SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933
Delaware | 7374 | 20-3881465 | ||||||||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Kitara Media Corp. 525 Washington Blvd., Suite 2620 Jersey City, New Jersey 07310 (201) 539-2200 | Robert Regular Chief Executive Officer Kitara Media Corp. 525 Washington Blvd., Suite 2620 Jersey City, New Jersey 07310 (201) 539-2200 | |||||
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(Address, including zip code, and telephone number, including area code, of each registrant’s principal executive offices) | (Name, address, including zip code, and telephone number, including area code, of agent for service) |
Jeffrey M. Gallant, Esq.
Graubard Miller
The Chrysler Building
405 Lexington Avenue, 11th Floor
New York, New York 10174
Telephone: (212) 818-8800
Fax: (212) 818-8881
Large accelerated filero | Accelerated filero | |||||
Non-accelerated filero (Do not check if a smaller reporting company) | Smaller reporting companyx |
Title of each class of securities being registered | Amounts being registered(1) | Proposed maximum offering price per unit(2) | Proposed maximum aggregate offering price | Amount of registration fee | ||||||||||||||
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Common Stock, par value $0.0001 per share | 56,000,000 | $ | 0.60 | $ | 33,600,000 | $ | 4,327.68(3 | ) |
(1) | This registration statement registers for resale by the selling stockholders an aggregate of 56,000,000 shares of common stock, par value $0.0001 per share. Pursuant to Rule 416 of the Securities Act of 1933, as amended, this registration statement also registers such additional shares of common stock of the registrant as may hereafter be offered or issued as a result of stock splits, stock dividends, or similar transactions. |
(2) | Based upon the average of the high and low prices on the Over-the-Counter Bulletin Board as of May 8, 2014, in accordance with Rule 457(c) promulgated under the Securities Act of 1933, as amended. |
(3) | The filing fee has previously been paid. |
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• | references to “Kitara” or the “Company” and to “we,” “us” or “our” are to Kitara Media Corp., a Delaware corporation, and its subsidiaries; |
• | references to “Kitara Media” are to Kitara Media, LLC, a Delaware limited liability company that is a wholly owned subsidiary of the Company; |
• | references to “NYPG” are to New York Publishing Group, Inc., a Delaware corporation that is a wholly owned subsidiary of the Company; and |
• | references to “Health Guru Media” are to Health Guru Media, Inc., a Delaware corporation that is a wholly owned subsidiary of the |
• | The Kitara Ad+ Solution, which provides video advertisers enhanced performance by delivering the desired target audience with well-positioned video ads that offer highly relevant and engaging video content experiences; |
• | The Kitara Publisher+ Solution, which offers online media publishers a full video solution including technology, content and monetization; and |
• | The Kitara Content+ Solution, which offers video content providers expanded reach for their content libraries with a highly engaged syndicated target audience by aligning video content with relevant publishers. |
price of $25,000. Upon completion of a reverse stock split on September 23, 2008, the 1,500,000 shares were converted into 150,000 shares. In November 2008, Mr. Rice transferred 13,581 of such shares held by him to Graubard Miller to extinguish legal fees owed by the Company to the law firm. In January 2011, Mr. Rice transferred the remaining 105,562 of such shares held by him, together with the 7,075,000 shares of the Company’s common stock received upon conversion of his promissory notes and all 112,988 of the other shares of common stock held by him, or an aggregate of 7,293,550 shares of common stock, to Ironbound.
Common stock offered by selling stockholders | 68,137,989 shares | |||||
Common stock issued and outstanding prior to this offering | 95,884,241 shares | |||||
Plan of distribution | The shares of common stock covered by this prospectus may be sold by the selling stockholders in public or private transactions, using any of the methods described under the section entitled “Plan of Distribution” beginning on page 60. | |||||
Total proceeds raised by offering | We will not receive any proceeds from the resale by the selling stockholders of the shares offered by this prospectus. | |||||
OTCBB Symbol | KITM | |||||
Risk factors | See the section entitled “Risk Factors” beginning on page 5 and the other information included in this prospectus for a discussion of risk factors you should carefully consider before deciding to invest in our common stock. |
• | the performance of their video ad campaigns and their perception of the efficacy and efficiency of their advertising campaign utilizing our solutions; |
• | changes in the economic prospects of advertisers or the economy generally; |
• | our access to relevant inventory; |
• | our ability to deliver video ad campaigns in full; |
• | their satisfaction with our solutions and our client support; |
• | the ability of our optimization algorithms underlying our solutions to deliver better rates of return on video ad spend dollars than competing solutions; |
• | seasonal patterns in advertisers’ spending, which tend to be discretionary; |
• | the pricing of our or competing solutions; and |
• | reductions in spending levels or changes in advertisers’ strategies regarding video advertising spending. |
replace in a timely or effective manner departing advertisers with new advertisers from whom we generate comparable revenue.
not agree to permit us to place our data collection tags on their sites or agree to provide us with the data generated by interactions with the content on their sites. The inability to collect or use data from advertisers and publishers may limit the usefulness of the data that we do collect and use. Furthermore, advertisers may request that we discontinue using data obtained from their campaigns that have already been aggregated with other advertisers’ campaign data. It would be difficult, if not impossible, to comply with these requests, and complying with these kinds of requests could cause us to spend significant amounts of resources. Interruptions, failures or defects in our data collection, mining, analysis and storage systems, as well as privacy concerns and regulatory restrictions regarding the collection, use and processing of data, could also limit our ability to aggregate and analyze the data from our customers’ advertising campaigns. If that happens, we may not be able to optimize the placement of advertising for the benefit of our advertising customers, which could make our solutions less valuable, and, as a result, we may lose customers and our revenue may decline.
publishers’ websites, such assessments may not detect or prevent fraudulent or malicious activity. If fraudulent or other malicious activity is perpetrated by others, and we fail to detect or prevent it, the affected advertisers may experience or perceive a reduced return on their investment and our reputation may be harmed. High levels of fraudulent or malicious activity could lead to dissatisfaction with our solutions, refusals to pay, refund demands or withdrawal of future business. If we fail to detect fraud or other actions that impact the performance of our video ad campaigns, we could lose the confidence of our advertisers or agencies, which could cause our business to suffer.
• | Inability to accurately process data and extract meaningful insights and trends; |
• | Faulty or out-of-date algorithms that fail to properly process data or result in inability to capture brand-receptive audiences at scale; |
• | Technical or infrastructure problems causing digital video not to function, display properly or be placed next to inappropriate context; |
• | Inability to control video completion rates, maintain user attention or prevent end users from skipping advertisements; and |
• | Unavailability of standard digital video audience ratings and brand receptivity measurements for brand advertisers to effectively measure the success of their campaigns. |
• | subject us to significant liabilities for monetary damages, which may be tripled in certain instances, and the attorneys fees of others; |
• | prohibit us from developing, commercializing or continuing to provide some or all of our solutions unless we obtain licenses from, and pay royalties to, the holders of the patents or other intellectual property rights, which may not be available on commercially favorable terms, or at all; |
• | subject us to indemnification obligations or obligations to refund fees to, and adversely affect our relationships with, our current or future advertisers, agencies, publishers and content providers; |
• | result in injunctive relief against us, or otherwise result in delays or stoppages in providing all or certain aspects of our solutions; |
• | cause advertisers, agencies, publishers or content providers to avoid working with us; |
• | divert the attention and resources of management and technical personnel; and |
• | require technology or branding changes to our solutions that would cause us to incur substantial cost and that we may be unable to execute effectively or at all. |
(3 customers), respectively, of the related accounts receivable. For the years ended December 31, 2013 and 2012, our largest three customers accounted for approximately 52.9% and 36.5%, respectively, of our revenues, and for approximately 49.4% and 15.3%, respectively, of the related accounts receivable. Such concentration exposes us to increased risk in the event of nonpayment or reduced use of our services from any one of these customers. Customer demand depends on a variety of factors including, but not limited to, our customers’ financial condition and general economic conditions. If any one of our largest customers is unable to pay for services provided, significantly reduces their use of our services or discontinues their relationship with us, our revenues and results of operations would be materially and adversely affected.
• | to elect or defeat the election of our directors; |
• | to amend or prevent amendment of our certificate of incorporation or bylaws; |
• | to effect or prevent a merger, sale of assets or other corporate transaction; and |
• | to control the outcome of any other matter submitted to our stockholders for vote to elect or defeat the election of our directors; |
1. | Our board of directors has not established adequate financial reporting monitoring activities to mitigate the risk of management override, specifically: |
• | a majority of our board of directors is not independent; |
• | we have not established a formal Audit Committee whose function would be to provide oversight specifically as it relates to scope of activities, monitoring of results, and sufficiency of accounting principle implementation. |
2. | We did not maintain sufficient segregation of duties to ensure the review process related to significant and non-routine transactions in the financial reporting process. |
procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could harm our business and operating results.
• | our business model; |
• | our industry; |
• | our ability to protect our intellectual property; |
• | our ability to integrate recently acquired companies; |
• | our ability to process, store and use data in compliance with governmental regulation and other legal obligations related to privacy; |
• | our ability to hire, integrate and retain world class talent; |
• | our ability to maintain adequate control of our expenses; |
• | our ability to successfully expand our business, while maintaining high quality; |
• | and our ability to obtain additional working capital as and when needed; |
• | our public securities’ potential liquidity and trading; and |
• | general economic conditions. |
Common Stock | |||||||||||
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High | Low | ||||||||||
Fiscal 2014: | |||||||||||
Second Quarter* | $ | 1.00 | $ | 0.60 | |||||||
First Quarter | $ | 1.40 | $ | 0.25 | |||||||
Fiscal 2013: | |||||||||||
Fourth Quarter | $ | 1.49 | $ | 0.26 | |||||||
Third Quarter | $ | 0.75 | $ | 0.20 | |||||||
Second Quarter | $ | 0.35 | $ | 0.20 | |||||||
First Quarter | $ | 0.75 | $ | 0.30 | |||||||
Fiscal 2012: | |||||||||||
Fourth Quarter | $ | 0.79 | $ | 0.55 | |||||||
Third Quarter | $ | 0.85 | $ | 0.79 | |||||||
Second Quarter | $ | 0.85 | $ | 0.25 | |||||||
First Quarter | $ | 0.55 | $ | 0.05 |
* | Through May 20, 2014 |
• | Demographic and Psychographic Audience Metrics |
• | Viewability and Engagement Metrics |
• | Brand Safety Metrics |
• | Maximizing value with tested and validated inventory of relevant options for ad placements. |
• | Ensuring complimentary content accompanies and enhances ad placements. |
• | Protecting ad performance by cleansing and verifying target audiences. |
• | Minimizing risks associated with bots, auto-clicking server farms and other compromising performance issues. |
• | Providing consistent protection with proven technology, solid metrics and deep analytics. |
• | Video Slideshows |
• | Video Surveys |
• | Video Quizzes |
• | Video Q&A |
with nearly 500 million monthly advertising views per month. With every ad campaign we establish a set of brand objectives and establish metrics accordingly.
