ITEM 10. – DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
The following table provides information
regarding our executive officers, other executive management and directors as of December 31, 2016:
Name (Age)
|
|
Current Position(s)
|
|
Position(s) Held in Fiscal Year 2016
|
Sean Zarinegar (45)
|
|
Director, Member of Real Estate Committee
|
|
Director; Chairman of the Board of Directors, Chief Financial Officer, and Treasurer (2/25/2016 – 3/13/2017); Chief Executive Officer and President (11/29/2016 – 3/13/2017).
|
Jeff Howard (53)
|
|
N/A
|
|
Director, President and Chief Executive Officer (1/1/2016 – 10/25/2016)
|
James Stevens (57)
|
|
N/A
|
|
Director, President and Chief Executive Officer (10/25-2016 – 11/29/2016)
|
Kenneth Hedrick (47)
|
|
Director, Member of Real Estate Committee
|
|
Director
|
Les Gutierrez (64)
|
|
Director, Member of Real Estate Committee
|
|
Director
|
Michael Ogburn (43)
|
|
Chairman of the Board of Directors, Chief Executive Officer/President, Chief Financial Officer/Treasurer
|
|
N/A
|
Joaquin Flores (40)
|
|
Director
|
|
N/A
|
Brian Werner (55)
|
|
Director
|
|
N/A
|
Jack Combs (73)
|
|
Vice President
|
|
Vice President
|
Christ Andersen (35)
|
|
Secretary
|
|
Secretary
|
Biographical Information
for Michael Ogburn, Chairman of the Board of Directors, Chief Executive Officer, President, Chief Financial Officer, and Treasurer
Ogburn graduated from
California State University with a B.S. in Agriculture Business. He then started Epic Wood Floors, Inc. (“EWF”), a
company that manufacturing high end wood floors. EWF was sold in 2006. Ogburn then started Lightwave Capital, LLC (“Lightwave”),
which facilitated mergers and acquisitions as well as funding on a short and long term basis. Lightwave worked closely with companies
throughout a variety of transition to insure accurate financial information was being reported. In December 2015, Ogburn was appointed
Chief Executive Officer of iBrands Corporation Inc. (“iBrands”), a publicly reporting company currently traded OTC.
Obgurn will resign from his position at iBrands upon his acceptance of his appointments with the Company.
Biographical Information
for Brian Werner, Director
Brian Werner (“Werner”)
was appointed to the Board of Directors by the aforementioned Board Consent on March 7, 2017, subject to the closing of the Stock
Exchange Agreement. Prior to his appointment to the Board of Directors, Werner served as a Senior Mortgage Write for Omni Fund
Inc. He resides in Fresno, California.
Biographical Information
for Joaquin Flores, Director
Joaquin Flores (“Flores”)
was the third director appointed to the Board of Directors as a result of the aforementioned Board Consent and closing of the Stock
Exchange Agreement. Flores has significant experience in business development. Prior to his appointment on the Board of Directors,
Flores served as a Business Development Executive for the Winnemucca Indian Colony of Nevada for nine years.
Biographical Information for Sean Zarinegar,
Director and Member of the Real Estate Committee
Mr. Zarinegar brings more than twenty years
of experience in operations, evaluation, investment and management of real estate assets and is responsible for new asset origination,
evaluation, analysis and due diligence, as well as overall executive direction. Mr. Zarinegar brings investment experience to the
company as well as experience having formed successful business partnerships and has acquired a talented team of experts necessary
to support ongoing and future projects and opportunities. Mr. Zarinegar has been an active real estate investor in Arizona, Texas,
and Nevada as well as Colorado and Southern California, and has been tasked by the Corporation in leading efforts to convert the
Corporation to a Real Estate Investment Trust consistent with 26 USC § 856.
Mr. Zarinegar is focused on maximizing the
tremendous opportunity in the Phoenix, Arizona real estate market. With the decades of experience behind him, along with a severely
depressed real estate market, the opportunities are abundant. For the past five years, Mr. Zarinegar has served as the Managing
Partner for Core Performance Realty, and related parties, Performance Realty and American Realty. Mr. Zarinegar incorporates by
reference the prior disclosure regarding the cease and desist orders issued by the Kansas Securities Commission and Alabama Securities
Commission.
Mr. Zarinegar initially worked for the
Company on an independent contractor basis. On February 25, 2016, Jeff Howard executed, with approval from the Board of Directors,
the Employment Agreement with Mr. Zarinegar on behalf of the Company (the “Employment Agreement”). As a result, Mr.
