Filed Pursuant to Rule 433 of the Securities Act of
1933
Issuer Free Writing Prospectus dated February 22,
2019
Relating to Preliminary Prospectus dated February 12,
2019
Registration No. 333-229144
SUPER LEAGUE GAMING, INC.
FREE WRITING PROSPECTUS
This free writing prospectus relates only to, and should be read
together with, the preliminary prospectus dated February 12, 2019
(the “Preliminary
Prospectus”) included in
Amendment No. 2 to the Registration Statement on Form S-1
(File No. 333-229144) (the “Registration
Statement”) relating to
the initial public offering of common stock of Super League Gaming,
Inc. (the “Company”). On February 22, 2019, we filed Amendment
No. 3 to the Registration Statement.
The information in this free writing prospectus is preliminary and
is subject to completion or change. This free writing prospectus is
only a summary of the changes to the Preliminary Prospectus and
should be read together with the Preliminary Prospectus included in
the Registration Statement, including the section entitled
“Risk
Factors” beginning on
page 9 of the Preliminary Prospectus. Capitalized terms used, but
not defined, herein have the meanings set forth in the Preliminary
Prospectus.
To review the Preliminary Prospectus included in the Registration
Statement, click on the following link: https://www.sec.gov/Archives/edgar/data/1621672/000165495419001363/slgs1-am22019.htm
Super League Gaming, Inc. has filed a
registration statement, including the Preliminary Prospectus, with
the Securities and Exchange Commission (the
“SEC”) for the offering to which this
communication relates. Before you invest, you should read the
Preliminary Prospectus in that registration statement and other
documents we have filed with the SEC for more complete information
about us and this offering. You may obtain these documents for free
by visiting EDGAR on the SEC’s website at www.sec.gov.
Alternatively, you may obtain copies of the Preliminary Prospectus
by contacting Northland Securities Inc., at 150 South Fifth Street,
Suite 3300, Minneapolis, MN 55402 or Lake Street Capital Markets,
LLC at 920 Second Avenue South, Suite 7000, Minneapolis, MN
55402.
The following information updates and supersedes the information
contained in the Preliminary Prospectus to the extent that such
information is inconsistent therewith:
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The Offering
The following summary is provided solely for your convenience and
is not intended to be complete. You should read the full text and
more specific details contained elsewhere in this
prospectus.
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Issuer
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Super
League Gaming, Inc.
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Common
stock offered by us
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2,272,727
shares.
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Over-allotment
option
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The
underwriters have an option for a period of 30 days from the date
of this prospectus to purchase up to 340,909 additional shares of
our common stock to cover over-allotments, if any
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Common
stock to be outstanding after this offering
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8,338,020
shares, or 8,678,929 shares if the
underwriters exercise their option to purchase additional shares in
full.
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Use of
proceeds
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We
estimate that the net proceeds from this offering, after deducting
underwriting discounts and commissions and estimated offering
expenses payable by us, will be approximately $22.4 million, or
approximately $25.8
million if the underwriters exercise their option to purchase
additional shares from us in full, assuming an initial public
offering price of $11.00 per share, which is the midpoint of the
price range set forth on the cover page of this prospectus. We
intend to use the net proceeds of this offering for working capital
and general corporate purposes, including sales and marketing
activities, product development and capital expenditures. See
“Use of
Proceeds” for a more complete description of the
intended use of proceeds from this offering.
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Risk
factors
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You
should read the “Risk
Factors” section of this prospectus and the other
information in this prospectus for a discussion of factors to
consider carefully before deciding to invest in shares of our
common stock.
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Proposed
listing
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We
have applied to have our common stock listed on the Nasdaq Capital
Market in connection with this offering. No assurance can be given
that such listing will be approved.
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Proposed Nasdaq
Capital Market symbol
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“SLGG”
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The number of shares of our common stock to be outstanding after
this offering is based on 4,610,109 shares of our common stock outstanding as of
February
21, 2019, and excludes:
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2,578,415 shares of common stock
issuable upon exercise of warrants to purchase our common stock, of
which 1,396,383 warrants (assuming an initial
public offering price of $11.00, the midpoint of the price range
set forth on the cover page of this prospectus, and a conversion
price of $9.35, subject to adjustment as described
below) are callable at the election of the Company, at any time
following the completion of this offering;
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1,524,468
shares of common stock issuable upon exercise of options held and
274,698 shares of common stock reserved for issuance pursuant to
our 2014 Plan (as defined herein); and
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68,182 shares of common stock
issuable upon the exercise of the warrant to be issued to the underwriters, which
equates to 3.0% of the number of shares of our common stock to be
issued and sold in this offering.
Except as otherwise indicated, all information in this prospectus
assumes the following:
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automatic
conversion of our outstanding 9.00% secured convertible promissory
notes issued between May 2018 and August 2018
(the “2018 Notes”) into 1,455,184
shares of our common stock (the “Automatic Note
Conversion”);
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a one-for-three
reverse stock split of our common stock which was effected on
February 8, 2019 (all share and per share amounts in this
prospectus have been presented on a retrospective basis to reflect
the reverse stock split) (the
“Reverse Stock
Split”); and
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no
exercise by the underwriters of their option to purchase up
to 340,909 additional shares of common stock from us in this
offering to cover over-allotments, if any.
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SUMMARY FINANCIAL DATA
The following tables set forth a summary of our
historical financial data as of, and for the periods ended on, the
dates indicated. We have derived the statements of operations data
for the years ended December 31, 2018 and 2017 from our
audited financial statements included elsewhere in this prospectus.
You should read this data together with our financial statements
and related notes included elsewhere in this prospectus and the
sections in this prospectus entitled “Selected Financial
Data” and
“Management’s Discussion
and Analysis of Financial Condition and Results of
Operations.” Our
historical results for any prior period are not indicative of our
future results.
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Statements
of Operations Data:
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Sales
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$ 1,046,359
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201,182
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Cost of goods
sold
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684,105
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1,487,905
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Gross profit
(loss)
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362,254
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(1,286,723)
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Operating
expenses:
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Selling, marketing
and advertising
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1,525,525
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1,155,506
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Research and
development
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17,197
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61,543
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General and
administrative
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14,979,732
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12,451,636
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Total operating
expenses
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16,522,454
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13,668,685
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Loss from
operations
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(16,160,200)
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(14,955,408)
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Other income
(expense), net
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(4,466,616)
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-
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Net
loss
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$ (20,626,816)
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$ (14,955,408)
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Net loss per share
attributable to common stockholders (1)
(2)
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Basic
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$ (4.48)
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$ (3.52)
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Diluted
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$ (4.48)
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$ (3.52)
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Weighted average
shares outstanding used in computing net income (loss) per share
attributable to common stockholders (1)
(2)
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Basic
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4,606,951
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4,246,626
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Diluted
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4,606,951
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4,246,626
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(1)
See Note 1 to our
audited financial statements included elsewhere in this prospectus
for an explanation of the methods used to calculate the historical
net income (loss) per share, basic and diluted, and the number of
shares used in the computation of the per share amounts.