• | Increase investment in our PROPEL+ online video advertising technology platform to enable the automation and optimization of video advertising, video content and publishing space. |
• | Evolve and deliver an advanced video native advertising platform. |
• | Acquire new advertising customers through both direct and programmatic channels. |
• | Expand our Video+ Portfolio with additional content syndication partners, unique video formats and premium video content. |
• | Increase our digital publishing partnerships to expand advertising reach and improve monetization. |
• | Continue to advance our audience targeting, data intelligence and analytics capabilities with our Audience+ Analyzer tools. |
• | Pursue strategic acquisitions. |
Three Months Ended March 31, | |||||||||||
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2014 | 2013 | ||||||||||
Revenue | $ | 6,944 | $ | 4,908 | |||||||
Cost of revenue | 5,664 | 3,598 | |||||||||
Gross Profit | 1,280 | 1,310 | |||||||||
GP as % of revenue | 18 | % | 27 | % | |||||||
Operating expenses | |||||||||||
Employee Expenses | 2,237 | 1,015 | |||||||||
Related party expenses | — | 85 | |||||||||
Other operating expenses | 1,456 | 195 | |||||||||
Depreciation and amortization | 110 | 156 | |||||||||
Total operating expenses | 3,803 | 1,451 | |||||||||
Operating (loss) | (2,523 | ) | (141 | ) | |||||||
Other (loss) | (87 | ) | — | ||||||||
Loss before income taxes | (2,610 | ) | (141 | ) | |||||||
Income taxes | 1 | — | |||||||||
Net (loss) | (2,611 | ) | (141 | ) | |||||||
EBITDA (a non-GAAP measure) | (2,342 | ) | 15 | ||||||||
Net (loss) | (2,611 | ) | (141 | ) | |||||||
Depreciation and amortization | 110 | 156 | |||||||||
Interest expense, less other income | 87 | — | |||||||||
Stock compensation expense | 71 | — | |||||||||
Taxes | 1 | — | |||||||||
EBITDA (a non-GAAP measure) | (2,342 | ) | 15 |
into one video platform to deliver strong engagement for advertisers and high revenues for publishers, as well as improve user experience with engaging digital content.
Year Ended December 31, | |||||||||||
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2013 | 2012 | ||||||||||
Revenue | $ | 25,377 | $ | 23,557 | |||||||
Cost of revenue | 17,148 | 18,598 | |||||||||
Gross Profit | 8,229 | 4,959 | |||||||||
GP as % of revenue | 32 | % | 21 | % | |||||||
Operating expenses | |||||||||||
Employee Expenses | 5,097 | 4,672 | |||||||||
Related party expenses | 251 | 399 | |||||||||
Impairment of property and equipment | 0 | 649 | |||||||||
Other operating expenses | 2,432 | 1,316 | |||||||||
Depreciation and amortization | 525 | 748 | |||||||||
Total operating expenses | 8,305 | 7,784 | |||||||||
Operating (loss) | (76 | ) | (2,825 | ) | |||||||
Other (loss) | (43 | ) | (5 | ) | |||||||
Loss before income taxes | (119 | ) | (2,830 | ) | |||||||
Income taxes | (67 | ) | 0 | ||||||||
Net (loss) | $ | (186 | ) | $ | (2,830 | ) | |||||
EBITDA (a non-GAAP measure) | $ | 537 | $ | (2,082 | ) | ||||||
Net (loss) | (186 | ) | (2,830 | ) | |||||||
Depreciation and amortization | 525 | 748 | |||||||||
Interest expense, less other income | 42 | 0 | |||||||||
Stock compensation expense | 89 | 0 | |||||||||
Taxes | 67 | 0 | |||||||||
EBITDA (a non-GAAP measure) | $ | 537 | $ | (2,082 | ) |
Bank charges a commission rate of .35% of the gross invoice. All debits in the account shall bear interest daily at a rate equal to 1.75% above prime rate as published in the Wall Street Journal. The ability to borrow against our accounts receivable gives us greater flexibility to grow the business by providing additional liquidity and relieving the pressure we currently have in working capital.
4.25% with a minimum interest charge of $10 per month. There are various financial and other covenants in the credit agreement that we must continue to satisfy in order to be compliant with the credit facility.
Total | Less than 1 year | 1-3 Years | 3-5 Years | More than 5 years | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating Leases | 361 | 361 | ||||||||||||||||||||
Notes Payable and collateralized obligations | 526 | 224 | 101 | 201 | ||||||||||||||||||
Credit facilities | 1,921 | 1,921 | ||||||||||||||||||||
Loan | 1,383 | 1,383 | ||||||||||||||||||||
Total Contractual Obligations | 4,191 | 3,889 | 101 | 0 | 201 |
to 1.75% above prime rate as published in the Wall Street Journal. As of December 31, 2013, the total balance outstanding was $1,080.
• | Existence of persuasive evidence than an arrangement exists; |
• | Delivery has occurred or services have been rendered; |
• | The seller’s price to the buyer is fixed and determinable; and |
• | Collectability is reasonably assured. |
Name | Age | Position | ||||||||
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Robert Regular | 41 | Chief Executive Officer and Director | ||||||||
Joshua Silberstein | 39 | President and Director | ||||||||
Jonathan J. Ledecky | 56 | Non-Executive Chairman | ||||||||
Sam Humphreys | 53 | Director | ||||||||
Craig dos Santos | 32 | Director | ||||||||
Jeremy Zimmer | 55 | Director | ||||||||
Ben Lewis | 33 | Director | ||||||||
Limor Regular | 39 | Chief Operating Officer | ||||||||
Lisa VanPatten | 49 | Chief Financial Officer |
Apparel. From January 2007 to April 2009, Mr. Ledecky served as president, secretary and a director of Victory Acquisition Corp., a blank check company that did not complete a business combination and returned all of its capital, representing approximately $330 million, to its public shareholders.
approximately $760 million in August 2010. Prior to Playdom, Mr. dos Santos was at iLike from July 2008 until February 2009. iLike was a launch partner during the first launch of the Facebook Platform. At iLike, Mr. dos Santos was in charge of monetization of applications and helped strike deals with Rhapsody, Ticketmaster, Comscore and Nielsen. iLike was sold to MySpace in 2009. From May 2006 until July 2008, Mr. dos Santos served as a principal of dos Santos and Partners, a partnership he founded that focused on brokering software services to India. From 2002 to 2006, Mr. dos Santos worked at Microsoft, where he was on the Microsoft Passport and Microsoft Windows Core Security teams. He was responsible for some of the security features in Windows XP as well as Windows Vista. Mr. dos Santos graduated from Rice University in 2003 with a Bachelors of Science in Electrical and Computer Engineering. We believe Mr. dos Santos is well-qualified to serve as a member of the board of directors due to his technical expertise and his business contacts.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock/Unit Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Non- Qualifed Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||||
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Robert Regular | 2013 | 430 | — | — | 199 | — | — | — | 629 | |||||||||||||||||||||||||||||
Chief Executive Officer | 2012 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Limor Regular | 2013 | 197 | — | — | 42 | — | — | — | 239 | |||||||||||||||||||||||||||||
Chief Operating Officer | 2012 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Lisa VanPatten | 2013 | 65 | — | — | 104 | — | — | — | 169 | |||||||||||||||||||||||||||||
Chief Financial Officer | 2012 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Craig dos Santos | 2013 | 225 | — | — | — | — | — | — | 225 | |||||||||||||||||||||||||||||
Former Chief Executive Officer | 2012 | 262 | — | — | — | — | — | — | 262 |
is terminated earlier as provided therein. Mr. Silberstein will earn an annual base salary of $300. Mr. Silberstein also received a one-time performance bonus in the amount of $125 upon the signing of the employment agreement and will receive an additional $125 payable on July 1, 2014. Mr. Silberstein will also be eligible to earn a yearly performance bonus equal to 50% of his base salary annually if certain mutually agreed upon performance objectives are met. Mr. Silberstein was also granted a five-year stock option to purchase 2,500,000 shares of our common stock at an exercise price of $0.26 per share (the closing bid price on the date of the Employment Agreement), which option vests on a quarterly basis over the term of the Employment Agreement. The options have a contractual life of five years.
Option Awards | |||||||||||||||||||
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Name and Principal Position | Number of Securities Underlying Unexercised Options (#): Exercisable | Number of Securities Underlying Unexercised Options (#): Unexercisable | Option Exercise Price ($) | Option Expiration Date | |||||||||||||||
Robert Regular | 150,000 | 2,250,000 | $ | 0.20 | 6/30/2018 | ||||||||||||||
Chief Executive Officer | |||||||||||||||||||
Limor Regular | 31,250 | 468,750 | $ | 0.20 | 6/30/2018 | ||||||||||||||
Chief Operating Officer | |||||||||||||||||||
Lisa VanPatten | 31,250 | 468,750 | $ | 0.50 | 7/31/2018 | ||||||||||||||
Chief Financial Officer | |||||||||||||||||||
Craig dos Santos | — | — | — | — | |||||||||||||||
Former Chief Executive Officer |
change in such named executive officer’s responsibilities following a change in control, except the payments described above pursuant to our employment agreements with our named executive officers.