Zarinegar became a full-time employee of the Company. Mr. Zarinegar has agreed to continue to serve on the Board of Directors at
no cost (unless subsequently adjusted by the Board of Directors with Mr. Zarinegar abstaining). In exchange for his employment,
the Company agrees to pay Mr. Zarinegar an annual salary equal to $120,000 on the dates consistent with the Company’s payroll
schedule, or 1% of the Company’s assets as reported on its year-end balance sheet, whichever is greater, unless, an opinion
of counsel or the Company’s auditors conclude that the asset-based compensation limits or impairs the Company’s intent
of becoming a real estate investment trust or impairs the Company’s status as a publicly reporting company in good standing
under the rules promulgated by the United States Securities and Exchange Commission.
The Company recognizes that Mr. Zarinegar
is a significant employee to the Company, and has incurred and continues to incur risk and exposure in guaranteeing the First
Key debt service of the Company and the debt of its subsidiaries, which ultimately benefits the Company and its shareholders.
Recognizing that the consideration above does not completely compensate Mr. Zarinegar, the Company initially agreed to issue Mr.
Zarinegar or his designee a total of 3,000,000 shares of the Company’s common stock on the first, second and third anniversary.
The Employment Agreement was subsequently amended on or about December 30, 2016. Pursuant to the amended Employment Agreement,
Mr. Zarinegar agreed to waive his rights to this issuance in favor of a reduced issuance of 616,180 shares of the Company’s
common stock for the period of February 25, 2016 through October 7, 2016.
At
the time of the amendment,
Mr. Zarinegar had already received 439,401 shares of common stock on
August 1, 2016. Mr. Zarinegar agreed to waive his rights to the issuance of
the remaining 176,779 shares.
Mr. Zarinegar is subject to a cease and
desist order issued by the Alabama Securities Commission and a consent cease and desist order issued by the Kansas Securities Commission.
The final consent order issued by the Kansas Securities Commission dated July 21, 2008 prohibits Mr. Zarinegar from offering or
selling unregistered securities in the State of Kansas, absent reliance on an exemption, or acting as a broker-dealer, or agent
thereof, in the sale of securities, and to not violate the Kansas Uniform Securities Act. The Alabama Securities Commission has
represented that a Final Order was entered on May 5, 2011, but no final order has been produced. Regardless, according to the FINRA
disclosure made under U-6, the final order does not constitute a final order based on any laws or regulations that prohibit fraudulent,
manipulative or deceptive conduct. Mr. Zarinegar filed a Statement of Claim for Expungement with FINRA pursuant to Rule 2080 (the
“Statement of Claim”), but the Statement of Claim was deemed not eligible for arbitration presumably due to the fact
that FINRA could not obtain jurisdiction over Malory, a defunct entity. In response, Mr. Zarinegar filed separate correspondence
with the Kansas Securities Commission and the Alabama Securities Commission requesting that the subject orders be set aside. These
requests are still pending.
These orders are not related to the Company.
Zarinegar was a registered representative with FINRA between approximately 1992 and 2005. During the period of time in which he
was registered with FINRA, Zarinegar held Series 6, 7, 22, 24, 27, 39 and 63 designations. He had been registered with six securities
firms during this time period with the last being Malory Investments, LLC ("Malory") between August 2001 and April 2005.
Zarinegar has two disclosure events set forth in his CRD, both of which revolve around alleged activity during his tenure at Malory.
These disclosures are not customer complaints; rather, they revolve around cease and desist orders issued by the State of Kansas
and the State of Alabama in 2007 as part of their respective investigations into Malory and six other primary respondents. The
allegations against Mr. Zarinegar were that he failed to properly supervise the sale of private offerings in Kansas and Alabama.
Mr. Zarinegar has been in compliance with the Orders since issuance. The Orders are not related in any manner with respect to the
Company or its related parties. The Orders do not restrict Mr. Zarinegar from engaging in an offering in the State of Kansas or
State of Alabama provided he complies with the appropriate disclosures and laws. The Company is not aware of any similar orders
in any other jurisdiction.