(2)
All share and per
share data has been retrospectively adjusted to reflect the
one-for-three Reverse Stock Split, which was effected on February
8, 2019.
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$2,774,421
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$25,128,369
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(8,032,686)
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25,243,863
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4,987,157
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27,341,105
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9.00% Convertible
notes payable
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10,922,601
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Additional paid-in
capital
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48,325,146
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89,825,509
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(55,133,473)
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(63,361,015
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Total
stockholders’ deficit
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(6,794,496)
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26,482,053
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(1)
Pro forma as
adjusted balance sheet data reflects the Automatic
Note Conversion of the 2018 Notes described above,
plus our sale of 2,272,727 shares of common stock
in this offering at an assumed initial public offering price of
$11.00 per share, the midpoint of the price range set forth on the
cover page of this prospectus, after deducting underwriting
discounts and commissions and estimated offering expenses payable
by us. Pro forma as adjusted balance sheet data is illustrative
only and will change based on the actual initial public offering
price and other terms of this offering determined at pricing. Each
$1.00 increase or decrease in the assumed initial public offering
price of $11.00 per share, the midpoint of the price range set
forth on the cover page of this prospectus, would increase or
decrease pro forma as adjusted cash, total assets and total
stockholders' deficit by approximately $2.1 million, assuming that
the number of shares offered by us, as set forth on the cover page
of this prospectus, remains the same, and after deducting
underwriting discounts and commissions and estimated offering
expenses payable by us. We may also increase or decrease the number
of shares we are offering. A 1,000,000 share increase or decrease
in the number of shares offered by us would increase or decrease
pro forma as adjusted cash, total assets and total stockholders'
deficit by approximately $10.2 million, assuming that the assumed
initial price to public remains the same, and after deducting
underwriting discounts and commissions and estimated offering
expenses payable by us. These unaudited pro forma adjustments are
based upon available information and certain assumptions we believe
are reasonable under the circumstances.
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The following table sets forth our cash and capitalization as
of December 31, 2018:
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on a pro forma basis, giving effect to (i) the
Automatic Note Conversion of all outstanding
principal and accrued but unpaid interest on the 2018
Notes, totaling $13.6
million at December 31, 2018, into an aggregate of 1,455,184 shares
of our common stock immediately prior to the completion of this
offering (assuming an initial public offering price of $11.00, the
midpoint of the price range set forth on the cover page of this
prospectus, and a conversion price of $9.35) and (ii) the
immediate amortization, as interest expense, of the beneficial
conversion feature (“BCF”) associated with the 2018
Notes, which is exercisable upon the consummation of an initial
public offering, as described at Note 6 to the audited financial
statements included elsewhere in this prospectus. The intrinsic
value of the BCF at December 31, 2018, which was limited to the net
proceeds allocated to the debt on a relative fair value basis, was
approximately $8,227,542;
and
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on
a pro forma as adjusted basis to reflect the sale by us of
2,272,727 shares of common stock in this offering at an assumed
initial public offering price of $11.00 per share, the midpoint of
the price range set forth on the cover page of this prospectus,
after deducting underwriting discounts and commissions and
estimated offering expenses payable by us.
The pro forma and pro forma as adjusted information below is
illustrative only, and our capitalization following the closing of
this offering will be adjusted based on the actual initial public
offering price and other terms of this offering determined at
pricing as well as our actual expenses. You should read this table
together with “Selected Financial
Data” and
“Management’s Discussion
and Analysis of Financial Condition and Results of
Operations” and our
financial statements and the related notes thereto appearing
elsewhere in this prospectus.
If you invest in our common stock in this offering, your interest
will be diluted to the extent of the difference between the assumed
initial public offering price per share of our common stock and the
pro forma as adjusted net tangible book value per share of our
common stock immediately after the completion of this
offering. Net tangible book value per share of our common
stock is determined at any date by subtracting our total
liabilities from the amount of our total tangible assets (total
assets, less intangible assets) and dividing the difference by the
number of shares of our common stock deemed to be outstanding at
that date.
Our
historical net tangible book value (deficit) as of December 31,
2018 was $(7.5) million, or $(1.63) per share of common stock. Our
historical net tangible book value per share represents our total
tangible assets less our total liabilities, divided by the number
of shares of common stock outstanding as of December 31,
2018.
Our pro forma net tangible book value as of December 31, 2018 was
$3.4 million, or $0.56 per share of common stock. Pro forma net
tangible book value per share represents our total tangible assets
less our total liabilities, divided by the number of shares of
common stock outstanding as of December 31, 2018, as adjusted to
reflect the Reverse Stock Split, after giving effect to the
Automatic Note Conversion of all principal and accrued but unpaid
interest on the 2018 Notes, totaling $13.6 million at December 31,
2018, into an aggregate of 1,455,184 shares of our common stock
immediately prior to the closing of this offering.
After further giving effect to (i) the pro forma adjustment to
reflect the Automatic Note Conversion of the 2018 Notes described
above, and (ii) our receipt of approximately $22.4 million of
estimated net proceeds, after deducting underwriting discounts and
commissions and estimated offering expenses payable by us, from our
sale of common stock in this offering at an assumed initial public
offering price of $11.00 per share, the midpoint of the
price range set forth on the cover page of this prospectus, our pro
forma as adjusted net tangible book value as of December 31, 2018,
would have been approximately $25.8 million, or $3.09 per share.
This amount represents an immediate increase in net tangible book
value of $2.53 per share of our common stock to existing
stockholders and an immediate dilution in net tangible book value
of $7.91 per share of our common stock to new investors
purchasing shares of common stock in this offering.
The
following table illustrates this dilution on a per share basis to
new investors:
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Assumed initial
public offering price per share
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$
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11.00
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Historical net
tangible book value (deficit) per share as of December 31, 2018
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$
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(1.63
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)
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Pro forma increase in
net tangible book value per share attributable to the
transactions described above
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$
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2.19
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Pro forma net
tangible book value per share as of December 31, 2018
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$
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0.56
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Increase in pro
forma net tangible book value per share attributed to new investors
purchasing shares from us in this offering
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$
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2.53
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Pro forma as
adjusted net tangible book value per share after giving effect to
this offering
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$
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3.09
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Dilution in pro
forma as adjusted net tangible book value per share to new
investors in this offering
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$
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7.91
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The
dilution information discussed above is illustrative only and will
change based on the actual initial public offering price and other
terms of this offering to be determined at pricing. Each $1.00
increase (decrease) in the assumed initial public offering price of
$11.00 per share, the midpoint of the price range set forth on the
cover page of this prospectus, would increase (decrease) the pro
forma as adjusted net tangible book value by approximately $2.1
million, or by approximately $0.30 per share, assuming the number
of shares of common stock offered by us, as set forth on the cover
page of this prospectus, remains the same, after deducting
underwriting discounts and commissions and estimated offering
expenses payable by us. Similarly, each increase (decrease) of
1,000,000 shares in the number of shares of common stock offered by
us would increase (decrease) the pro forma as adjusted net tangible
book value per share by approximately $10.2 million, or
approximately $0.76 per share, assuming the assumed initial public
offering price remains the same, after deducting underwriting
discounts and commissions and estimated offering expenses payable
by us.