Name | All Other Compensation ($) | Total Compensation ($) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sam Humphreys(1) | $ | 0 | $ | 0 | ||||||
Jon Ledecky | $ | 0 | $ | 0 | ||||||
Jeremy Zimmer | $ | 0 | $ | 0 | ||||||
Ben Lewis | $ | 0 | $ | 0 | ||||||
Richard Hecker(2) | $ | 0 | $ | 0 |
(1) | Mr. Humphreys joined our board of directors effective July 1, 2013. |
(2) | Mr. Hecker resigned from our board of directors effective July 1, 2013. |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities reflected in first column) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity Compensation Plans approved by security holders | — | $ | — | — | ||||||||||
Equity Compensation Plans not approved by security holders | 9,150,000 | $ | 0.31 | 2,850,000 | ||||||||||
Total | 9,150,000 | $ | 0.31 | 2,850,000 |
company, and the company’s board of directors does not authorize or otherwise approve such acquisition, then the vesting periods of any and all stock options and other awards granted and outstanding under the Plans shall be accelerated and all such stock options and awards will immediately and entirely vest, and the respective holders thereof will have the immediate right to purchase and/or receive any and all our common stock subject to such stock options and awards on the terms set forth in the plan and the respective agreements respecting such stock options and awards. An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the company acquires its stock in exchange for property is not treated as an acquisition of stock.
situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.
• | each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; |
• | each of our officers and directors; and |
• | all of our officers and directors as a group. |
Name and Address of Beneficial Owner(1) | Amount of Beneficial Ownership | Percentage of Beneficial Ownership | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Executive Officers and Directors: | ||||||||||
Robert Regular | 10,586,864 | (2) | 11.0 | % | ||||||
Lisa VanPatten | 62,500 | (3) | * | |||||||
Jonathan J. Ledecky 970 West Broadway, PMB 402 Jackson, Wyoming 83002 | 16,152,685 | (4) | 16.6 | % | ||||||
Craig dos Santos 360 Ritch Street, Floor 3 San Francisco, CA 94107 | 6,000,000 | (5) | 6.3 | % | ||||||
Ben Lewis 360 Ritch Street, Floor 3 San Francisco, CA 94107 | 2,500,000 | 2.6 | % | |||||||
Jeremy Zimmer 9560 Wilshire Boulevard Beverly Hills, CA 90212 | 550,000 | (6) | * | |||||||
Sam Humphreys c/o London Bay Capital, LLC 15 Funston Avenue San Francisco, CA 94129 | 0 | (7) | 0 | % | ||||||
Joshua Silberstein | 775,277 | (8) | * | |||||||
Limor Regular | 93,750 | (9) | * | |||||||
All officers and directors as a group (9 individuals) | 36,721,076 | (10) | 37.3 | % |
Name and Address of Beneficial Owner(1) | Amount of Beneficial Ownership | Percentage of Beneficial Ownership | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Five Percent Holders: | ||||||||||
Selling Source, LLC c/o London Bay Capital, LLC 15 Funston Avenue San Francisco, CA 94129 | 32,145,294 | (11) | 33.5 | % | ||||||
Ironbound Partners Fund LLC(12) 970 West Broadway, PMB 402 Jackson, Wyoming 83002 | 16,152,685 | (13) | 16.6 | % | ||||||
Castile Ventures III L.P. 65 William Street, Suite 205 Wellesley, Massachusetts 02482 | 4,916,887 | (14) | 5.9 | % | ||||||
Unterberg Koller Capital Fund, L.P. c/o Diker Management LLC 730 Fifth Avenue, 15th Floor New York, NY 10019 | 9,818,182 | (15) | 9.9 | % |
* | Less than one percent. |
(1) | Unless otherwise indicated, the business address of each individual is c/o Kitara Media Corp., 525 Washington Blvd, Suite 2620, Jersey City, New Jersey 07310. |
(2) | This amount includes (i) 10,091,409 shares of common stock, (ii) 450,000 shares of common stock issuable upon exercise of stock options which may be exercised within 60 days and 45,455 shares of common stock issuable upon the exercise of warrants exercisable at a price of $0.825 per share and expiring on April 30, 2019. Does not include 1,950,000 shares of common stock issuable upon exercise of the stock options, which may not be exercised within 60 days. |
(3) | Includes 62,500 shares of common stock issuable upon exercise of stock options which may be exercised within 60 days. Does not include 437,500 shares of common stock issuable upon exercise of the stock options, which may not be exercised within 60 days. |
(4) | Represents shares held by Ironbound, of which Mr. Ledecky is managing member. |
(5) | Includes 2,000,000 shares held by The Craig Marcel dos Santos 2012 Annuity Trust. |
(6) | Includes 200,000 shares held by the Jeremy and Marisa Zimmer Living Trust. |
(7) | Does not include any shares held by Selling Source, LLC. Mr. Humphreys is the Chief Executive Officer of London Bay Capital, LLC, which ultimately controls the securities held by Selling Source, LLC. |
(8) | Includes 125,000 shares of common stock issuable upon exercise of stock options which may be exercised within 60 days. Does not include 2,375,000 shares of common stock issuable upon exercise of the stock options, which may not be exercised within 60 days. |
(9) | Includes 93,750 shares of common stock issuable upon exercise of stock options which may be exercised within 60 days. Does not include 406,250 shares of common stock issuable upon exercise of the stock options, which may not be exercised within 60 days. |
(10) | Includes 1,512,500 shares of common stock issuable upon exercise of stock options which may be exercised within 60 days and 987,500 shares of common stock issuable upon the exercise of warrants exercisable at a price of $0.825 per share and expiring on April 30, 2019. Does not include 5,137,500 shares of common stock issuable upon exercise of the stock options, which may not be exercised within 60 days. |
(11) | Includes 10,000,000 shares held by Robert Regular subject to a Voting Rights Agreement. Information derived from a Schedule 13D filed on July 8, 2013. |
(12) | Mr. Ledecky is the managing member of Ironbound and as such has sole voting and dispositive power over such shares. |
(13) | Includes 942,045 shares of common stock issuable upon the exercise of warrants exercisable at a price of $0.825 per share and expiring on April 30, 2019 and 750,000 shares of common stock issuable upon exercise of stock options which may be exercised within 60 days. |
(14) | Information derived from a Schedule 13G filed on December 13, 2013. |
(15) | Includes 3,272,727 shares of common stock issuable upon the exercise of warrants exercisable at a price of $0.825 per share and expiring on April 30, 2019. |
Name of Selling stockholder | Number of Shares of Common Stock Owned Prior to the Offering(1) | Percentage of Common Stock Owned Prior to the Offering | Number of Shares of Common Stock Offered in the Offering | Number of Shares of Common Stock Owned After the Offering(2) | Percentage of Common Stock Owned After the Offering(2) | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Ironbound Partners Fund, LLC(3) | 14,460,640 | 15.1 | % | 12,576,550 | 1,884,090 | 1.9 | % | |||||||||||||||
Jeremy Zimmer(4) | 550,000 | * | 550,000 | 0 | * | |||||||||||||||||
Dakota Group Ltd.(5) | 250,000 | * | 250,000 | 0 | * | |||||||||||||||||
Evan Morgan | 125,000 | * | 125,000 | 0 | * | |||||||||||||||||
Leman Management Nominees Limited(6) | 200,000 | * | 200,000 | 0 | * | |||||||||||||||||
LM Holdings Ltd.(6) | 1,500,000 | 1.6 | % | 1,500,000 | 0 | * | ||||||||||||||||
Pepper Grove Holdings Limited(6) | 800,000 | * | 800,000 | 0 | * | |||||||||||||||||
Moyo Partners, LLC(7) | 200,000 | * | 200,000 | 0 | * | |||||||||||||||||
Adam Nelson Trust #2 | 150,000 | * | 150,000 | 0 | * | |||||||||||||||||
Eric Nelson Trust #2 | 150,000 | * | 150,000 | 0 | * | |||||||||||||||||
Steven Nelson | 150,000 | * | 150,000 | 0 | * | |||||||||||||||||
Brimco LLC(8) | 250,000 | * | 250,000 | 0 | * | |||||||||||||||||
David Parker | 200,000 | * | 200,000 | 0 | * | |||||||||||||||||
William Campbell III | 200,000 | * | 200,000 | 0 | * | |||||||||||||||||
David Eisner | 100,000 | * | 100,000 | 0 | * | |||||||||||||||||
Firefly Holdings, LLC(9) | 100,000 | * | 100,000 | 0 | * | |||||||||||||||||
The Brian Robbins TR DTD 01/28/2010 | 100,000 | * | 100,000 | 0 | * | |||||||||||||||||
Stephen L. Brown(8) | 10,286 | * | 10,286 | 0 | * | |||||||||||||||||
Russell C. Ball III(10) | 10,286 | * | 10,286 | 0 | * | |||||||||||||||||
Arthur Spector(11) | 10,286 | * | 10,286 | 0 | * | |||||||||||||||||
Graubard Miller(12) | 13,581 | * | 13,581 | 0 | * | |||||||||||||||||
Castile Ventures III L.P. | 4,916,887 | 5.1 | % | 4,916,887 | 0 | * | ||||||||||||||||
Village Ventures Partners Fund, L.P.(13) | 2,436,431 | 2.5 | % | 2,436,431 | 0 | * | ||||||||||||||||
Village Ventures Partners Fund A, L.P.(13) | 184,510 | * | 184,510 | 0 | * |
Name of Selling stockholder | Number of Shares of Common Stock Owned Prior to the Offering(1) | Percentage of Common Stock Owned Prior to the Offering | Number of Shares of Common Stock Offered in the Offering | Number of Shares of Common Stock Owned After the Offering(2) | Percentage of Common Stock Owned After the Offering(2) | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Ross E. Traphagen, Jr. Revocable Trust | 614,846 | * | 614,846 | 0 | * | |||||||||||||||||
Venture Lending & Leasing VI, LLC(14) | 1,334,774 | 1.4 | % | 1,334,774 | 0 | * | ||||||||||||||||
Dace Ventures I, LP(15) | 1,499,207 | 1.6 | % | 1,499,207 | 0 | * | ||||||||||||||||
