpose of increasing the per-share market price of our Common Stock in order
to enhance our ability to attract investment and support for our shares in the market, as well as to broaden the potential audience
for our Company, and for other purposes as described below in this Information Statement. Pursuant to the Reverse Split, four outstanding
shares of Common Stock would be combined into one share of Common Stock.
The actual timing for implementation of
the Reverse Split will be determined by the Board based upon its evaluation as to when such action would be most advantageous to
the Company and its stockholders, provided that it occurs prior to July 31, 2014.
The Board has discretion to take such actions
as are deemed necessary to implement the Reverse Split, including, but not limited to, amending our Articles of Incorporation pursuant
to an amendment thereto in such form as the Board approves.
No fractional shares will be issued. If
the number of “pre-split” common shares is not evenly divisible by the ratio number, the “pre-split” shares
will round up to the next number that is divisible by the ratio number. The number of authorized common stock shall remain unaffected
and the par value shall remain at $0.001 per share.
We will promptly file a Certificate of
Amendment with the Secretary of State of the State of Nevada to amend our existing Articles of Incorporation. The Reverse Split
will become effective on the date of filing the Certificate of Amendment and upon the filing of documentation with the Financial
Industry Regulatory Authority (“FINRA”) and our stock transfer agent. After the Reverse Split becomes effective, our
Common Stock will have a new Committee on Uniform Securities Identification Procedures (CUSIP) number, which is a number used to
identify our equity securities.
Description of Securities
The Company currently has authorized 75,000,000
common shares, $0.001 par value and no preferred shares, $0.001 par value. As of June 19, the Company’s outstanding shares
consisted of 33,844,260
shares of Common Stock and no preferred shares.
The holders of Common Stock are entitled
to one vote per share. Holders of the Company’s Common Stock do not have any pre-emptive or other rights to subscribe for
or purchase additional shares of capital stock, no conversion rights, redemption or sinking-fund provisions.
The Company has not paid any dividends
on its Common Stock since inception and expects to continue to retain all earnings generated by its operations for the development
and growth of its business and does not anticipate paying any cash dividends to its stockholders in the foreseeable future. The
payment of future dividends on the Common Stock and the rate of such dividends, if any, will be determined by the Board in light
of its earnings, financial condition, capital requirements and other factors.
There were approximately 27 beneficial
holders of our Common Stock as of June 19, 2014. The Reverse Split is not expected to cause a significant change in the number
of beneficial owners of our Common Stock.
The Reverse Split will not affect any stockholder’s
proportionate equity interest in the Company or the rights, preferences, privileges or priorities of any stockholder, other than
an adjustment, which may occur due to fractional shares. Likewise, the Reverse Split will not affect the total stockholders’
equity in the Company or any components of Stockholders’ equity as reflected on the financial statements of the Company except
to change the number of issued and outstanding shares of capital stock. There would be no increase or decrease in the Company’s
“stated capital” account or “capital in excess” account (excess of the Company’s net assets over
the Company’s stated capital). In addition to the number of outstanding shares of Common Stock, the Company will need to
adjust the historical earnings per share on its financial statements. No other adjustment will be required in the Company’s
financial statements as a result of the Reverse Split.
As shown in the schedule below, after the
Reverse Split, there will be additional shares available for issuance. Such an issuance of additional shares will have the effect
of diluting the current stockholders’ percentage of Company ownership. We may seek additional capital through a combination
of private and public equity offerings, debt financings and other strategic arrangements. To the extent that we raise additional
capital through the sale of equity or convertible debt securities, your ownership interest could be diluted and the terms may include
liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing, if available, would result
in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to
take specific actions such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds
through other strategic arrangements with third parties, we may have to relinquish valuable rights to our properties, future revenue
streams or grant rights on terms that are not favorable to us.