If
the underwriters exercise their option to purchase additional
shares in full in this offering, the pro forma as adjusted net
tangible book value after this offering would be approximately
$29.3 million, or approximately $3.37 per share, the increase in
pro forma net tangible book value to existing stockholders would be
$0.28 per share, and the dilution per share to new investors would
be $7.63 per share, in each case based on an assumed initial public
offering price of $11.00 per share, the midpoint of the
price range set forth on the cover page of this
prospectus.
The
following table summarizes as of December 31, 2018, on the
pro forma as adjusted basis described above, the number of shares
of our common stock, the total consideration and the average price
per share (i) paid to us by our existing stockholders and
(ii) to be paid by investors purchasing our common stock in
this offering at an assumed initial public offering price of $11.00
per share, the midpoint of the price range set forth on the cover
page of this prospectus, before deducting underwriting discounts
and commissions and estimated offering expenses payable by
us.
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Existing
Stockholders
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6,065,293
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73%
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$43,054,978
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63%
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$7.10
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New
Investors
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2,272,727
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27%
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$25,000,000
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37%
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$11.00
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Total
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8,338,020
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100%
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$68,054,978
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100%
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The
number of shares of common stock that will be outstanding after
this offering is based on 4,610,109 shares of common stock
outstanding as of December 31, 2018, and excludes as of such
date:
●
2,578,415
shares of
common stock issuable upon exercise of warrants to purchase our
common stock, including an estimated 1,396,383 warrants (assuming an initial
public offering price of $11.00, the midpoint of the price range
set forth on the cover page of this prospectus, and a conversion
price of $9.35, subject to adjustment as described below)
that are callable, at the election of the Company, at any time
following the completion of this offering;
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1,524,468 shares of common stock issuable upon exercise of
options held and 274,698 shares of common stock reserved for
issuance pursuant to our 2014 Plan; and
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68,182 shares of common stock
issuable upon the exercise of the warrant to be issued to the underwriters, which
equates to 3.0% of the number of shares of our common stock to be
issued and sold in this offering.
If the underwriters exercise their option to purchase additional
shares in full, the percentage of shares of common stock held by
existing stockholders will decrease to approximately 70% of the
total number of shares of our common stock outstanding after this
offering, and the number of shares held by new investors will
increase to 2,613,636, or approximately 30% of the total
number of shares of common stock outstanding after the
offering.
To the extent that options or warrants are exercised, new options
or other securities are issued under our equity incentive plans, or
we issue additional shares of common stock in the future, there
will be further dilution to investors participating in this
offering. In addition, we may choose to raise additional capital
because of market conditions or strategic considerations, even if
we believe that we have sufficient funds for our current or future
operating plans. If we raise additional capital through the sale of
equity or convertible debt securities, the issuance of these
securities could result in further dilution to our
stockholders.
SELECTED FINANCIAL
DATA
The following selected financial data should be read together with
our financial statements and related notes thereto, as well as the
information found under the sections titled
“Management’s Discussion
and Analysis of Financial Condition and Results of
Operations” included
elsewhere in this prospectus. We derived the selected financial
data as of and for the years ended December 31, 2018 and 2017 from
our audited financial statements included elsewhere in this
prospectus. Our historical results are not necessarily indicative
of the results to be expected in future
periods.
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Sales
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$1,046,359
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$201,182
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Cost of sales
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684,105
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1,487,905
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Gross profit
(loss)
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362,254
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(1,286,723)
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Operating
expense:
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Sales,
marketing and advertising
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1,525,525
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1,155,506
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Research and
development
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17,197
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61,543
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General and
administrative
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14,979,732
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12,451,636
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Total
operating expense
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16,522,454
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13,668,685
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Loss from
operations
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(16,160,200)
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(14,955,408)
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Other Income
(expense), net:
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Interest expense,
net
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(4,468,692)
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-
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Other
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2,076
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-
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Other income
(expense), net
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(4,466,616)
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-
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Net loss
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$(20,626,816)
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$(14,955,408)
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Net loss per share:
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Basic and diluted
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$(4.48)
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$(3.52)
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Weighted
average common shares used to compute net loss per
share:
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Basic and diluted
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4,606,951
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4,246,626
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Pro forma net loss
per share (unaudited):
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Basic and diluted (1) (2)
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$(4.76)
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$(3.52)
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Pro forma weighted
average common shares outstanding (unaudited):
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Basic and diluted
(1) (2)
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$6,062,135
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$4,246,626
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_______________
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(1)
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See
Note 1 to our audited financial statements included elsewhere in
this prospectus for an explanation of the method used to calculate
the historical and pro forma net loss per share, basic and diluted,
and the number of shares used in the computation of the per share
amounts.
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Pro
forma basic and diluted net loss per common share and pro forma
weighted average shares outstanding have been calculated assuming,
as of the beginning of the applicable period: (i) the Automatic
Note Conversion of all outstanding principal and accrued but unpaid
interest on our outstanding 2018 Notes, totaling $13.6 million at
December 31, 2018, into an aggregate of 1,455,184 shares of our
common stock immediately prior to the closing of this offering
(assuming an initial public offering price of $11.00, the midpoint
of the price range set forth on the cover page of this prospectus,
and a conversion price of $9.35); and (ii) the immediate
amortization, as interest expense, of the BCF associated with the
2018 Notes which is exercisable upon the consummation of an initial
public offering, as described at Note 6 to the audited financial
statements included elsewhere in this prospectus. The intrinsic
value of the BCF at December 31, 2018, which was limited to the net
proceeds allocated to the debt on a relative fair value basis, was
approximately $8,227,542.
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(2)
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All share and per share data has been retrospectively adjusted to
reflect the one-for-three Reverse Stock Split, which was effected
on February 8, 2019.
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Cash Flows for the Years Ended December 31, 2018 and
2017
Cash Flows from Financing Activities. Cash flows from financing activities were
comprised of the following for Fiscal 2018 and Fiscal
2017:
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Proceeds
from issuance of common stock, net of issuance costs
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$-
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$8,244,882
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Proceeds
from convertible notes payable, net of issuance cost
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12,610,688
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-
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Net cash provided by financing activities
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$12,610,688
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$8,244,882
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During
Fiscal 2017, the Company issued 788,280 shares of common stock at a
price of $10.80 per share, raising aggregate net proceeds of
approximately $8.2 million.