Biographical Information for Kenneth Hedrick,
Director and Member of Real Estate Committee
Mr. Hedrick brings over 21 years of residential
mortgage and banking experience to the board of American Housing Income Trust. He currently serves as Vice President of foreclosure,
bankruptcy, and loss recovery for TCF National Bank in Michigan, a subsidiary of TCF Financial Corporation, a $19 billion Minnesota-based
national bank holding company. He began his career with TCF Bank right out of college, handling production, underwriting, and approval
of residential and consumer loans. As he entered production management, his roles included customer financial analysis, compliance,
and audit oversight. Since 2009, as an employee of TCF Bank, Mr. Hedrick has gained expertise through portfolio management in the
areas of foreclosure, bankruptcy, loss recovery, collections, loss mitigation, REO, as well as oversight of legal matters as they
relate to residential customers. In the world of increased regulatory oversight, Mr. Hedrick also brings a wealth of knowledge
when it comes to interacting with, and responding to, regulators and auditors for issues ranging from operational practices to
policy development and disaster recovery plans.
Mr. Hedrick is currently elected to his 2nd
term on the Board of Education for the Avondale School District in Auburn Hills, Michigan. He has sat on this board since 2006,
holding officer positions of Secretary and Treasurer, and currently serves as Board President. Mr. Hedrick holds a bachelor degree
in business administration from Hope College, and currently resides in Bloomfield Hills, Michigan.
Biographical Information for Lez Gutierrez
– Director and Member of the Real Estate Committee
Mr. Gutierrez brings
over 28 years’ experience in real estate and telecom projects with a wide range of experience in systems, operations, accounting,
budgeting, marketing and finance. With respect to his real estate background, Mr. Gutierrez has experience in site acquisition,
property acquisitions and zoning. Mr. Gutierrez is currently a Senior Site Acquisition Manager with a top 20 Engineering and Design
Firm in the US, based in Albuquerque, New Mexico. Mr. Gutierrez is a member of NM Properties, LLC, a New Mexico limited liability
company and limited partner in AHIT Northern NM Properties, LLP, a Maryland limited liability partnership and umbrella partnership
real estate investment trust of the Company.
Biographical Information for Jack Combs,
Vice President
Mr. Combs has been active in the Scottsdale,
Arizona real estate market since 1992 from sales and marketing, to property management. Mr. Combs is a United States Air Force
veteran serving between 1962 and 1966. He is a graduate of California State University-Fullerton with a Bachelors of Arts in 1971.
He received his Masters in Business Administration from the University of Southern California in 1976.
Biographical Information for Christ Anderson,
Secretary
Ms. Andersen has over fifteen years’
experience in real estate administration. She started her career in 1997 with a small internet service provider as the office and
accounts manager in Albany, Oregon. She moved to Arizona in 1999 where she worked in property management for several years. In
2010, Ms. Andersen joined Performance Realty Management, LLC as the Executive Secretary, and oversaw the day-to-day functions of
the office for two years. She elected to further purse her interests in real estate and served as a Listing/Transaction Coordinator
for Long Realty until 2016, when she joined the Company.
Executive Compensation and Corporate Governance
It is the intention of the Company to establish
nominating committees, audit committees, compensation committees and protocols and procedures associated with annual and special
meetings of shareholders (to the extent not addressed in the enclosed Bylaws). The Company currently does not have an Employee
Stock Option Plan.
Since we do not have an audit or compensation
committee comprised of independent directors, the functions that would have been performed by such committees are performed by
our director. The Board of Directors has not established an audit committee and does not have an audit committee financial expert,
nor has the Board established a nominating committee. Thus, there is a potential conflict of interest in that our director
and officer has the authority to determine issues concerning management compensation, nominations, and audit issues that may affect
management decisions.
Our Board of Directors intends on adopting
a code of ethics applying to all employees, including our principal executive officer, principal financial officer and principal
accounting officer or controller, or persons performing similar functions. Among other matters, our code of ethics will be designed
to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of
interest, and full, fair, accurate, timely and understandable disclosures in simple English" in our reports filed with the
Commission and other public communications. The Company believes it has done so to date. Any waiver of the code of ethics for our
executive officers, directors or employees would be made only by our Board of Directors or a committee of our Board of Directors
and would be promptly disclosed as required by law or stock exchange regulations.
Limitations on Liabilities and Indemnification
of Directors and Officers
For information concerning limitations of liability
and indemnification applicable to our directors, executive officers and, in certain circumstances, employees, see the discussion
above regarding Maryland law, our Charter and our Bylaws. Although it is our intent in the near future, we have not yet obtained
directors' and officers' liability insurance insuring our directors and officers against liability for acts or omissions in their
capacities as directors or officers. We have entered into indemnification agreements with key officers and directors, and such
persons shall also have indemnification rights under applicable laws, and our Charter and Bylaws.