The following table illustrates the principal
effects the Reverse Split on the Common Stock, stock awards, warrants, and convertible or exchangeable securities:
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Pre-Reverse Split
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Post-Reverse Split
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Common Stock
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Authorized
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75,000,000
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75,000,000
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Issued and Outstanding
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33,844,260
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8,461,065
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Warrant Exercises
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0
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0
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Equity Compensation Plans Options
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0
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0
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Available for Issuance
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41,155,740
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66,538,935
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Preferred Stock
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Authorized
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0
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0
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Issued and Outstanding
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0
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0
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Purpose of the Reverse Split
The Board believes the completion of the
Reverse Split will cause the minimum bid price of the Common Stock to increase. There can be no assurance, however that the Reverse
Split will result in any change in the price of the Common Stock or that, if the price of the Common Stock does increase as a result
of the Reverse Split, the amount or duration of such increase.
The Board also believes that the Reverse
Split may result in a broader market for the Common Stock than currently exists due to the anticipated increase of the per share
price. The Board believes that the present level of per share market prices of the Common Stock impairs the acceptability of the
stock by portions of the financial community and the investing public. Theoretically, the price per share of stock should not,
of itself, affect the community; however, in practice, the price per share does affect the stock because many investors look upon
low priced stock as unduly speculative in nature and, as a matter of policy, avoid investment in such stocks. The increased price
per share may encourage interest and trading in the Common Stock and possibly promote greater liquidity for the Company’s
stockholders, although such liquidity could be adversely affected by the reduced number of shares outstanding after the Reverse
Split. Nonetheless, there is no assurance that these effects will occur or that the per share price level of the Common Stock immediately
after the proposed Reverse Split will be maintained for any period of time.
In addition, the Board believes that the
Reverse Split may improve the liquidity of the Common Stock in another manner. Frequently, brokers charge trading commission based
upon the number of shares purchased. As a result, this trading commission per share is relatively higher as a percentage of the
value of the shares of Common Stock purchased. The Board and management believe that the relatively high trading cost of Common
Stock may adversely impact the liquidity of the Common Stock by making it a less attractive investment to the stock of other companies
in the Company’s industry. If the Reverse Split is implemented and the price of the Common Stock rises correspondingly, the
trading cost per “trading dollar” of Common Stock would decrease.
The Reverse Split may result in some stockholders
owning “odd lots” of less than 100 shares. The costs, including brokerage commissions, of transactions in odd lots
are generally higher than the costs in transactions in “round lots” of even multiples of 100.
Beneficial Holders of Common Stock (i.e. Stockholders who
hold in street name)
Upon completion of the Reverse Split, we
will treat shares held by stockholders through a bank, broker, custodian or other nominee, in the same manner as registered stockholders
whose shares are registered in their names. Banks, brokers, custodians or other nominees will be instructed to effect the Reverse
Split for their beneficial holders holding our Common Stock in street name. However, these banks, brokers, custodians or other
nominees may have different procedures for processing the Reverse Split. If a stockholder holds shares of our Common Stock with
a bank, broker, custodian or other nominee and has any questions in this regard, the stockholder is encouraged to contact his/her
bank, broker, custodian or other nominee.
Registered “Book-Entry” Holders of Common Stock
(i.e. Stockholders that are registered on the transfer agent’s books and records but do not hold stock certificates)
Certain of our registered holders of Common
Stock may hold some or all of their shares electronically in book-entry form with the transfer agent. These stockholders do not
have stock certificates evidencing their ownership of the Common Stock. They are, however, provided with a statement reflecting
the number of shares registered in their accounts. If a stockholder holds registered shares in book-entry form with the transfer
agent, after the Reverse Split becomes effective he/she will automatically receive the “post-split” number of shares.
Holders of Certificated Shares of Common Stock
Any “pre-split” certificates
submitted for exchange, whether because of a sale, transfer or other disposition of stock, will automatically be exchanged for
new “post-split” certificates. Until surrendered, we will deem outstanding “pre-split” shares held by stockholders
to be cancelled and only to represent the number of whole shares of post-reverse stock split Common Stock to which these stockholders
are entitled. No new “post-split” certificates will be issued to a stockholder until such stockholder has surrendered
all “pre-split” certificates to the transfer agent, TranShare Securities Transfer and Registrar.
No stockholder will be required to pay
a transfer or other fee to exchange his, her or its “pre-split” certificates. Stockholders will then receive a New
Certificate(s) representing the number of whole shares of Common Stock to which they are entitled as a result of the Reverse Split.
If a “pre-split” certificate
has a restrictive legend, the New Certificate will be issued with the same restrictive legends that are on the “pre-split”
certificate(s).