Dace Parallel Fund I, LP(15) | 2,373,587 | 2.5 | % | 2,373,587 | 0 | * | ||||||||||||||||
William Bo S. Peabody | 1,997,834 | 2.1 | % | 1,997,834 | 0 | * | ||||||||||||||||
Ethan Ayer | 60,701 | * | 60,701 | 0 | * | |||||||||||||||||
Granite Point Capital Master Fund, LP(16) | 649,635 | * | 649,635 | 0 | * | |||||||||||||||||
Warren Lammert | 27,682 | * | 27,682 | 0 | * | |||||||||||||||||
Long River Ventures, L.P(17) | 156,378 | * | 156,378 | 0 | * | |||||||||||||||||
The Worcester Venture Fund, L.P.(17) | 214,592 | * | 214,592 | 0 | * | |||||||||||||||||
Social Starts, LP(18) | 3,211 | * | 3,211 | 0 | * | |||||||||||||||||
BLZ Investments, LLC(18) | 3,211 | * | 3,211 | 0 | * | |||||||||||||||||
William Lohse | 8,763 | * | 8,763 | 0 | * | |||||||||||||||||
Joshua Silberstein(13) | 775,277 | (14) | * | 650,277 | 125,000 | (14) | * | |||||||||||||||
Christopher Bruno(15) | 500,175 | * | 500,175 | 0 | * | |||||||||||||||||
Thomas Harrison | 75,000 | * | 75,000 | 0 | * | |||||||||||||||||
Steve Elkes | 65,000 | * | 65,000 | 0 | * | |||||||||||||||||
Stefan Lehmann- Karp | 50,000 | * | 50,000 | 0 | * | |||||||||||||||||
Khaled Alquaddoomi | 25,000 | * | 25,000 | 0 | * | |||||||||||||||||
Rosalie Rung | 20,000 | * | 20,000 | 0 | * | |||||||||||||||||
Janis Barsuk | 12,000 | * | 12,000 | 0 | * | |||||||||||||||||
Sarah Hahn | 11,000 | * | 11,000 | 0 | * | |||||||||||||||||
Becca Cohen | 10,000 | * | 10,000 | 0 | * | |||||||||||||||||
Philip Goffinet | 10,000 | * | 10,000 | 0 | * | |||||||||||||||||
Bo Landsman | 10,000 | * | 10,000 | 0 | * | |||||||||||||||||
Jeffery Broder | 10,000 | * | 10,000 | 0 | * | |||||||||||||||||
Alex Tumarinson | 10,000 | * | 10,000 | 0 | * | |||||||||||||||||
Branden Smythe | 10,000 | * | 10,000 | 0 | * | |||||||||||||||||
Rachel Spindel | 5,000 | * | 5,000 | 0 | * | |||||||||||||||||
Lynne McCarthy(15) | 5,000 | * | 5,000 | 0 | * | |||||||||||||||||
Steve McEvoy | 5,000 | * | 5,000 | 0 | * | |||||||||||||||||
Lee Pender(15) | 3,500 | * | 3,500 | 0 | * | |||||||||||||||||
Christiana Yiallourides(15) | 3,000 | * | 3,000 | 0 | * | |||||||||||||||||
Chaucy Dixon | 2,500 | * | 2,500 | 0 | * | |||||||||||||||||
Anne Apuzzo(15) | 2,500 | * | 2,500 | 0 | * | |||||||||||||||||
Gussy Ellis(15) | 2,500 | * | 2,500 | 0 | * | |||||||||||||||||
Linda Albert(15) | 2,000 | * | 2,000 | 0 | * | |||||||||||||||||
Stephanie Pereira(15) | 1,500 | * | 1,500 | 0 | * | |||||||||||||||||
Rich Stora | 1,500 | * | 1,500 | 0 | * | |||||||||||||||||
Lei Xu(15) | 1,500 | * | 1,500 | 0 | * | |||||||||||||||||
Larissa Starikova | 1,500 | * | 1,500 | 0 | * | |||||||||||||||||
Corey Hanson(15) | 1,250 | * | 1,250 | 0 | * | |||||||||||||||||
Veronica Genco(15) | 1,250 | * | 1,250 | 0 | * | |||||||||||||||||
George Fu | 1,000 | * | 1,000 | 0 | * | |||||||||||||||||
Kimberly Curran | 1,000 | * | 1,000 | 0 | * | |||||||||||||||||
Conor Rogers | 1,000 | * | 1,000 | 0 | * | |||||||||||||||||
Coco Kim | 1,000 | * | 1,000 | 0 | * |
Name of Selling stockholder | Number of Shares of Common Stock Owned Prior to the Offering(1) | Percentage of Common Stock Owned Prior to the Offering | Number of Shares of Common Stock Offered in the Offering | Number of Shares of Common Stock Owned After the Offering(2) | Percentage of Common Stock Owned After the Offering(2) | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sagar Budhrani | 1,000 | * | 1,000 | 0 | * | |||||||||||||||||
Tara Martinez(15) | 750 | * | 750 | 0 | * | |||||||||||||||||
Charu Verma | 620 | * | 620 | 0 | * | |||||||||||||||||
Luke Murphy(15) | 500 | * | 500 | 0 | * | |||||||||||||||||
Kristen Cesca(15) | 500 | * | 500 | 0 | * | |||||||||||||||||
Corsis | 10,000 | * | 10,000 | 0 | * | |||||||||||||||||
Faisal Raja(15) | 7,500 | * | 7,500 | 0 | * | |||||||||||||||||
Arthur Fried(15) | 5,000 | * | 5,000 | 0 | * | |||||||||||||||||
Don Hackett | 5,000 | * | 5,000 | 0 | * | |||||||||||||||||
Scott Briggs | 4,465 | * | 4,465 | 0 | * | |||||||||||||||||
Carlos Cashman | 4,464 | * | 4,464 | 0 | * | |||||||||||||||||
Almond Mendoza | 2,500 | * | 2,500 | 0 | * | |||||||||||||||||
Roxanne Neems(15) | 2,500 | * | 2,500 | 0 | * | |||||||||||||||||
Oliver Geluz | 2,000 | * | 2,000 | 0 | * | |||||||||||||||||
Alex Kestner | 1,500 | * | 1,500 | 0 | * | |||||||||||||||||
Katerina Leznik | 1,000 | * | 1,000 | 0 | * | |||||||||||||||||
Jane Ezersky | 1,000 | * | 1,000 | 0 | * | |||||||||||||||||
Suhyun Kim | 500 | * | 500 | 0 | * | |||||||||||||||||
Sam Erwin Kollah | 100,000 | * | 100,000 | 0 | * | |||||||||||||||||
Mark Peabody | 100,000 | * | 100,000 | 0 | * | |||||||||||||||||
Henry and Cheryl Riehl | 10,000 | * | 10,000 | 0 | * | |||||||||||||||||
Rebecca Riehl | 10,000 | * | 10,000 | 0 | * | |||||||||||||||||
Scott and Kelly Parent | 5,000 | * | 5,000 | 0 | * | |||||||||||||||||
Jay Peabody | 5,000 | * | 5,000 | 0 | * | |||||||||||||||||
William and Margaret Peabody | 50,000 | * | 50,000 | 0 | * | |||||||||||||||||
Wayne Charles and Barbara Renatta Kollath | 50,000 | * | 50,000 | 0 | * | |||||||||||||||||
Matt and Jessica Harris | 25,000 | * | 25,000 | 0 | * | |||||||||||||||||
Arnold Kling | 100,000 | * | 100,000 | 0 | * | |||||||||||||||||
MTL Investments Inc.(19) | 1,681,818 | 1.8 | % | 1,000,000 | 681,818 | * | ||||||||||||||||
Laura Ingraham | 1,681,818 | 1.8 | % | 1,000,000 | 681,818 | * | ||||||||||||||||
Selling Source, LLC(16) | 22,145,294 | 23.1 | % | 20,000,000 | 2,145,294 | 2.2 | % | |||||||||||||||
Robert Regular(17) | 10,136,864 | 10.6 | % | 10,000,000 | 136,864 | * |
(1) | Includes shares of common stock owned by such shareholder and his, her or its affiliates. |
(2) | Assumes shareholders will resell all the shares offered hereby. |
(3) | Mr. Ledecky has served as our Non-Executive Chairman of the Board since the consummation of the merger with Andover Games on February 29, 2012. Mr. Ledecky also served as our Interim Chief Financial Officer from February 29, 2012 until July 1, 2013 and as our Chief Executive Officer from January 21, 2011 until the consummation of the merger with Andover Games on February 29, 2012. Mr. Ledecky is the managing member of Ironbound and as such has sole voting and dispositive power over the shares held by Ironbound. |
(4) | Mr. Zimmer has served as a member of our board of directors since the consummation of the merger with Andover Games on February 29, 2012. |
(5) | Stanley Buchthal, president of Dakota Group Ltd., exercises voting and dispositive power over the shares held by such entity. |
(6) | Edward Allanby exercises voting and dispositive power over the shares held by each of Leman Management Nominees Limited, LM Holdings Ltd. and Pepper Grove Holdings Limited. |
(7) | Arnold Kling is the managing partner of Moyo Partners, LLC and exercises voting and dispositive power over the shares held by such entity. |
(8) | Stephen L. Brown serves as the managing partner and chairman of the board of Brimco LLC and exercises sole voting and dispositive power over the shares held by such entity. Mr. Brown was a member of our board of directors from our inception until January 6, 2011. |
(9) | Nicholas Grouf, member of Firefly Holdings, LLC exercises voting and dispositive power over the shares held by such entity. |
(10) | Mr. Ball was a member of our board of directors from our inception until August 5, 2009. |
(11) | Mr. Spector was a special advisor to us from our inception until 2009. |
(12) | Graubard Miller has served as our general counsel since January 2011 and served as our general counsel from our inception until May 2008. |
(13) | William Bo S. Peabody and Matthew C. Harris share voting and/or dispositive power over these shares. |
(14) | The managing member of this entity is Westech Investment Advisors, LLC. This entity is controlled by Ron Swenson, Sal Gutierrez, Maurice Werdegar, Jay Cohan, David Wanek, and Martin Eng and accordingly such individuals may be deemed to have shared voting and/or dispositive power over these shares. |
(15) | Jonathan Chalt, managing member of Dace Ventures GP, LLC, the general partner of these entities, has voting and/or dispositive power over these shares. |
(16) | C. David Bushley has voting and/or dispositive power over these shares as COO of the investment manager of Granite Point Capital Master Fund, LP. |
(17) | Word D. Peake III has voting and/or dispositive power over these shares. |
(18) | William Lohse has voting and/or dispositive power over these shares. |
(19) | Arnie Hermann has voting and/or dispositive power over these shares. |
• | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchases; |
• | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
• | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
• | an exchange distribution in accordance with the rules of the applicable exchange; |
• | privately negotiated transactions; |
• | settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part; |
• | broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; |
• | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
• | a combination of any such methods of sale; or |
• | any other method permitted pursuant to applicable law. |
• | a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an “interested stockholder”); |
• | an affiliate of an interested stockholder; or |
• | an associate of an interested stockholder, |
• | our Board approves the transaction that made the stockholder an “interested stockholder,” prior to the date of the transaction; |
• | after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares; or |