In
February through April 2018, we issued 9.00% secured convertible
promissory notes with a collective face value of $3,000,000 (the
“Initial 2018
Notes”). The Initial 2018 Notes (i) accrued simple
interest at the rate of 9.00% per annum, (ii) matured on the
earlier of December 31, 2018 or the close of a $15,000,000 equity
financing (“Qualifying
Equity Financing”) by us, and (iii) all outstanding
principal and accrued interest was automatically convertible into
equity or equity-linked securities sold in a Qualifying Equity
Financing based upon a conversion rate equal to (x) a 10% discount
to the price per share of a Qualifying Equity Financing, with (y) a
floor of $10.80 per share. In addition, the holders of the Initial
2018 Notes were collectively issued warrants to purchase
approximately 55,559 shares of common stock, at an exercise price
of $10.80 per share and a term of five years (the
“Initial 2018
Warrants”).
In May
through August 2018, we issued additional 9.00% secured convertible
promissory notes with a collective face value of $10,000,000 (the
“Additional 2018
Notes”). In May 2018, all of the Initial 2018 Notes
and related accrued interest, totaling $3,056,182, were converted
into the Additional 2018 Notes, resulting in an aggregate principal
amount of $13,056,182 (hereinafter collectively, the
“2018 Notes”).
The holders of the converted Initial 2018 Notes retained their
respective Initial 2018 Warrants.
The
2018 Notes (i) accrue simple interest at the rate of 9.00% per
annum, (ii) mature on the earlier of the closing of an initial
public offering (“IPO”) of our common stock on a
national securities exchange or April 30, 2019, and (iii) all
outstanding principal and accrued interest is automatically
convertible into shares of common stock upon the closing of an IPO
at the lesser of (x) $10.80 per share or (y) a 15% discount to the
price per share of the IPO. In
addition, the holders of the 2018 Notes were collectively
issued 1,396,383 warrants to purchase common stock equal to
100% of the aggregate principal amount of the 2018 Notes divided by
$9.35 per share (assuming an initial
public offering price of $11.00, the midpoint of the price range
set forth on the cover page of this prospectus, and a conversion
price of $9.35) (the “2018 Warrants”). The number of
2018 Warrants ultimately issued is subject to adjustment upon the
closing of an IPO and will be determined by dividing 100% of the
face value of the 2018 Notes by the lesser of (x) $10.80 per share
or (y) a 15% discount to the price per share of the IPO. The 2018
Warrants are exercisable for a term of five years, commencing on
the close of an IPO, at an exercise price equal to the lesser of
(x) $10.80 per share or (y) a 15% discount to the IPO price per
share and are callable at our election at any time following the
closing of an IPO.
MANAGEMENT
Executive Officers and Directors
The following table sets forth the names, ages, and positions of
our executive officers, directors and significant employees as of
the date of this prospectus.
|
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
|
|
|
|
Executive Officers and Directors:
|
|
|
|
|
|
|
|
|
|
|
Ann
Hand
|
|
49
|
|
Chief
Executive Officer, President, Chair of the Board
|
|
|
David
Steigelfest
|
|
51
|
|
Chief
Product and Technology Officer, Director
|
|
|
Clayton
Haynes
|
|
49
|
|
Chief
Financial Officer
|
|
|
Matt
Edelman
|
|
48
|
|
Chief
Commercial Officer
|
|
|
John
Miller (1)
|
|
39
|
|
Director
|
|
|
Jeff
Gehl
|
|
50
|
|
Director
|
|
|
Robert Stewart
|
|
51
|
|
Director
|
|
| Kristin Patrick |
|
48
|
|
Director |
|
| Michael Keller |
|
48
|
|
Director |
|
|
|
|
|
|
|
|
|
Significant Employees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andy
Babb
|
|
49
|
|
Executive
Vice President of Game Partnerships
|
|
|
Anne
Gailliot
|
|
41
|
|
Chief
of Staff, Vice President of Special Projects
|
|
|
(1)
|
Mr.
Miller intends to resign from our Board contingent upon and
effective immediately prior to the effectiveness of the
registration statement to which this prospectus forms a
part.
|
There are no arrangements or understandings between our Company and
any other person pursuant to which he or she was or is to be
selected as a director, executive officer or nominee. Ms. Hand, our
President and Chief Executive Officer, is a first cousin of Mr.
Gehl, a member of our Board. There are no other family
relationships among any of our directors or executive officers. To
the best of our knowledge, none of our directors or executive
officers have, during the past ten years, been involved in any
legal proceedings described in Item 401(f) of Regulation
S-K.
Executive Officers
Ann Hand
Chief Executive Officer, President, Chair of the Board
Ms.
Hand has served as our Chief Executive Officer, President and Chair
of our Board since June 2015. Over the past 20 years, Ms. Hand has
served as a market-facing executive with a track record in brand
creation and turn- around with notable delivery at the intersection
of social impact with consumer trends and technology to create bold
offers, drive consumer preference and deliver bottom line results.
Prior to joining the Company, from 2009 to 2015, Ms. Hand served as
Chief Executive Officer and as a director of Project Frog, a
venture-backed firmwith a mission to democratize healthy, inspired
buildings that are better, faster, greener, and more affordable
than traditional construction. From 1998 through 2008, Ms. Hand
served in various senior executive positions with BP plc, including
Senior VicePresident, Global Brand Marketing & Innovation from
2005 to 2008, during which time she led many award-winning
integrated marketing campaigns and oversaw the entire brand
portfolio of B2C and B2B brands, including BP, Castrol, Arco, am/pm
and Aral. Additionally, she served as Chief Executive, Global
Liquefied Gas Business Unit with full P&L accountability across
15 countries and 3,000 staff, covering operations, logistics, sales
and marketing with over $3 billion in annual revenue. Ms. Hand was
recognized by Goldman Sachs - “100 Most Intriguing
Entrepreneurs” in 2014, by Fortune - “Top 10 Most
Powerful Women Entrepreneurs” in 2013, and Fast Company
– “100 Most Creative People” in 2011. Ms. Hand
earned a Bachelor of Arts in Economics from DePauw University, an
MBA from Northwestern’s Kellogg School of Management, and
completed executive education at Cambridge, Harvard and Stanford
Universities.
David Steigelfest
Chief Product and Technology Officer, Director
Mr.
Steigelfest co-founded the Company in 2014 and has served as a
director on our Board since that time. In addition, Mr. Steigelfest
served has our Chief Product and Technology Officer since May 2018.
An attorney by education, David has served as an executive and
entrepreneur in the digital and technology space for more than 20
years. Prior to co-founding the Company in 2014, Mr. Steigelfest
founded rbidr LLC, a media and technology startup and a pioneer in
yield management and price optimization software, where he served
as Chief Executive Officer from 2008 to 2013. From 2013 to 2014,
Mr. Steigelfest worked for Cosi Consulting, where he provided
management consulting services ranging from complex project
management, PMO, software design, 3rd party software integration and
migration, enterprise content management, data management and
system-based regulatory compliance to various Fortune 500
companies. From 2001 to 2008, Mr. Steigelfest worked on Wall Street
at Deutsche Bank, where he oversaw various multi-million-dollar
change management projects. In addition, Mr. Steigelfest previously
served as Vice President of eCommerce at Starguide Digital
Networks, where he had responsibility over the streaming media
portal, CoolCast. CoolCast utilized satellite technology to
distribute high quality streaming content into multi-cast enabled
networks bypassing Internet bottlenecks. Prior to Starguide, Mr.
