Item 1.01 Entry into a Material Definitive Agreement.
As previously reported by Vinco Ventures, Inc. (the "Company") in current
reports on Form 8-K filed with the Securities and Exchange Commission (the
"SEC") in October 2020, the Company, pursuant to that certain Purchase and Sale
Agreement (the "Agreement"),acquired all of the issued and outstanding
membership units of TBD Safety, LLC (the "Acquisition"). On May 26, 2021,
pursuant to the Agreement, the Company issued a total of 764,618 shares (the
"Acquisition Shares") of its common stock, par value $0.001 per share (the
"Common Stock") to two LLCs (the "Stockholders"). A portion of the Acquisition
Shares represented more than 20% of the Company's outstanding shares of Common
Stock as of the October 16, 2020 closing date of the Acquisition (the
"Percentage Threshold").
To enable the shares issued pursuant to the Agreement to be below the Percentage
Threshold, on January 3, 2022, the Company and one of the LLCs (controlled by
person who served as the Company's Chief Strategy Officer from November 2020
until September 2021) entered into a Share Exchange Agreement (the "Exchange
Agreement"). Pursuant to the Exchange Agreement, the parties agreed that (i) the
LLC would return 600,000 shares of Common Stock to the Company after which the
Company would cancel these 600,000 shares (the "Cancelled Shares") and (ii) the
Company would pay $1,644,000 to the LLC in exchange for the Cancelled Shares. In
connection with the Exchange Agreement, the Company and the Stockholders entered
into an Indemnification Agreement dated January 3, 2022 (the "Indemnification
Agreement"), whereby the Company agreed to indemnify the Stockholders for any
and all Losses (as defined in the Indemnification Agreement) incurred by the
Stockholders, whether occurring before, on or after the date of the Exchange
Agreement, in connection with the Acquisition, the Shares, the Cancelled Shares
and related tax liabilities.
The closing of the Exchange Agreement occurred on January 3, 2022.
The foregoing description of the terms of the Exchange Agreement and the
Indemnification Agreement, and the transactions contemplated thereby, does not
purport to be complete and is qualified in its entirety by reference to the
Exchange Agreement and the Indemnification Agreement, which are filed as Exhibit
10.1 and 10.2, respectively, hereto and are incorporated herein by reference.
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
The Company has been communicating with the Listing Qualifications Department of
the Nasdaq Stock Market LLC ("Nasdaq") regarding an issue of inadvertent
non-compliance with Nasdaq Listing Rule 5635(a) in connection with the
Agreement.
Listing Rule 5635(a) requires shareholder approval prior to the issuance of
securities in an acquisition if the total number of shares issued exceed 20% of
the outstanding number of shares immediately prior to the transaction. On
January 5, 2022, we received a letter from Nasdaq stating that because the
original number of shares issued in the Acquisition exceeded 20% of the
outstanding shares immediately prior to the transaction, Nasdaq determined the
Company did not comply with the Listing Rule 5635(a). Nasdaq further determined
that, as a result of the Company entering into and closing the Exchange
Agreement, the Company has regained compliance with the Rule and the matter is
now closed.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
10.1 Share Exchange Agreement between the Company and One LLC
10.2 Indemnification Agreement by and among the Company and Two LLCs
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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