• | on or subsequent to the date of the transaction, the business combination is approved by our Board and authorized at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder. |
• | Our certificate of incorporation does not provide for cumulative voting in the election of directors. Cumulative voting provides for a stockholder to vote a portion or all of its shares for one or more candidates for seats on the board of directors. Without cumulative voting, a minority stockholder will not be able to gain as many seats on our board of directors based on the number of shares of our stock that such stockholder holds as it would if cumulative voting were permitted. The elimination of cumulative voting makes it more difficult for a minority stockholder to gain a seat on our board of directors to influence the board’s decision regarding a takeover. |
• | Under our certificate of incorporation, 1,000,000 shares of preferred stock remain undesignated. As discussed above in the section entitled “—Preferred Stock”, the authorization of undesignated preferred stock makes it possible for the board of directors, without stockholder approval, to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to obtain control of us. |
• | Our by-laws contain advance-notice procedures that apply to stockholder proposals and the nomination of candidates for election as directors by stockholders, other than nominations made pursuant to the notice given by us with respect to such meetings or nominations made by or at the direction of the board of directors. |
Page | ||||||
---|---|---|---|---|---|---|
Unaudited Financial Statements: | ||||||
F-2 | ||||||
F-3 | ||||||
F-4 | ||||||
F-5 | ||||||
Audited Financial Statements: | ||||||
F-15 | ||||||
F-16 | ||||||
F-17 | ||||||
F-18 | ||||||
F-19 | ||||||
F-20 |
Condensed Consolidated Balance Sheets
($ in thousands, except share and per share data)
March 31, 2014 (Unaudited) | December 31, 2013 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||||
CURRENT ASSETS | ||||||||||
Cash | $ | 2,306 | $ | 2,478 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $343 and $343, respectively | 7,586 | 10,061 | ||||||||
Prepaid expenses and other current assets | 381 | 268 | ||||||||
TOTAL CURRENT ASSETS | 10,273 | 12,807 | ||||||||
Property and equipment, net | 1,086 | 910 | ||||||||
Restricted cash | 195 | 183 | ||||||||
Deferred financing costs | 68 | 74 | ||||||||
Intangible assets | 2,070 | 2,126 | ||||||||
Goodwill | 11,816 | 11,816 | ||||||||
TOTAL ASSETS | 25,508 | 27,916 | ||||||||
LIABILITIES | ||||||||||
CURRENT LIABILITIES | ||||||||||
Accounts payable and accrued liabilities | 4,418 | 4,629 | ||||||||
Accrued compensation | 960 | 1,180 | ||||||||
Short term debt | 2,871 | 3,304 | ||||||||
Note payable stockholder, current | 1,101 | — | ||||||||
TOTAL CURRENT LIABILITIES | 9,350 | 9,113 | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
Deferred rent | 5 | 9 | ||||||||
Deferred tax liability | 272 | 272 | ||||||||
Other liabilities | 224 | 224 | ||||||||
Note payable stockholder, non-current | 201 | 302 | ||||||||
TOTAL LIABILITIES | 10,052 | 9,920 | ||||||||
STOCKHOLDERS’ EQUITY | ||||||||||
Preferred Stock, $0.0001 par value, authorized 1,000,000 shares, none issued | — | — | ||||||||
Common stock, $0.0001 par value, authorized 300,000,000 shares, issued and outstanding 83,156,969 and 83,156,969, at March 31, 2014 and December 31, 2013, respectively | 8 | 8 | ||||||||
Additional paid-in capital | 17,891 | 17,820 | ||||||||
Retained (Accumulated deficit) earnings | (2,443 | ) | 168 | |||||||
TOTAL STOCKHOLDERS’ EQUITY | 15,456 | 17,996 | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 25,508 | $ | 27,916 |
Condensed Consolidated Statements of Operations
($ in thousands, except share and per share data)
(unaudited)
Three Months Ended March 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | ||||||||||
Revenue | $ | 6,944 | $ | 4,908 | |||||||
Cost of revenue | 5,664 | 3,598 | |||||||||
Gross Profit | 1,280 | 1,310 | |||||||||
Operating expenses | |||||||||||
Employee expenses | 2,237 | 1,015 | |||||||||
Related party expenses | — | 85 | |||||||||
Other operating expenses | 1,456 | 195 | |||||||||
Depreciation and amortization | 110 | 156 | |||||||||
Total operating expenses | 3,803 | 1,451 | |||||||||
Operating loss | (2,523 | ) | (141 | ) | |||||||
Interest Expense | (87 | ) | — | ||||||||
Loss before income taxes | (2,610 | ) | (141 | ) | |||||||
Income taxes | 1 | — | |||||||||
Net Loss | $ | (2,611 | ) | $ | (141 | ) | |||||
Net Loss per Common Share — Basic and Diluted | $ | (0.03 | ) | $ | (0.01 | ) | |||||
Weighted-Average Number of shares outstanding — Basic and Diluted | 83,156,969 | 20,000,000 |
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(unaudited)
Three Months Ended March 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2014 | 2013 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net (loss) | $ | (2,611 | ) | $ | (141 | ) | |||||
Adjustments to reconcile net (loss) to net cash used in operating activities | |||||||||||
Depreciation and amortization | 110 | 156 | |||||||||
Stock-based compensation | 71 | — | |||||||||
Deferred rent amortization | (4 | ) | — | ||||||||
Financing costs amortization | 6 | — | |||||||||
Provisions for bad debt | — | (60 | ) | ||||||||
Changes in Assets and Liabilities | |||||||||||
Accounts receivable, net | 2,475 | 3,192 | |||||||||
Prepaid expenses | (113 | ) | 10 | ||||||||
Restricted cash | (12 | ) | (3 | ) | |||||||
Accounts payable and accrued liabilities | (211 | ) | (581 | ) | |||||||
Accrued compensation | (220 | ) | (17 | ) | |||||||
Net cash (used in)/provided by operating activities | (509 | ) | 2,556 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Purchase of fixed assets | (230 | ) | (113 | ) | |||||||
Net cash (used in) investing activities | (230 | ) | (113 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Capital (distributions to) contributions from members | — | (1,906 | ) | ||||||||
Repayments of loan | (366 | ) | — | ||||||||
Repayments under lines of credit | (7,343 | ) | — | ||||||||
Borrowings under lines of credit | 7,276 | — | |||||||||
Proceeds from note payable—shareholder | 1,000 | — | |||||||||
Changes in cash overdraft from financial institution, net | — | (537 | ) | ||||||||
Net cash provided by/(used in) financing activities | 567 | (2,443 | ) | ||||||||
Net decrease in cash | (172 | ) | — | ||||||||
Cash at beginning of period | 2,478 | — | |||||||||
Cash at end of period | $ | 2,306 | $ | — | |||||||
Supplemental disclosure to cash flow information: | |||||||||||
Cash paid for Interest | $ | 87 | $ | — | |||||||
Cash paid for Taxes | $ | 1 | $ | — |
Notes to Condensed Consolidated Financial Statements
($ in thousands, except share and per share data)
(unaudited)
shares from a stockholder simultaneously with the closing of the Mergers. Prior to June 30, 2013, the operations of Andover Games were formally discontinued. On July 1, 2013, the financial statements of Kitara Media became the Company’s financial statements and the Company’s operations became entirely that of Kitara Media and NYPG.
• | Level 1: Quoted prices in active markets for identical assets or liabilities. |
• | Level 2: Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. |
• | Level 3: Significant unobservable inputs that cannot be corroborated by market data |
Skyword Royalty Payment Schedule | Royalty Rate Applied to Revenues for Stated Period | |||||
---|---|---|---|---|---|---|
09/01/13 to 02/28/14 | 5% | |||||
03/01/14 to 8/31/14 | 15% | |||||
09/01/14 to 02/28/15 | 20% | |||||
03/01/15 to 09/15/17 | 25% |
Condensed Consolidated Balance Sheet | Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fair value of contingent consideration in connection with the purchase of Gather (included in other liabilities): | ||||||||||||||||||
March 31, 2014 | $ | 224 | $ | — | $ | — | $ | 224 | ||||||||||
December 31, 2013 | $ | 224 | $ | — | $ | — | $ | 224 |
For the Three Months Ended March 31, 2014 | ||||||
---|---|---|---|---|---|---|
Beginning balance at January 1, 2014 | $ | 224 | ||||
Change in fair value of contingent consideration | — | |||||
Ending balance at March 31, 2014 | $ | 224 |
potentially dilutive securities (consisting solely of stock options) of 8,852,500 and 150,000, respectively, because their inclusion would be antidilutive.
Wall Street Journal. As of March 31, 2014 the total balance outstanding was $946, and as of December 31, 2013 the outstanding balance was $1,080.
Number of Options | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Outstanding at January 1, 2014 | 9,150,000 | $ | 0.31 | $ | 0.13 | 4.7 | $ | 10,013 | ||||||||||||||
Granted | — | — | — | |||||||||||||||||||
Exercised | — | — | — | |||||||||||||||||||
Forfeited, expired or canceled | (297,500 | ) | 0.40 | 0.17 | ||||||||||||||||||
Outstanding at March 31, 2014 | 8,852,500 | $ | 0.30 | $ | 0.13 | 4.5 | $ | 6,175 | ||||||||||||||
Exercisable at January 1, 2014 | 212,500 | $ | 0.24 | $ | 0.10 | 4.5 | $ | 245 | ||||||||||||||
Vested | 368,750 | 0.25 | 0.10 | |||||||||||||||||||
Forfeited, expired or canceled | — | — | — | |||||||||||||||||||
Exercisable at March 31, 2014 | 581,250 | $ | 0.25 | $ | 0.10 | 4.4 | $ | 437 |
January 1, 2023 to replace the existing advances from the stockholder of NYPG. Each of the Closing Notes accrues interest at a rate of 1% per annum, which will be due at the time the Closing Notes become due and payable. The aggregate purchase price of the transaction was $2,000.