Fractional Shares
We do not expect to issue certificates
representing fractional shares. Stockholders of record who would otherwise hold fractional shares because the number of shares
of Common Stock they hold before the Reverse Split is not evenly divisible by the split ratio will be entitled to having their
fractional “post-split” shares rounded up to a single share. For example, if the number of “pre-split”
common shares you own is not evenly divisible by the ratio number, the remaining shares will round up to the next number that is
divisible by the ratio number. For example, if you own 10,003 shares of the Company’s stock, a one-for-four reverse stock
split will reduce your number of common shares to 2,501 shares after the Reverse Split. The “rounded-up shares” are
subject to applicable federal and state income tax.
Effect of the Reverse Stock Split on Options, Restricted
Stock Awards and Units, Warrants, and Convertible or Exchangeable Securities
Based upon the reverse stock split ratio,
proportionate adjustments are required to be made to the per share exercise price and the number of shares issuable upon the exercise
or conversion of all outstanding options, warrants, convertible or exchangeable securities entitling the holders to purchase, exchange
for, or convert into, shares of Common Stock. This will result in an adjusted per share price being required to be paid under such
options, warrants, convertible or exchangeable securities upon exercise, and approximately the same value of shares of Common Stock
being delivered upon such exercise, exchange or conversion, immediately following the reverse stock split as was the case immediately
preceding the reverse stock split. The number of shares deliverable upon settlement or vesting of restricted and deferred stock
awards and units will be similarly adjusted.
The number of shares reserved for issuance
pursuant to these securities will be reduced proportionately based upon the reverse stock split ratio. The number of shares remaining
available for grant under our Stock Incentive Plans at the time of the Reverse Split shall remain the same.
Accounting Matters
The Reverse Stock will not affect the per
share par value of our Common Stock, which will remain at $0.001. As a result of the Reverse Split, the stated capital attributable
to Common Stock on our balance sheet will be reduced proportionately based on the reverse stock split ratio (including a retroactive
adjustment of prior periods), and the additional paid-in capital account will be credited with the amount by which the stated capital
is reduced. Reported per share net income or loss will be higher because there will be fewer shares of Common Stock outstanding.
Basic earnings per share data will be adjusted for the changes for all periods presented, with disclosure of such action in the
year of change.
Certain Federal Income Tax Consequences of the Reverse Stock
Split
A summary of the federal income tax consequences
of the Reverse Split is set forth in the paragraph below. The discussion is based on the present federal income tax law. The discussion
is not intended to be, nor should it be relied on as, a comprehensive analysis of the tax issues arising from or relating to the
proposed Reverse Split. Income tax consequences to the Stockholders may vary from the federal tax consequences described generally
below.
STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO
THE EFFECT OF THE CONTEMPLATED REVERSE SPLIT UNDER APPLICABLE FEDERAL, STATE, AND LOCAL INCOME TAX LAWS.
Unless otherwise specifically indicated
herein, this summary addresses the tax consequences only to a beneficial owner of our Common Stock that is a citizen or individual
resident of the United States, a corporation organized in or under the laws of the United States or any state thereof or the District
of Columbia or otherwise subject to U.S. federal income taxation on a net income basis in respect of our Common Stock (a “U.S.
holder”). This summary does not address all of the tax consequences that may be relevant to any particular stockholder, including
tax considerations that arise from rules of general application to all taxpayers or to certain classes of taxpayers or that are
generally assumed to be known by stockholders. This summary also does not address the tax consequences to (i) persons that
may be subject to special treatment under U.S. federal income tax law, such as banks, insurance companies, thrift institutions,
regulated investment companies, real estate investment trusts, tax-exempt organizations, U.S. expatriates, persons subject to the
alternative minimum tax, traders in securities that elect to mark to market and dealers in securities or currencies, (ii) persons
that hold our Common Stock as part of a position in a “straddle” or as part of a “hedging,” “conversion”
or other integrated investment transaction for federal income tax purposes, or (iii) persons that do not hold our Common Stock
as “capital assets” (generally, property held for investment).