Steigelfest served as the Director of Product Management at Gateway
Computers, where he oversaw Gateway.com and Gateway’s
business-to-business extranet system, eSource. In addition, Mr.
Steigelfest has consulted for companies of all sizes throughout his
career addressing a wide variety of IT and business challenges,
including complex business process change, software implementation
and e-commerce. Mr. Steigelfest received a Bachelor of Arts
in International Relations and Psychology from Syracuse University,
and a JD with an emphasis in business transactions and business law
from Widener University School of Law.
Clayton Haynes
Chief Financial Officer
Mr. Haynes was appointed as our Chief Financial Officer in August
2018. From 2001 to August 2018, Mr. Haynes served as Chief
Financial Officer, Senior Vice President of Finance and Treasurer
of Acacia Research Corporation (NASDAQ: ACTG), an industry-leading intellectual
property licensing and enforcement and technology investment
company. Mr. Haynes is a party to a transition related consulting
agreement with Acacia Research Corporation that expires on February
14, 2019. From 1992 to March 2001, Mr. Haynes was employed by
PricewaterhouseCoopers LLP, ultimately serving as a Manager in the
Audit and Business Advisory Services practice, where he provided
and managed full scope financial statement audit and business
advisory services for public and private company clients with
annual revenues up to $1 billion in a variety of sectors, including
manufacturing, distribution, oil and gas, engineering, aerospace
and retail. Mr. Haynes received a Bachelor of Arts in
Economics and Business/Accounting from the University of California
at Los Angeles, an MBA from the University of California at Irvine
Paul Merage School of Business and is a Certified Public Accountant
(Inactive).
Matt Edelman
Chief Commercial Officer
Mr.
Edelman oversees the Company’s revenue, marketing, content,
creative services and business development activities, and has
served as our Chief Commercial Officer since July 2017. Mr. Edelman
is the owner of PickTheBrain, a leading digital self-improvement
business, a board member and marketing committee member of the
Epilepsy Foundation of Greater Los Angeles and has over 20 years of
experience working in the digital and traditional media and
entertainment industries. Since 2001, he has served as an advisor
and consultant to numerous digital and media companies, including,
amongst others, Nike, Marvel, MTV, Sony Pictures, 20th Century Fox and TV Guide. Prior to
joining the Company, from 2014 to 2017, Mr. Edelman served as the
Head of Digital Operations and Marketing Solutions at WME-IMG (now
Endeavor), where he was responsible for several areas, including
digital audience and revenue growth through content, social media
and paid customer acquisition across the company’s global
live events business within sports, fashion culinary and
entertainment verticals; digital marketing services for consumer
brands, college athletics programs and talent; and management of
direct-to-consumer digital content businesses, including both
eSports and Fashion OTT properties. From 2010 to 2013, Mr.
Edelmanserved as the Chief Executive Officer of Glossi (previously
ThisNext), an authoring platform enabling individuals to create
their own digital magazines. Previously, Mr. Edelman also founded
and/or served in executive positions at multiple early stage
digital media companies. Mr. Edelman earned a Bachelor of Arts in
Politics from Princeton University.
Board of Directors
Ann Hand
Chief Executive Officer, President, Chair of the Board
Please
see Ms. Hand’s biography in the preceding section under the
heading “Executive
Officers.”
Ms. Hand’s extensive background in corporate leadership and
her practical experience in brand creation and turn- around
directly align with the Company’s focus, and ideally position
her to make substantial contributions to the Board, both as Chair
of the Board and as the leader of the Company’s executive
team.
David Steigelfest
Chief Product and Technology Officer, Director
Please
see Mr. Steigelfest’s biography in the preceding section
under the heading “Executive
Officers.”
As a co-founder of the Company and a lead developer of the
Company’s platform, Mr. Steigelfest provides the Board with
critical insight into the technological aspects of the
Company’s operations and the ongoing development of the
platform, attributes that make Mr. Steigelfest a particularly
valued member of the Board.
John Miller
Director
Mr.
Miller co-founded the Company in 2014 and has served as a director
on our Board since its inception. In addition, Mr. Miller founded
and has served as Chief Executive Officer and Chairman of Cali
Group, a holding company with ownership positions in various
companies focused on the development of new technologies for the
restaurant and retail industries and a significant investor in the
Company, since 2011. Prior to founding Cali Group, Mr. Miller
worked for Arrowhead Pharmaceuticals, Inc. (NASDAQ: ARWR), where he
was responsible for the formation, growth and the ultimate sale of
Arrowhead’s electronics business unit. From 2005 to 2010, Mr.
Miller served as Vice President of Intellectual Property at Undiym,
Inc. (formerly, Nanopolaris, Inc.), which he also founded. Mr.
Miller is an author of The Handbook of Nanotechnology Business,
Policy, and Intellectual Property Law, as well as various other
publications related to nanomaterials and nanoscale electronics. He
obtained an undergraduate degree from University of Redlands and
graduated Order of the Coif from Stanford Law School.
Mr.
Miller’s focus on the development of new technologies and his
involvement with the Company since inception has significantly
supported the Board’s perspective during the early stages of
the development of the Company’s platform and are key assets
to the Board as the Company looks to scale the utilization of its
technology.
Jeff Gehl
Independent Director
Mr.
Gehl has served as a director on our Board since 2015. Mr. Gehl is
a Co-Owner at VLOC LLC. Since 2001, Mr. Gehl has been a Managing
Partner of RCP Advisors. Mr. Gehl is responsible for leading RCP's
client relations function and covering private equity fund managers
in the Western United States. He is a General Partner of BKM
Capital Partners, L.P. Previously, Mr. Gehl was an Advisor at
Troy Capital Partners until 2018. In addition, Mr. Gehl founded and
served as Chairman and Chief Executive Officer of MMI, a technical
staffing company, and acquired Big Ballot, Inc., a sports marketing
firm. He currently serves as a Director of P10 Industries, Inc., a
Director of Veritone, Inc. (NASDAQ: VERI) and an Advisory Board
member of several of RCP’s underlying funds, as well as
Accel-KKR and Seidler Equity Partners. Mr. Gehl was the Manager of
VLOC. Mr. Gehl received the 1989 “Entrepreneur of the
Year” award from University of Southern California’s
Entrepreneur Program. He obtained a Bachelor of Science in Business
Administration from the University of Southern California's
Entrepreneur Program.
Mr. Gehl’s wide range of experience in
financing,
developing and managing high-growth technology companies, as well
as his entrepreneurial experience, has considerably broadened the Board’s
perspective, particularly as the Company engaged in capital raising
activities to fund the early stages of its development. Mr. Gehl
also serves as our Board-designated “audit committee
financial expert,” as the Chair of the Board’s Audit
Committee and as a member of the Nominating and Corporate
Governance Committee.