Three Months Ended March 31, 2013 | ||||||
---|---|---|---|---|---|---|
Revenue | $ | 7,149 | ||||
Net (Loss) | $ | (1,626 | ) | |||
Net (Loss) per Common Share — Basic and Diluted | $ | (0.02 | ) | |||
Weighted-Average Number of shares outstanding — Basic and Diluted | 83,156,969 |
the investors in the Offering. Pursuant to the Purchase Agreement, the Company sold a total of $7,000 of its shares of common stock (or an aggregate of 12,727,272 shares) in the Offering to several accredited investors (the “Investors”), including Ironbound and Robert Regular, the Company’s chief executive officer. In connection with the Offering, the Company issued warrants to purchase an aggregate of 6,363,636 shares of the Company’s common stock. The warrants are exercisable at a price of $0.825 per share and expire on April 30, 2019.
Kitara Media Corp.
Melville, NY
Consolidated Balance Sheets
($ in thousands, except share and per share data)
December 31, 2013 | December 31, 2012 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||||
CURRENT ASSETS | ||||||||||
Cash | $ | 2,478 | $ | 0 | ||||||
Accounts receivable, net | 10,061 | 7,595 | ||||||||
Prepaid expenses | 268 | 115 | ||||||||
Other assets | 0 | 5 | ||||||||
TOTAL CURRENT ASSETS | 12,807 | 7,715 | ||||||||
Property and equipment, net | 910 | 129 | ||||||||
Restricted cash | 183 | 124 | ||||||||
Deferred financing costs | 74 | 0 | ||||||||
Intangible assets | 2,126 | 386 | ||||||||
Goodwill | 11,816 | 0 | ||||||||
TOTAL ASSETS | 27,916 | 8,354 | ||||||||
LIABILITIES | ||||||||||
CURRENT LIABILITIES | ||||||||||
Cash overdraft | 0 | 670 | ||||||||
Accounts payable and accrued liabilities | 4,629 | 2,435 | ||||||||
Accrued compensation | 1,180 | 214 | ||||||||
Due to related party | 0 | 343 | ||||||||
Short term debt | 3,304 | 0 | ||||||||
TOTAL CURRENT LIABILITIES | 9,113 | 3,662 | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
Deferred rent | 9 | 20 | ||||||||
Deferred tax liability | 272 | 0 | ||||||||
Other liabilities | 224 | 0 | ||||||||
Note payable stockholder, non-current | 302 | 0 | ||||||||
TOTAL LIABILITIES | 9,920 | 3,682 | ||||||||
STOCKHOLDERS’ EQUITY | ||||||||||
Preferred stock, $0.0001 par value, authorized 1,000,000 shares, none issued | 0 | 0 | ||||||||
Common stock, $0.0001 par value, authorized 300,000,000 shares, issued and outstanding 83,156,969 and 20,000,000, respectively | 8 | 2 | ||||||||
Additional paid-in capital | 17,820 | 4,316 | ||||||||
Retained earnings | 168 | 354 | ||||||||
TOTAL STOCKHOLDERS’ EQUITY | 17,996 | 4,672 | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 27,916 | $ | 8,354 |
Consolidated Statements of Operations
($ in thousands, except share and per share data)
Year Ended December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2013 | 2012 | ||||||||||
Revenue | $ | 25,377 | $ | 23,557 | |||||||
Cost of revenue | 17,148 | 18,598 | |||||||||
Gross Profit | 8,229 | 4,959 | |||||||||
Operating expenses | |||||||||||
Employee expenses | 5,097 | 4,672 | |||||||||
Related party expenses | 251 | 399 | |||||||||
Impairment of property and equipment | 0 | 649 | |||||||||
Other operating expenses | 2,432 | 1,316 | |||||||||
Depreciation and amortization | 525 | 748 | |||||||||
Total operating expenses | 8,305 | 7,784 | |||||||||
Operating (loss) | (76 | ) | (2,825 | ) | |||||||
Other (expense) | (43 | ) | (5 | ) | |||||||
Loss before income taxes | (119 | ) | (2,830 | ) | |||||||
Income taxes | (67 | ) | 0 | ||||||||
Net (Loss) | $ | (186 | ) | $ | (2,830 | ) | |||||
Net (Loss) per Common Share — Basic | $ | (0.00 | ) | $ | (0.14 | ) | |||||
Weighted-Average Number of shares outstanding — Basic | 41,897,560 | 20,000,000 | |||||||||
Net (Loss) per Common Share — Diluted | $ | (0.00 | ) | $ | (0.14 | ) | |||||
Weighted-Average Number of shares outstanding — Diluted | 41,897,560 | 20,000,000 |
Consolidated Statements of Changes in Stockholders’ Equity
($ in thousands, except share and per share data)
Common stock | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares | Amount | Additional Paid in Capital Amount | Retained Earnings Amount | Total Stockholders’ Equity Amount | |||||||||||||||||||
Balance at January 1, 2012 | 20,000,000 | $ | 2 | $ | 1,237 | $ | 3,184 | $ | 4,423 | ||||||||||||||
Member’s Capital Contributions | 3,079 | 3,079 | |||||||||||||||||||||
Net Loss | (2,830 | ) | (2,830 | ) | |||||||||||||||||||
Balance at December 31, 2012 | 20,000,000 | $ | 2 | $ | 4,316 | $ | 354 | $ | 4,672 | ||||||||||||||
Distributions to former members of Kitara | (699 | ) | (699 | ) | |||||||||||||||||||
Reverse Merger with Ascend Acquisition Corp. on July 1, 2013 | 51,206,700 | 5 | (605 | ) | (600 | ) | |||||||||||||||||
10,000,000 shares issued on July 1, 2013 in consideration for the acquisition of NYPG | 10,000,000 | 1 | 1,999 | 2,000 | |||||||||||||||||||
Private placement on July 1, 2013 of 4,000,000 shares at $0.50 per share | 4,000,000 | 2,000 | 2,000 | ||||||||||||||||||||
Contribution of 25,813,075 shares on July 1, 2013 for no consideration | (25,813,075 | ) | (3 | ) | 3 | 0 | |||||||||||||||||
Repurchase of 381,950 shares on July 1, 2013 | (381,950 | ) | (50 | ) | (50 | ) | |||||||||||||||||
Shares issued on October 21, 2013 to satisfy working capital adjustment and accrued expenses related to services provided — related to the reverse merger with Ascend | 2,145,294 | 170 | 170 | ||||||||||||||||||||
18,000,000 shares issued on December 3, 2013 in consideration for the acquisition of Health Guru | 18,000,000 | 2 | 8,598 | 8,600 | |||||||||||||||||||
Private Placement on December 3, 2013 of 4,000,000 shares at $0.50 per share | 4,000,000 | 1 | 1,999 | 2,000 | |||||||||||||||||||
Stock based compensation | 89 | 89 | |||||||||||||||||||||
Net loss | (186 | ) | (186 | ) | |||||||||||||||||||
Balance, December 31, 2013 | 83,156,969 | $ | 8 | $ | 17,820 | $ | 168 | $ | 17,996 |
Year Ended December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2013 | 2012 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net (loss) | $ | (186 | ) | $ | (2,830 | ) | |||||
Adjustments to reconcile net (loss) to net cash used in operating activities | |||||||||||
Depreciation and amortization | 525 | 748 | |||||||||
Asset impairment of property and equipment | 649 | ||||||||||
Stock-based compensation | 89 | 0 | |||||||||
Deferred rent amortization | (11 | ) | (9 | ) | |||||||
Provisions for bad debt | 301 | (8 | ) | ||||||||
Loss on disposal of property and equipment | 58 | 0 | |||||||||
Changes in Assets and Liabilities | |||||||||||
Accounts receivable, net | 214 | (2,321 | ) | ||||||||
Prepaid expenses | �� | 111 | 111 | ||||||||
Other Assets | 0 | 50 | |||||||||
Accounts payable and accrued liabilities | (1,538 | ) | 668 | ||||||||
Accrued compensation | 222 | 142 | |||||||||
Due to related party | (173 | ) | 0 | ||||||||
Net cash used in operating activities | (388 | ) | (2,800 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Purchase of fixed assets | (746 | ) | (593 | ) | |||||||
Cash acquired in reverse merger with Ascend | 2 | 0 | |||||||||
Cash acquired in acquisition of Health Guru/Gather | 754 | 0 | |||||||||
Cash acquired in Kitara/NYPG merger | 6 | 0 | |||||||||
Net cash provided by/(used in) investing activities | 16 | (593 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Capital (distributions to) contributions from members | (699 | ) | 3,079 | ||||||||
Repayments under lines of credit | (119 | ) | 0 | ||||||||
Borrowings under lines of credit | 841 | 0 | |||||||||
Deferred financing costs | (74 | ) | 0 | ||||||||
Repayments of term loans | (79 | ) | 0 | ||||||||
Proceeds from private placement | 3,700 | 0 | |||||||||
Repurchase of stock | (50 | ) | 0 | ||||||||
Changes in cash overdraft from financial institution, net | (670 | ) | 314 | ||||||||
Net cash provided by financing activities | 2,850 | 3,393 | |||||||||
Net increase in cash | 2,478 | 0 | |||||||||
Cash at beginning of period | 0 | 0 | |||||||||
Cash at end of period | $ | 2,478 | $ | 0 | |||||||
Supplemental disclosure to cash flow information: | |||||||||||
Cash paid for Interest | 43 | 0 | |||||||||
Cash paid for Taxes | 4 | 0 | |||||||||
Supplemental disclosure of non-cash financing activities: | |||||||||||
Net assets acquired in connection with the acquisition of New York Publishing Group including the acquisition of $2,662 in short term debt (see Note 13) | $ | 2,000 | |||||||||
Net assets acquired in connection with the acquisition of Health Guru including the acquisition of $300 in promissory notes payable (see Note 13) | $ | 8,600 | $ | 0 | |||||||
Accrued working capital adjustment related to the Kitara reverse acquisition | $ | 1,074 | $ | 0 | |||||||
Conversion of promissory notes to equity | $ | 300 | $ | 0 |
Notes to Consolidated Financial Statements
($ in thousands, except share and per share data)
381,950 shares from a stockholder simultaneously with the closing of the Mergers. Prior to June 30, 2013, the operations of Andover Games were formally discontinued. On July 1, 2013, the financial statements of Kitara Media became the Company’s financial statements and the Company’s operations became entirely that of Kitara Media and NYPG.