Interests in Our Investments
We are permitted to make or acquire investments
in which our directors, officers or stockholders or any of our or their respective affiliates have direct or indirect pecuniary
interests. However, any such transaction in which our directors or any of their respective affiliates has any interest would be
subject to review and approval by the Board of Directors with the interested director or officer (to the extent they are the one
involved in the transaction at issue) abstaining from vote on the particular transaction. For example, as set forth herein, Mr.
Zarinegar and American Realty hold the property located at 4201 Martin Road in Las Vegas, Nevada as tenants-in-common. The note
associated with the loan on this property is held by Citibank, which holds a deed in trust as collateral for Mr. Zarinegar's obligations.
Mr. Zarinegar is the sole borrower on the note. A conflict of interest might arise to the extent Mr. Zarinegar defaults under the
note or deed in trust; more specifically, to the extent Citibank exercises its rights under the deed-in-trust, American Realty
could lose title to the property, which in turn would impact the value of the Company's stock, and if additional capital is needed
in order to meet the note obligations, so American Realty does not lose its interest in the property, there would be dilution of
all shares. Performance Realty authorized this tenancy in common as being in the best interests of American Realty.
Summary Compensation Table – 2015
- 2016
This narrative addresses summary compensation
of Mr. Zarinegar in his role as manager of Performance Realty, which is the manager of American Realty, a wholly-owned subsidiary
of the Company, for the fiscal year ending in 2015 and 2016. In 2014, Mr. Zarinegar was the sole principal executive officer for
Performance Realty, which was the manager of American Realty. For all intents and purposes, Mr. Zarinegar managed and operated
American Realty through Performance Realty. Mr. Zarinegar does not have a written employment agreement with Performance Realty
or American Realty. He was, and still is, an at-will employee of American Realty receiving W2 compensation. He also received member
distributions as a member of Performance Realty.
On May 15, 2015, Mr. Zarinegar executed
an Advisory Board Consulting and Compensation Agreement. The Company agreed to pay Mr. Zarinegar an annual fee equal to $120,000
or 1% of the Company's assets as reported on its year-end balance sheet, whichever is greater, unless, an opinion of counsel or
the Company's auditors conclude that the asset-based compensation limits or impairs the Company's intent of becoming a real estate
investment trust or impairs the Company's status as a publicly reporting company in good standing under the rules promulgated
by the United States Securities and Exchange Commission.
On February 25, 2016, the Company and Mr.
Zarinegar executed a formal Employment Agreement and the First Amended Advisory Board Consulting and Compensation Agreement (the
“2016 Agreements”). The 2016 Agreements formally appointed Mr. Zarinegar as the Chief Financial Officer and Chairman
of the Board of Directors. The Employment Agreement was amended on December 30, 2016 to include duties associated with the Chief
Executive Officer and President. The compensation outlined in the 2016 Agreements mirrored the terms set out in the original Advisory
Board Consulting and Compensation Agreement. Mr. Zarinegar has been paid $74,955 in 2016 in relation to his Employment Contract.
In addition, the Company recognized $1,848,540 of stock based compensation for 616,180 shares issuable to Mr. Zarinegar for services
provided to the Company during the period from Feb 25, 2016 to October 7, 2016. On August 1, 2016, Mr. Zarinegar was issued 439,401
shares of common stock. Mr. Zarinegar agreed to waive his rights to the issuance
of the remaining 176,779 shares and therefore the Company has reversed stock based compensation of $530,337 previously recognized
during the year ended December 31, 2016.
On October 12, 2015, the Company hired Jeff
Howard to serve as Chief Executive Officer and President. Pursuant to the terms of the agreement, Mr. Howard is to be compensated
an annual salary of $64,800 between October 12, 2015 and October 12, 2016 (the “Initial Term”). In 2016, Mr. Howard
was paid $44,861 in connection with his role as President and Chief Executive Officer. Mr. Howard resigned from the Company on
October 25, 2016 and forgave $8,088 of accrued management fees owed to him.
Mr. Stevens was appointed to the Board of Directors
on July 21, 2016. In consideration for his services to the Board of Directors, Mr. Stevens was issued 10,000 shares of restricted
common stock in the Company. He resigned from the Board on November
29, 2016, but remains employed by the Company.
Les Gutierrez was appointed to the Board
of Directors on July 15, 2016. In connection with his appointment to the Board of Directors, Mr. Gutierrez entered into a Board
Director Agreement, which provided that Mr. Gutierrez may be compensated by an issuance of 10,000 shares of the Company’s
restricted common stock. As of December 31, 2016, those shares have not been issued to Mr. Gutierrez.