Robert Stewart
Independent Director
Mr. Stewart has served as a director on our Board since October
2014. From 1997 to August 2018, Mr. Stewart served in various
executive officer roles with Acacia, including as Vice-President of
Corporate Finance and Senior Vice-President, Corporate Finance and
Investor Relations. Prior to joining Acacia, Mr. Stewart served as
President of Macallan, Dunhill & Associates, a private
investment fund. Mr. Stewart received a Bachelor of Science in
Economics from the University of Colorado at Boulder.
Mr. Stewart’s 11 years in various executive officer
roles of a public company brings extensive leadership experience
and public company expertise to our Board, experience that will be
invaluable to the Board following the Company becomes a public
company following the completion of its initial public
offering. Mr. Stewart also
serves as a member of the Board’s Audit Committee, and as
Chair of the Compensation
Committee.
Kristin Patrick
Independent Director
Ms.
Patrick has served as a director on our Board since November 2018,
and currently serves as Global Chief Marketing Officer of Soda
Brand at Pepsico, Inc., a position she has held since June 2013.
Prior to her time with Pepsico, Inc., Ms. Patrick servedas Chief
Marketing Officer of Playboy Enterprises, Inc. from November 2011
to June 2013, and as Executive Vice President of Marketing Strategy
for William Morris Endeavor from January 2010 to November 2011. Ms.
Patrick has also held senior marketing positions at Liz
Claiborne's Lucky Brand, Walt Disney Company, Calvin Klein, Revlon
and NBC Universal and Gap, Inc. A Brandweek "Next Gen Marketer" and
Reggie Award recipient, Ms. Patrick received her Bachelor of Arts
from Emerson College and J.D. from Southwestern
University.
As we
continue to expand the visibility of our Brand, we believe Ms.
Patrick will provide instrumental input on our marketing efforts,
and will assist the Board and management with initiating marketing
programs to enable us to meet our short-term and long-term growth
objectives. Ms. Patrick also serves as a member of the
Board’s Compensation Committee and the Nominating and
Corporate Governance Committee.
Michael Keller
Independent Director
Mr.
Keller has served as a director on our Board since November 2018.
From July 2014 to February 2018, Mr. Keller served as an advisor
and board member for Cake Entertainment, an independent
entertainment company specializing in the production, distribution,
development, financing and brand development of kids’ and
family properties, as managing director of Tiedemann Wealth
Management from March 2008 to December 2013, as co-founder and
principal of Natrica USA, LLC from August 2006 to March 2008 and as
Senior Vice President of Brown Brothers Harriman Financial Services
from July 1996 to June 2006. Mr. Keller earned his Bachelors of
Arts in History from Colby College.
With
over 15 years of experience in asset and portfolio management, and
experience in helping companies gain exposure for their products
and services, including in the entertainment industry, we believe
Mr. Keller provides our Board with useful insight that will help us
as we allocate resources to expand the utility of our platform and
other technologies. Mr. Keller also serves as Chair of the
Board’s Nominating and Corporate Governance Committee and as
a member of the Audit Committee and the Compensation
Committee.
Significant Employees
Andy Babb
Executive Vice President of Game Partnerships
Mr.
Babb overseas the Company’s game strategy and publisher and
developer relationships and has served as our Executive Vice
President of Game Partnerships since September 2015. Prior to
joining the Company, from 2007 to 2015, Mr. Babb served as
President of Brandissimo, Inc., the company that created and
developed NFL RUSH, including NFL RUSH Zone, a multiplayer online
virtual game world, and over 100 NFL video games and apps. From
2006 to 2007, Mr. Babb served as the President of Infusio-NA, a
French mobile video game publisher, and for ten years prior to
that, he managed business development for Take Two Interactive, 2K
Games and SegaSoft. Throughout his career, Mr. Babb has published
over 200 video games across console, handheld, PC, online and
mobile platforms. He earned a Bachelor of Arts in Communications
Studies from the University of California Los Angeles and an MBA
from Stanford University.
Anne Gailliot
Chief of Staff, Vice President of Special Projects
Ms.
Gailliot has served as our Chief of Staff since July 2015, as well
as our Vice President of Special Projects since 2016. She provides
oversight to strategic programs and partnerships, ranging from
theatre relationships, the development of a national contracted
workforce, our after-school programs, and end-to-end live event
execution. Prior to joining the Company, Ms. Gailliot served as
Chief of Staff of Project Frog from 2007 to 2015, where she led
strategic and financial planning and supported supply chain
optimization. Before pursuing a graduate degree, Anne spent several
years at the National Trust for Historic Preservation managing
grant programs, community advocacy efforts, and local leadership
development initiatives for the western region. Ms. Gailliot earned
a Bachelor of Arts in Art History from Princeton University and an
MBA from University of Pennsylvania – the Wharton
School.
Board Composition and Election of Directors
Director Independence
Our
Board has determined that five of its directors qualify as
independent directors, as determined in accordance with the rules
of the Nasdaq Stock Market, consisting of Ms. Patrick and Messrs.
Gehl, Stewart and Keller. Under the applicable listing requirements
of the Nasdaq Capital Market, we are permitted to phase in our
compliance with the majority independent board requirement of the
Nasdaq Stock Market rules within one year of our listing on Nasdaq.
The director independence definition under the Nasdaq Stock Market
rule includes a series of objective tests, including that the
director is not, and has not been for at least three years, one of
our employees and that neither the director nor any of his family
members has engaged in various types of business dealings with us.
In addition, as required by Nasdaq Stock Market rules, our Board
has made a subjective determination as to each independent director
that no relationships exist, which, in the opinion of our Board,
would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. In making these
determinations, our Board reviewed and discussed information
provided by the directors and us with regard to each
director’s business and personal activities and relationships
as they may relate to us and our management.
Ms. Hand, our President and Chief Executive Officer, is a first
cousin of Mr. Gehl, a member of our Board. There are no other
family relationships among any of our directors or executive
officers.
Board Committees and Independence
Compensation Committee
Our compensation committee is currently comprised of Robert
Stewart, who serves as the committee chair, Kristin Patrick and
Michael Keller, each of whom are independent directors as
determined in accordance with the rules of the Nasdaq Stock
Market. The compensation committee’s main function is
to assist our Board in the discharge of its responsibilities
related to the compensation of our executive officers. Pursuant to its charter, the compensation
committee is primarily responsible for, among other
things:
●
reviewing
our compensation programs and arrangements applicable to our
executive officers, including all employment-related agreements or
arrangements under which compensatory benefits are awarded or paid
to, or earned or received by, our executive officers, and advising
management and the Board regarding such programs and
arrangements;
●
reviewing and recommending to the Board the goals
and objectives relevant to CEO compensation, evaluating CEO
performance in light of such goals and objectives, and determining
CEO compensation based on the evaluation;
●
retaining,
reviewing and assessing the independence of compensation
advisers;
●
monitoring issues
associated with CEO succession and management
development;
●
overseeing and
administering our equity incentive plans;
●
reviewing and
making recommendations to our Board with respect to compensation of
our executive officers and senior management;
●
reviewing and
making recommendations to our Board with respect to director
compensation;
●
endeavoring to ensure that our executive
compensation programs are reasonable and appropriate, meet their
stated purpose (which, among other things, includes rewarding and
creating incentives for individuals and Company performance), and
effectively serve the interests of the Company and our
stockholders; and
●
upon becoming
subject to the Exchange Act, preparing and approving an annual
report on executive compensation and such other statements to
stockholders which are required by the SEC and other governmental
bodies.