U.S. Holders
The reverse stock split should be treated
as a recapitalization for U.S. federal income tax purposes. Therefore, except as described below with respect to the round-up shares
in lieu of fractional shares, no gain or loss will be recognized upon the reverse stock split. Accordingly, the aggregate tax basis
in the Common Stock received pursuant to the reverse stock split should equal the aggregate tax basis in the Common Stock surrendered
(excluding the portion of the tax basis that is allocable to any fractional share), and the holding period for the Common Stock
received should include the holding period for the Common Stock surrendered.
A U.S. holder who receives round-up shares
in lieu of a fractional share of our Common Stock pursuant to the reverse stock split should recognize capital gain or loss in
an amount equal to the difference between the amount of additional shares received and the U.S. holder’s tax basis in the
shares of our Common Stock surrendered that is allocated to such fractional share of our Common Stock. Such capital gain or loss
should be long-term capital gain or loss if the U.S. holder’s holding period for our Common Stock surrendered exceeded one
year at the effective time. The deductibility of net capital losses by individuals and corporations is subject to limitations.
Information returns generally will be required
to be filed with the Internal Revenue Service (IRS) with respect to the receipt of round-up shares in lieu of a fractional share
of our Common Stock pursuant to the reverse stock split in the case of certain U.S. holders.
Non-U.S. Holders
The discussion in this section is addressed
to “non-U.S. holders.” A non-U.S. holder is a beneficial owner of our Common Stock who is a foreign corporation or
a non-resident alien individual.
Generally, non-U.S. holders will not recognize
any gain or loss upon completion of the reverse stock split. In particular, gain or loss will not be recognized with respect to
round-up shares received in lieu of a fractional share provided that (a) such gain or loss is not effectively connected with
the conduct of a trade or business in the United States (or, if certain income tax treaties apply, is not attributable to a non-U.S.
holder’s permanent establishment in the United States), (b) with respect to non-U.S. holders who are individuals, such
non-U.S. holders are present in the United States for less than 183 days in the taxable year of the reverse stock split and other
conditions are met, and (c) such non-U.S. holders comply with certain certification requirements.
Rights of Dissenters With Respect to the Corporate Actions
Under Nevada law, the Company’s stockholders
are not entitled to appraisal rights with respect to the Reverse Split.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Transactions with Related Persons
The following sets forth a summary of transactions
since the beginning of the fiscal year of 2013, or any currently proposed transaction, in which the Company was to be a participant
and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets
at year end for the last two completed fiscal years and in which any related person had or will have a direct or indirect material
interest (other than compensation described under “Executive Compensation” above). We believe the terms obtained or
consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms
available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.
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As previously disclosed in our Current Reports on Form 8-K filed with
the Commission on August 1, 2013 and March 28, 2014, respectively, on July 11, 2013, the Company entered into an Assets and Business
Acquisition Agreement with Media Rhythm to acquire all of the assets in connection with the business of Media Rhythm and, subsequently,
on March 5, 2014, the Company and Media Rhythm entered into the Second Agreement, whereby the Company sold, transferred and assigned
to Media Rhythm all of the Media Assets.
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At December 31, 2012, loan from our director and President, Chief
Executive Officer, Secretary, James Edward Lynch, Jr., to the Company, amounted to $4,072. The loan is unsecured and non- interest-bearing
with no set terms of repayment.
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On June 26, 2012, our former President, Chief Financial Officer, Secretary
and Treasurer, Anthony Pizzacalla, forgave the debts owed to him by the Company in an amount of $54,742.
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Policies and Procedures for Review, Approval or Ratification
of Transactions with Related Persons
We expect to prepare and adopt a written
related-person transactions policy that sets forth our policies and procedures regarding the identification, review, consideration
and approval or ratification of “related-persons transactions.” For purposes of our policy only, a “related-person
transaction” will be a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships)
in which we and any “related person” are participants involving an amount that exceeds $120,000 or one percent of the
average of the Company’s total assets at the year-end for 2013 and 2012. Transactions involving compensation for services
provided to us as an employee, director, consultant or similar capacity by a related person will not be covered by this policy.
A related person will be any executive officer, director or a holder of more than five percent of our common stock, including any
of their immediate family members and any entity owned or controlled by such persons.