• | Level 1: Quoted prices in active markets for identical assets or liabilities. |
• | Level 2: Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. |
• | Level 3: Significant unobservable inputs that cannot be corroborated by market data |
Skyword Royalty Payment Schedule | Royalty Rate Applied to Revenues for Stated Period | |||||
---|---|---|---|---|---|---|
09/01/13 to 02/28/14 | 5% | |||||
03/01/14 to 8/31/14 | 15% | |||||
09/01/14 to 02/28/15 | 20% | |||||
03/01/15 to 09/15/17 | 25% |
Consolidated Balance Sheet | Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fair value of contingent consideration in connection with the purchase of Gather (included in other liabilities): | ||||||||||||||||||
December 31, 2013 | $ | 224 | $ | — | $ | — | $ | 224 |
As of December 31, 2013 | ||||||
---|---|---|---|---|---|---|
Beginning balance at January 1, 2013 | $ | 0 | ||||
Acquisition of contingent consideration associated with the Health Guru Media merger | 224 | |||||
Ending balance at December 31, 2013 | $ | 224 |
policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s Chief Financial Officer.
volatility, dividend rate, risk free interest rate and the expected life. The Company calculates the expected volatility using the historical volatility over the most recent period equal to the expected term and evaluates the extent to which available information indicate that future volatility may differ from historical volatility. The expected dividend rate is zero as the Company does not expect to pay or declare any cash dividends on common stock. The risk-free rates for the expected terms of the stock options are based on the U.S. Treasury yield curve in effect at the time of the grant. The Company has not experienced significant exercise activity on stock options. Due to the lack of historical information, the Company determined the expected term of its stock option awards issued using the simplified method. The simplified method assumes each vesting tranche of the award has a term equal to the midpoint between when the award vests and when the award expires. The Company expenses stock-based compensation by using the straight-line method.
As of December 31, 2013 | As of December 31, 2012 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Leasehold improvements | $ | 25 | $ | 25 | ||||||
Furniture & Fixtures | 18 | 13 | ||||||||
Computer Equipment | 89 | 46 | ||||||||
Software | 587 | 189 | ||||||||
Other Equipment | 33 | 25 | ||||||||
Stock image, music & Video | 12 | 0 | ||||||||
Construction in progress | 481 | 58 | ||||||||
1,245 | 356 | |||||||||
Less: Accumulated Depreciation | (335 | ) | (227 | ) | ||||||
$ | 910 | $ | 129 |
As of December 31, 2013 | As of December 31, 2012 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Publisher relationships — Kitara Media | $ | 695 | $ | 695 | ||||||
Advertiser relationships — Kitara Media | 463 | 463 | ||||||||
Advertiser relationships — Healthguru | 720 | 0 | ||||||||
Domain and trade name — Healthguru (indefinite life) | 680 | 0 | ||||||||
Domain name — Gather | 142 | 0 | ||||||||
Video Library | 470 | 0 | ||||||||
Subscribers | 118 | 0 | ||||||||
Website | 26 | 0 | ||||||||
Total Intangible Asset | 3,314 | 1,158 | ||||||||
Less: Accumulated Amortization | (1,188 | ) | (772 | ) | ||||||
Net | $ | 2,126 | $ | 386 |
arrangement and contains certain subjective acceleration clauses. In addition, the bank may at its discretion, adjust the availability of the arrangement. At December 31, 2013 the outstanding balance was $841.
Source has advised the Company that it intends to make a motion for summary judgment on behalf of all defendants (including Kitara Media) dismissing the action. Selling Source also intends to move for a stay of discovery pending determination of the summary judgment motion.
Shares | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Outstanding at January 1, 2012 | — | |||||||||||||||||||||
Granted | 150,000 | $ | 0.75 | $ | 0.05 | |||||||||||||||||
Exercised | — | |||||||||||||||||||||
Forfeited, expired or cancelled | — | |||||||||||||||||||||
Outstanding at December 31, 2012 | 150,000 | $ | 0.75 | $ | 0.05 | $ | — | |||||||||||||||
Granted | 9,350,000 | $ | 0.30 | $ | 0.13 | |||||||||||||||||
Exercised | — | |||||||||||||||||||||
Forfeited, expired or cancelled | (350,000 | ) | $ | 0.47 | ||||||||||||||||||
Outstanding at December 31, 2013 | 9,150,000 | $ | 0.31 | $ | 0.13 | 4.7 | $ | 10,013 | ||||||||||||||
Exercisable at January 1, 2012 | — | |||||||||||||||||||||
Vested | — | |||||||||||||||||||||
Forfeited | — | |||||||||||||||||||||
Exercisable at December 31, 2012 | — | |||||||||||||||||||||
Vested | 212,500 | $ | 0.24 | $ | 0.10 | |||||||||||||||||
Forfeited | — | |||||||||||||||||||||
Exercisable at December 31, 2013 | 212,500 | $ | 0.24 | $ | 0.10 | 4.5 | $ | 245 |
May 7, 2012 Option Grants | Jul 1, 2013 Option Grants | Aug 1, 2013 Option Grants | Sep 1, 2013 Option Grants | Oct 23, 2013 Option Grants | Dec 3, 2013 Option Grants | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Stock Price | $ | 0.30 | $ | 0.20 | $ | 0.50 | $ | 0.70 | $ | 0.30 | $ | 0.26 | ||||||||||||||
Dividend Yield | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||||||||
Expected Volatility | 59 | % | 54 | % | 54 | % | 54 | % | 54 | % | 54 | % | ||||||||||||||
Risk-Free interest rate | 0.37 | % | 1.39 | % | 1.49 | % | 1.68 | % | 1.30 | % | 1.40 | % | ||||||||||||||
Expected life (in years) | 3 | 3.75 | 3.75 | 3.75 | 3.75 | 3.75 |
2013 | 2012 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Current | ||||||||||
Federal | $ | — | $ | — | ||||||
State | 67 | — | ||||||||
Total | 67 | — | ||||||||
Deferred | ||||||||||
Federal | — | — | ||||||||
State | — | — | ||||||||
Total | — | — | ||||||||
Total Income Tax Expense | $ | 67 | $ | — |
2013 | ||||||
---|---|---|---|---|---|---|
Statutory federal tax rate | 34.0 | % | ||||
State taxes, net of federal benefit | –39.6 | % | ||||
Transaction costs | –14.0 | % | ||||
Pre-merger Kitara LLC income | 33.2 | % | ||||
Valuation allowance | –71.9 | % | ||||
Other | 2.6 | % | ||||
Total | –55.7 | % |
December 31, 2013 | December 31, 2012 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deferred tax assets | ||||||||||
Net operating loss carryforward | $ | 4,558 | $ | — | ||||||
Accrued bonus | 182 | — | ||||||||
Bad debts | 137 | — | ||||||||
Accrued vacation | 56 | — | ||||||||
Non-qualified stock options | 36 | — | ||||||||
Gross deferred tax assets | 4,969 | — | ||||||||
Deferred tax liabilities | ||||||||||
Amortization of intangibles | (310 | ) | — | |||||||
Depreciation | (73 | ) | — | |||||||
Gross deferred tax liabilities | (383 | ) | — | |||||||
Valuation allowance | (4,858 | ) | — | |||||||
Net deferred tax liability | $ | (272 | ) | $ | — |
Intangible Asset Category | Amortization Period | |||||
---|---|---|---|---|---|---|
Subscribers | 7 years | |||||
Website | 3 years |
Fair Value | ||||||
---|---|---|---|---|---|---|
Cash | $ | 6 | ||||
Accounts Receivable | 28 | |||||
Property and Equipment | 2 | |||||
Intangible Asset — Subscribers | 118 | |||||
Intangible Asset — Website | 25 | |||||
Goodwill | 2,118 | |||||
Security Deposit | 3 | |||||
Promissory Notes Payable | (300 | ) | ||||
Total purchase price consideration | $ | 2,000 |
Intangible Asset Category | Amortization Period | |||||
---|---|---|---|---|---|---|
Domain Name — Gather.com | 18 months | |||||
Advertiser Relationship | 10 years | |||||
Video Library | 10 years | |||||
Domain and trade name | Indefinite |
Fair Value | ||||||
---|---|---|---|---|---|---|
Cash | $ | 754 | ||||
Accounts Receivable | 2,926 | |||||
Property and Equipment | 198 | |||||
Prepaid expenses and other current assets | 286 | |||||
Security Deposit | 56 | |||||
Intangible Asset — Domain and Trade Name — no amortization | 680 | |||||
Intangible Asset — Domain Name | 142 | |||||
Intangible Asset — Advertiser Relationship | 720 | |||||
Intangible Asset — Video Library | 470 | |||||
Goodwill | 9,698 | |||||
Deferred tax liability | (272 | ) | ||||
Accounts Payable and Accrued Expenses | (4,172 | ) | ||||
Contingent Consideration | (224 | ) | ||||
Short Term Debt | (2,662 | ) | ||||
Total purchase price consideration | $ | 8,600 |
For the year ended December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2013 | 2012 | ||||||||||
Revenues | $ | 35,090 | $ | 31,910 | |||||||
Net loss | $ | (5,552 | ) | $ | (6,761 | ) | |||||
Pro forma basic and diluted net loss per common share | $ | (0.07 | ) | $ | (0.08 | ) | |||||
Pro forma weighted average common shares outstanding — basic and diluted | 83,156,969 | 83,156,969 |
Securities and Exchange Commission registration fee | $ | 4,300 | ||||
Printer expenses | $ | 5,000 | ||||
Legal fees and expenses | $ | 25,000 | ||||
Accounting fees and expenses | $ | 15,000 | ||||
Total | $ | 49,300 |
Name | Shares | Warrants | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Brio Capital Master Fund Ltd. | 727,273 | 363,637 | ||||||||
Diker MicroCap Fund Ltd. | 727,273 | 363,636 | ||||||||
MAZ Partners LP | 225,000 | 112,500 | ||||||||
Unterberg Koller Capital Fund, L.P. | 6,545,455 | 3,272,727 | ||||||||
MJFIL Investments LLC | 50,000 | 25,000 | ||||||||
Serenity Now LLC | 100,000 | 50,000 | ||||||||
Option Opportunities Corp. | 100,000 | 50,000 | ||||||||
Max Communications, Inc. | 45,455 | 22,727 | ||||||||
John Lipman | 50,000 | 25,000 | ||||||||
Kingsbrook Opportunities Master Fund LP | 181,818 | 90,909 | ||||||||
Adventure Ventures LLC | 181,818 | 90,909 | ||||||||
Alpha Capital Anstalt | 909,091 | 454,545 | ||||||||
MTL Investments Inc. | 454,545 | 227,273 | ||||||||
Ironbound Partners Fund LLC | 1,884,090 | 942,045 | ||||||||
Robert Regular | 90,909 | 45,455 | ||||||||
Laura Ingraham | 454,545 | 227,273 |