Nominating and Governance Committee
Our nominating and governance committee is currently comprised
of Michael Keller, who serves as the committee chair, Kristin
Patrick and Jeff Gehl, each of whom are independent directors as
determined in accordance with the rules of the Nasdaq Stock
Market. Pursuant to its
charter, the nominating and governance committee is primarily
responsible for, among other things:
●
assisting the Board
in identifying qualified candidates to become directors, and
recommending to our Board nominees for election at the next annual
meeting of stockholders;
●
leading the Board
in its annual review of the Board’s performance;
●
recommending to the
Board nominees for each Board committee and each committee
chair;
●
reviewing and
overseeing matters related to the independence of Board and
committee members, in light of independence requirement of the
Nasdaq Stock Market and the rules and regulations of the
SEC;
●
overseeing the
process of succession planning of our CEO and other executive
officers; and
●
developing and
recommending to the Board corporate governance guidelines,
including our Code of Business Conduct, applicable to the
Company.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITYHOLDERS
The
following table sets forth certain information known to us
regarding beneficial ownership of our common stock as of February
21, 2019 for (i) each of our executive officers and directors
individually, (ii) all of our executive officers and directors as a
group, and (iii) each person, or group of affiliated persons, known
by us to be the beneficial owner of more than 5% of our capital
stock. The percentage of beneficial ownership in the table below is
based on 4,610,109 shares of common stock deemed to be outstanding
as of February 21, 2019.
|
Name,
address and title of beneficial owner (1)
|
|
Total
Number of Shares Subject to Exercisable Options and
Warrants
|
Total
Number of Shares Issuable Upon Conversion of Outstanding Promissory
Notes (2)
|
Total
Number of Shares Beneficially Owned
|
Percentage
of Voting Common Stock Outstanding (3)
|
|
|
Officers and Directors
|
|
|
|
|
|
|
Ann
Hand
Chief Executive Officer, President and Chair
|
73,374
|
563,543
|
-
|
636,917
|
12.3%
|
|
|
David
Steigelfest
Chief Products and Technology Officer
|
50,000
|
179,170
|
-
|
229,170
|
4.8%
|
|
|
Clayton
Haynes
Chief Financial Officer
|
-
|
20,001
|
-
|
20,001
|
*
|
|
|
Matt
Edelman
Chief Commercial Officer
|
-
|
35,600
|
-
|
35,600
|
*
|
|
|
John Miller (4)
Director
|
56,153
|
186,694
|
168,175
|
411,022
|
8.3%
|
|
|
Jeff Gehl (5)
Director
|
64,529
|
106,622
|
35,324
|
206,475
|
4.3%
|
|
|
Robert Stewart, Jr. (6)
Director
|
225,926
|
77,907
|
9,387
|
313,220
|
6.7%
|
|
|
Kristin
Patrick
Director
|
-
|
-
|
-
|
-
|
-
|
|
|
Michael Keller (7)
Director
|
-
|
88,544
|
79,284
|
167,828
|
3.5%
|
|
|
Executive Officers and Directors as a
Group (9 persons)
|
469,982
|
1,258,081
|
292,170
|
2,020,233
|
32.8%
|
|
|
|
|
|
|
|
|
|
Greater
than 5% Stockholders
|
|
|
|
|
|
|
CaliBurger
(8)
Floor 4, Willow
House, Cricket Square
Grand Cayman,
Cayman Islands
KY1-1104
|
261
|
186,693
|
168,174
|
355,128
|
7.2%
|
|
|
Pu Luo Chung VC Private Limited
(9)
37 Jalan
Pemimpin
#
06-12
Singapore
577177
|
471,129
|
-
|
-
|
471,129
|
10.2%
|
|
_______________________
* Less than 1.0%
|
(1)
|
Unless
otherwise indicated, the business address for each of the executive
officers and directors is c/o Super League Gaming, Inc., 2906
Colorado Ave., Santa Monica, CA 90404.
|
|
(2)
|
Includes
shares issuable upon conversion of outstanding 2018 Notes issued by
the Company in connection with the 2018 Bridge Financing. Upon
closing of the offering described in this prospectus, all
outstanding principal and accrued interest will automatically
convert into shares of common stock at the lesser of (x) $10.80 per
share or (y) a 15% discount to the public offering price per share.
For purposes of this table, we have assumed the 2018 Notes held by
Mr. Gehl and the Robert B. Stewart, Jr. Sole and Separate Property
Trust will convert into shares of common stock at a price of $10.80
per share and have excluded any accrued but unpaid
interest.
For
additional information regarding the 2018 Notes held by Mr. Gehl
and the Robert B. Stewart, Jr. Sole and Separate Property Trust, as
well as the 2018 Warrants issued in connection with the issuance of
the 2018 Notes, see footnotes 5, 6 and 8, hereto,
respectively.
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(3)
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Beneficial
ownership is determined in accordance with the rules of the SEC. In
computing the number of shares beneficially owned by a person and
the percentage of ownership by that person, shares of voting common
stock subject to outstanding rights to acquire shares of voting
common stock held by that person that are currently exercisable or
exercisable within 60 days are deemed outstanding. Such shares are
not deemed outstanding for the purpose of computing the percentage
of ownership by any other person.
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(4)
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In January 2019, CaliBurger completed a dividend pursuant to
which it distributed all of the shares of the Company’s
common stock previously held by CaliBurger to its stockholders (the
“CaliBurger
Dividend”). Following the CaliBurger Dividend, Mr.
Miller retained beneficial ownership of the following shares: (i)
804 shares held directly by Mr. Miller; (ii) 333 shares held by the
Miller Investment Partnership; (iii) 5,804 shares held by Miller
Resort, LLC; (iv) 47,619 shares held by Miller Time, LLC;(v) 2,318
shares held by the Miller-Lomelino Partnership; and (vi) all
securities that are held by CaliBurger following the CaliBurger
Dividend as described in footnote 8 below.
As a
partner of the Miller Investment Partnership and the
Miller-Lomelino Partnership, a principal of Miller Resort, LLC and
Miller Time, LLC, and a Director of CaliBurger, Mr. Miller may be
deemed to beneficially own the securities held directly by each
entity.
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(5)
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Includes
shares issuable upon conversion of 2018 Notes held by BigBoy, LLC
and BigBoy Investment Partnership, entities controlled by Mr. Gehl,
in the collective principal amount of $381,494, as well as shares
of common stock issuable upon exercise of the 2018 Warrants issued
to Mr. Gehl’s entities in connection with his purchase of the
2018 Notes. As noted in footnote 2 above, for purposes of this
table, we have assumed the 2018 Notes held by Mr. Gehl’s
entities will convert into shares of common stock at a price of
$10.80 per share, and accordingly will result in the issuance of
35,324 shares of common stock, and the 2018 Warrants issued to Mr.