We anticipate that, where a transaction
has been identified as a related-person transaction, the policy will require management to present information regarding the proposed
related-person transaction to our audit committee (or, where approval by our audit committee would be inappropriate, to another
independent body of our Board) for consideration and approval or ratification. Management’s presentation will be expected
to include a description of, among other things, the material facts, the direct and indirect interests of the related persons,
the benefits of the transaction to us and whether any alternative transactions are available.
To identify related-person transactions
in advance, we are expected to rely on information supplied by our executive officers, directors and certain significant shareholders.
In considering related-person transactions, our Board will take into account the relevant available facts and circumstances including,
but not limited to:
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The risks, costs and benefits to us;
|
|
|
·
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The effect on a director’s independence in the event the related
person is a director, immediate family member of a director or an entity with which a director is affiliated;
|
|
|
·
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The terms of the transaction;
|
|
|
·
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The availability of other sources for comparable services or products;
and
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|
|
·
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The terms available to or from, as the case may be, unrelated third
parties or to or from our employees generally.
|
We also expect that the policy will require
any interested director to excuse him or herself from deliberations and approval of the transaction in which the interested director
is involved.
Director Independence
James Edward Lynch, Jr. and Dallas James
Steinberger, the members of our Board for 2013 and through June 2014, are not independent using the definition of independence
under the applicable NASDAQ listing standards and the standards established by the Commission.
Bruce Storrs, Andy Diaz and Moses Lopez,
incoming Directors as of June 2014, are not independent using the definition of independence under the applicable NASDAQ listing
standards and the standards established by the Commission.
Michele Evangelista, incoming Director as
of June 2014, is independent using the definition of independence under the applicable NASDAQ listing standards and the standards
established by the Commission.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 (a) of the Exchange Act requires
the Company’s executive officers, directors and shareholders beneficially owning more than ten percent of all outstanding
Common Stock (“Reporting Persons”) to file certain reports (“Section 16 Reports”) with respect to their
beneficial ownership of the Company’s equity securities. Based solely on a review of the Section 16 Reports furnished to
the Company by its Reporting Persons and, where applicable, written representations by Reporting Persons that no Form 5 was required,
the Reporting Persons have complied with all applicable Section 16 (a) filing requirements during and with respect to Fiscal 2013.
Fees to Independent Registered Public Accounting Firm for
Fiscal Years 2013 and 2012
The following table shows the aggregate
fees we paid for professional services provided to us by PLS CPA for 2013 and 2012:
|
|
|
2013
|
|
|
2012
|
|
|
Audit Fees
|
|
$
|
12,800
|
|
|
$
|
10,000
|
|
|
Audit-Related Fees
|
|
|
0
|
|
|
|
0
|
|
|
Tax Fees
|
|
|
0
|
|
|
|
0
|
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
Total
|
|
$
|
12,800
|
|
|
$
|
10,000
|
|
Policy on Board of Directors Pre-Approval of Audit and Permissible
Non-Audit Services of Independent Auditors
The Board of Directors pre-approves all
audit and non-audit services provided by the independent auditors prior to the engagement of the independent auditors with respect
to such services. The Company’s independent auditors may be engaged to provide non-audit services only after the Board of
Directors has first considered the proposed engagement and has determined in each instance that the proposed services are not prohibited
by applicable regulations and the auditors’ independence will not be materially impaired as a result of having provided these
services. In making this determination, the Board of Directors will take into consideration whether a reasonable investor, knowing
all relevant facts and circumstances, would conclude that the Directors’ exercise of objective and impartial judgment on
all issues encompassed within the auditors’ engagement would be materially impaired.
ACTION III - APPROVAL OF THE RATIFICATION
OF BEDINGER & COMPANY AS OUR OUTSIDE AUDITORS
Our shareholders have approved a proposal
to continue to use Bedinger & Company to perform an audit of our consolidated financial statements and our subsidiaries for
the fiscal year ending December 31, 2014 in accordance with the standards of the Public Company Accounting Oversight Board (United
States) and for issuing a report thereon and for performing other independent audit work as determined by the Board of Directors
of the Company.
Exhibits Index
Exhibit 3(i)
Certificate of Amendment to the Articles of
Incorporation
End of Filing
Exhibit3.(i)