Name | Shares | |||||
---|---|---|---|---|---|---|
Ironbound Partners Fund, LLC | 600,000 | |||||
Jeremy Zimmer | 200,000 | |||||
Granite Point Capital Master Fund, L.P. | 200,000 | |||||
Arnold Kling | 100,000 | |||||
Matt Lauer | 1,000,000 | |||||
Laura Ingraham | 1,000,000 | |||||
Ross E. Traphagen Jr. Revocable Trust | 200,000 | |||||
Pepper Grove Holdings Limited | 200,000 | |||||
LM Holdings Ltd. | 500,000 |
Name | Shares | |||||
---|---|---|---|---|---|---|
Ironbound Partners Fund, LLC(3) | 500,000 | |||||
Jeremy Zimmer | 100,000 | |||||
Leman Management Nominees Limited | 200,000 | |||||
LM Holdings Ltd. | 1,000,000 | |||||
Pepper Grove Holdings Limited | 600,000 | |||||
Moyo Partners, LLC | 200,000 | |||||
Adam Nelson Trust #2 | 150,000 | |||||
Eric Nelson Trust #2 | 150,000 | |||||
Steven Nelson | 150,000 | |||||
Brimco LLC | 250,000 | |||||
David Parker | 200,000 | |||||
William Campbell III | 200,000 | |||||
David Eisner | 100,000 | |||||
Firefly Holdings, LLC | 100,000 | |||||
The Brian Robbins TR DTD 01/28/2010 | 100,000 |
Name | Shares | |||||
---|---|---|---|---|---|---|
Jeremy Zimmer | 250,000 | |||||
Dakota Group Ltd. | 250,000 | |||||
Evan Morgan | 125,000 |
and to obtain any additional information which we possessed or were able to acquire without unreasonable effort and expense, and (e) the stockholder had no need for the liquidity in its investment in us and could afford the complete loss of such investment. Management made the determination that the investors in instances where we relied on Regulation D were accredited investors (as defined in Regulation D) based upon management’s inquiry into their sophistication and net worth. In addition, there was no general solicitation or advertising for securities issued in reliance upon Regulation D.
(b) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 |
and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, that registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. |
KITARA MEDIA CORP. | ||||||||||
By: | /s/ Robert Regular | |||||||||
Robert Regular Chief Executive Officer |
Name | Title | Date | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
/s/ Robert Regular Robert Regular | Chief Executive Officer (Principal Executive Officer) | May 29, 2014 | ||||||||
/s/ Lisa VanPatten Lisa VanPatten | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | May 29, 2014 | ||||||||
Joshua Silberstein | President and Director | |||||||||
* Jonathan J. Ledecky | Non-Executive Chairman of the Board | May 29, 2014 | ||||||||
* Sam Humphreys | Director | May 29, 2014 | ||||||||
* Craig dos Santos | Director | May 29, 2014 | ||||||||
* Jeremy Zimmer | Director | May 29, 2014 | ||||||||
* Ben Lewis | Director | May 29, 2014 |
* | By Robert Regular, Power of Attorney |
Exhibit No. | Description | |||||
---|---|---|---|---|---|---|
2.1 | Merger Agreement and Plan of Reorganization, dated as of December 30, 2011, by and among Ascend Acquisition Corp., Ascend Merger Sub, LLC, Andover Games, LLC and the members of Andover Games, LLC. (Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on January 4, 2012.) | |||||
2.2 | Amendment No. 1 to the Merger Agreement and Plan of Reorganization, dated as of March 30, 2012, by and among Ascend Acquisition Corp., Andover Games, LLC and the former members of Andover Games. (Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on April 4, 2012.) | |||||
2.3 | Amendment No. 2 to the Merger Agreement and Plan of Reorganization, dated as of May 14, 2012, by and among Ascend Acquisition Corp., Andover Games, LLC and the former members of Andover Games. (Incorporated by reference to the Registrant’s Registration Statement on Form S-1/A filed with the SEC on May 25, 2012.) | |||||
2.4 | Merger Agreement and Plan of Reorganization, dated as of June 12, 2013, among Ascend Acquisition Corp., Ascend Merger Sub, LLC, Ascend Merger Sub, Inc., Kitara Media, LLC, New York Publishing Group, Inc. and the signing holders listed on the “Signing Holder Signature Page” thereto. (Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on June 12, 2013.) | |||||
2.5 | Amendment No. 1 to Merger Agreement and Plan of Reorganization, dated as of July 1, 2013, among Ascend Acquisition Corp., Ascend Merger Sub, LLC, Ascend Merger Sub, Inc., Kitara Media, LLC, New York Publishing Group, Inc. and the signing holders listed on the “Signing Holder Signature Page” thereto (Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on July 5, 2013.) | |||||
2.6 | Merger Agreement and Plan of Reorganization, dated as of December 3, 2013, by and among Kitara Media Corp., Kitara Media Sub, Inc., Health Guru Media, Inc. and those certain securityholders of Health Guru executing the signature page attached thereto. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on December 4, 2013.) | |||||
3.1 | Second Amended and Restated Certificate of Incorporation. (Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 and filed with the SEC on March 31, 2009.) | |||||
3.2 | Certificate of Amendment of the Certificate of Incorporation of Ascend Acquisition Corp. (Incorporated by reference to Appendix A of the Company’s Information Statement on Schedule 14C filed on July 26, 2013.) | |||||
3.3 | By-Laws. (Incorporated by reference to the Registrant’s Registration Statement on Form S-1 or amendments thereto (SEC File No. 333-131529).) | |||||
4.1 | Specimen Common Stock Certificate. (Incorporated by reference to the Registrant’s Registration Statement on Form S-1 or amendments thereto (SEC File No. 333-131529).) | |||||
5.1 | Opinion of Graubard Miller (previously filed) | |||||
10.1 | Form of Subscription Agreement between Registrant and the certain investors. (Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on March 6, 2012.) | |||||
10.2 | Form of Indemnification Agreement. (Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on March 6, 2012.) | |||||
10.3 | 2012 Long-Term Incentive Equity Plan. (Incorporated by reference to the Registrant’s Registration Statement on Form S-1/A filed with the SEC on May 25, 2012.) | |||||
10.4 | Registration Rights Agreement, dated as of July 1, 2013, by and among Ascend Acquisition Corp., Selling Source, LLC and Robert Regular. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on July 5, 2013.) | |||||
10.5 | Escrow Agreement, dated as of July 1, 2013, by and among Ascend Acquisition Corp., the representatives of the former sole Member of Kitara Media, LLC and the former sole stockholder of New York Publishing Group, Inc., the committee representing the interests of Ascend Acquisition Corp. and Continental Stock Transfer & Trust Company. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on July 5, 2013.) |
Exhibit No. | Description | |||||
---|---|---|---|---|---|---|
10.6 | Form of Lock-Up Agreement between Registrant and each of the NYPG Signing Holder, the Kitara Signing Holder, Jonathan J. Ledecky, Ironbound, Jeremy Zimmer, Ben Lewis, Lee Linden and Craig dos Santos. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on July 5, 2013.) | |||||
10.7* | Employment Agreement, dated as of July 1, 2013, by and between Ascend Acquisition Corp. and Robert Regular. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on July 5, 2013.) | |||||
10.8* | Employment Agreement, dated as of July 1, 2013, by and between Ascend Acquisition Corp. and Limor Regular. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on July 5, 2013.) | |||||
10.9* | Employment Agreement by and between Ascend Acquisition Corp. and Lisa VanPatten. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on August 20, 2013.) | |||||
10.10 | Credit and Security Agreement. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on November 7, 2013.) | |||||
10.11 | Form of Continuing Guaranty. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on November 7, 2013.) | |||||
10.12 | Form of Collateral Pledge Agreement. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on November 7, 2013.) | |||||
10.13 | Form of Lock-Up Agreement between the Registrant and each officer and director of Health Guru and each Health Guru Stockholder. (other than certain agreed upon Health Guru Stockholders). (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on December 4, 2013.) | |||||
10.14* | Employment Agreement, dated as of December 3, 2013, by and between Joshua Silberstein and Kitara Media Corp. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on December 4, 2013.) | |||||
10.15 | Indemnification Agreement, dated as of December 3, 2013, between the Company and Joshua Silberstein. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on December 4, 2013.) | |||||
10.16 | Kitara Media Corp. 2013 Long-Term Incentive Equity Plan (Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on December 4, 2013.) | |||||
10.17 | Securities Purchase Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on May 1, 2014) | |||||
10.18 | Form of Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on May 1, 2014) | |||||
10.19 | Registration Rights Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on May 1, 2014) | |||||
21 | List of subsidiaries of the Registrant. (Incorporated by reference to Registrant’s Annual Report on Form 10-K filed with the SEC on March 31, 2014.) | |||||
23.1 | Consent of Graubard Miller (included in Exhibit 5.1) | |||||
23.1 | Consent of Marcum LLP | |||||
101.INS | XBRL Instance Document. | |||||
101.SCH | XBRL Taxonomy Extension Schema. | |||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase. | |||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase. | |||||
101.LAB | XBRL Taxonomy Extension Label Linkbase. | |||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase. |
* | Management compensatory plan, contract or arrangement. |