Gehl’s entities will be exercisable for up to 39,954 shares
of common stock. A portion of the 2018 Warrants, exercisable for
35,324 shares of common stock, are callable, at the option of the
Company, at any time following the completion of the offering
described in this prospectus.
Also
includes 6,667 shares held by Jeff Gehl, 33,333 shares held by
BigBoy Investment Partnership, LLC and 24,532 shares held by
BigBoy, LLC. Mr. Gehl is the Managing Member of BigBoy Investment
Partnership and BigBoy, LLC, and, therefore, may be deemed to
beneficially own these shares.
The
business address for BigBoy Investment Partnership and BigBoy, LLC
is 111 Bayside Dr., Suite 270, Newport Beach, CA
92625.
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(6)
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Includes
shares issuable upon conversion of 2018 Notes held by the Robert B.
Stewart, Jr. Sole and Separate Property Trust (the
“Stewart
Trust”) in the principal amount of $101,380, as well
as shares of common stock issuable upon exercise of the 2018
Warrant issued to the Stewart Trust in connection with its purchase
of the 2018 Notes. As noted in footnote 2 above, for purposes of
this table, we have assumed the 2018 Notes held by the Stewart
Trust will convert into shares of common stock at a price of $10.80
per share, and accordingly will result in the issuance of 9,387
shares of common stock, and the 2018 Warrants held by the Stewart
Trust will be exercisable for up to 9,387 shares of common stock. A
portion of the 2018 Warrants, exercisable for 9,387 shares of
common stock, are callable, at the option of the Company, at any
time following the completion of the offering described in this
prospectus.
Also
includes 92,592 shares held by the Stewart Trust, additional 2018
Warrants (non-callable) to purchase up to 1,852 shares of common
stock held by the Stewart Trust, and an option to purchase 33,334
shares of common stock.
Mr.
Stewart is the trustee for the Stewart Trust, and, therefore, may
be deemed to beneficially own these shares.
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(7)
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Includes
shares issuable upon conversion of 2018 Notes held by Michael
Keller in the principal amount of $856,245, as well as shares of
common stock issuable upon exercise of the 2018 Warrants issued to
Michael Keller in connection with the purchase of the 2018 Notes.
As noted in footnote 2 above, for purposes of this table, we have
assumed the 2018 Notes held by Michael Keller will convert into
shares of common stock at a price of $10.80 per share, and
accordingly will result in the issuance of 79,284 shares of common
stock, and the 2018 Warrants held by Michael Keller will be
exercisable for up to 88,544 shares of common stock. A portion of
the 2018 Warrants, exercisable for 79,284 shares of common stock,
are callable, at the option of the Company, at any time following
the completion of the offering described in this prospectus.
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(8)
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Includes
shares issuable upon conversion of 2018 Notes held by CaliBurger in
the principal amount of $2,016,270, as well as shares of common
stock issuable upon exercise of the 2018 Warrant issued to
CaliBurger in connection with its purchase of the 2018 Notes. As
noted in footnote 2 above, for purposes of this table, we have
assumed the 2018 Notes held by CaliBurger will convert into shares
of common stock at a price of $10.80 per share, and accordingly
will result in the issuance of 168,175 shares of common stock, and
the 2018 Warrants held by CaliBurger will be exercisable for up to
186,694 shares of common stock. A portion of the 2018 Warrants,
exercisable for 168,175 shares of common stock, are callable, at
the option of the Company, at any time following the completion of
the offering described in this prospectus.
As
noted in footnote 4 above, Mr. Miller, a member of our Board of
Directors, is a Director of CaliBurger, and may be deemed to
beneficially own these securities.
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(9)
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Stuart
Hills, partner of Pu Luo Chung VC Private Limited has sole voting
and dispositive power over these shares and may be deemed to
beneficially own these securities.
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DESCRIPTION OF SECURITIES
Common Stock
Our Amended and Restated Charter currently authorizes 100.0 million
shares of common stock for issuance. As of February 21, 2019, there
were 4,610,109 shares of our common stock issued and outstanding,
which were held by approximately 231 stockholders of record,
approximately 1,455,184 shares of common stock issuable upon
conversion pursuant to the outstanding 2018 Notes
(assuming
an initial public offering price of $11.00, the midpoint of the
price range set forth on the cover page of this prospectus, and a
conversion price of $9.35),
approximately 2,578,415 shares of common stock issuable upon
exercise of warrants to purchase our common stock (assuming the
2018 Notes are convertible into shares of common stock at a price
of $9.35 per share, resulting in the same number of 2018 Warrants),
1,524,468 shares of common stock issuable upon exercise of options
held, 10,834 shares of our common stock issuable upon the vesting
of restricted stock units held and 274,698 shares of common stock authorized and available
for issuance pursuant to our 2014 Plan. Each holder of common stock
is entitled to one vote for each share of common stock held on all
matters submitted to a vote of the stockholders, including the
election of directors. Neither our Bylaws or the Amended and
Restated Charter do not and will not provide for cumulative voting
rights.
In addition to the Amended and Restated Charter, in September 2018
holders of a majority of our issued and outstanding securities
authorized our Board of Directors, acting in its sole discretion
without further approval of our stockholders, to effect a reverse
split of our issued and outstanding common stock, at a ratio of not
less than one-for-two, but not more than one-for-five, at any time
on or before August 15, 2019 (the “Reverse Stock
Split”). On January
31, 2019, our Board of Directors approved of a ratio of one-for
three, and on February 8, 2019, we filed a Certificate of Amendment
to our Charter to implement the Reverse Stock
Split.
Holders of our common stock have no preemptive, conversion or
subscription rights, and there are no redemption or sinking fund
provisions applicable to the common stock. The rights, preferences
and privileges of the holders of common stock are subject to, and
may be adversely affected by, the rights of the holders of shares
of any series of our preferred stock that we may designate and
issue in the future.
Preferred Stock
Under our Amended and Restated Charter, our Board of Directors has
the authority, without further action by our stockholders, to issue
up to 10.0 million shares of preferred stock in one or more series
and to fix the voting powers, designations, preferences and the
relative participating, optional or other special rights and
qualifications, limitations and restrictions of each series,
including, without limitation, dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, liquidation
preferences and the number of shares constituting any
series.
As of February 21, 2019, no shares of our authorized preferred
stock are outstanding. Because our Board of Directors has the power
to establish the preferences and rights of the shares of any
additional series of preferred stock, it may afford holders of any
preferred stock preferences, powers and rights, including voting
and dividend rights, senior to the rights of holders of our common
stock, which could adversely affect the holders of the common stock
and could delay, discourage or prevent a takeover of us even if a
change of control of our company would be beneficial to the
interests of our stockholders.