Mr. Hedrick did not receive any compensation
under his board advisory agreement in 2015 and 2016. He has no future stock options or grants. Although Mr. Hedrick has been treated
as an independent contractor, Mr. Hedrick and the Company agree that Mr. Hedrick owes duties to the Company as provided for under
Maryland law, and our Charter and Bylaws, where applicable.
The Company has not approved and implemented
an employee stock option plan, pension plan or other type of incentive plans related to its common stock or preferred stock.
Summary Compensation Table
- 2016
|
Name and principal position
|
|
|
Year
|
|
|
|
Salary ($)
|
|
|
|
Bonus ($)
|
|
|
|
Stock awards ($)
|
|
|
|
Option awards ($)
|
|
|
|
Nonequity incentive plan compensation ($)
|
|
|
|
Nonqualified deferred compensation earnings ($)
|
|
|
|
All other compensation ($)
|
|
|
|
Total($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sean Zarinegar (1)
|
|
|
2016
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Sean
Zarinegar (2)
|
|
|
2016
|
|
|
$
|
93,231
|
|
|
$
|
—
|
|
|
$
|
1,318,203
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,411,434
|
|
Jeff Howard
|
|
|
2016
|
|
|
$
|
44,861
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
44,861
|
|
Ken Hedrick
|
|
|
2016
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
James Stevens
|
|
|
2016
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Les Gutierrez
|
|
|
2016
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
This row represents the amount of compensation paid to Sean Zarinegar by American Realty.
(2)
This row represents the amount of compensation paid to Sean Zarinegar by the Company pursuant to his Advisory Board Consulting
and Compensation Agreement and Employment Agreement dated February 25, 2016 and amended December 30, 2016. As provided for in
the amended agreement, Mr. Zarinegar is entitled to receive 616,180 shares of common stock as payment for the services provided
under the agreement and amended agreement.
On August 1, 2016, Mr. Zarinegar was issued 439,401 shares of common stock pursuant
to the amended agreement. Mr. Zarinegar agreed to waive his rights to the issuance of
the remaining 176,779 shares.
Summary Outstanding
Equity Awards Table - 2015 and 2016
Pursuant to Item 402(q) of Regulation S-K,
American Realty, Performance Realty and the Company are required to provide the material terms of each plan that provides for the
payment of retirement benefits, or benefits that will be paid primarily following retirement, including but not limited to tax-qualified
defined benefit plans, supplemental executive retirement plans, tax-qualified defined contribution plans and nonqualified defined
contribution plans. The Company has no disclosures in this respect.
The Company is also required to provide the
material terms of each contract, agreement, plan or arrangement, whether written or unwritten, that provides for payment(s) to
a named executive officer at, following, or in connection with the resignation, retirement or other termination of a named executive
officer, or a change in control of the smaller reporting company or a change in the named executive officer's responsibilities
following a change in control, with respect to each named executive officer.
Mr. Zarinegar initially worked for the
Company on an independent contractor basis. On February 25, 2016, Jeff Howard executed, with approval from the Board of Directors,
the Employment Agreement with Mr. Zarinegar on behalf of the Company (the “Employment Agreement”). As a result, Mr.
Zarinegar became a full-time employee of the Company. Mr. Zarinegar has agreed to continue to serve on the Board of Directors
at no cost (unless subsequently adjusted by the Board of Directors with Mr. Zarinegar abstaining). In exchange for his employment,
the Company agrees to pay Mr. Zarinegar an annual salary equal to $120,000 on the dates consistent with the Company’s payroll
schedule, or 1% of the Company’s assets as reported on its year-end balance sheet, whichever is greater, unless, an opinion
of counsel or the Company’s auditors conclude that the asset-based compensation limits or impairs the Company’s intent
of becoming a real estate investment trust or impairs the Company’s status as a publicly reporting company in good standing
under the rules promulgated by the Commission. The Employment Agreement was amended on December 30, 2016. Pursuant to the December
30, 2016 amendment, Mr. Zarinegar agreed to serve as the Company’s Chief Financial Officer at no cost.
The Company recognizes that Mr. Zarinegar
is a significant employee to the Company, and has incurred and continues to incur risk and exposure in guaranteeing the First
Key debt service of the Company and the debt of its subsidiaries, which ultimately benefits the Company and its shareholders.
Recognizing that the consideration above does not completely compensate Mr. Zarinegar, the Company initially agreed to issue Mr.
Zarinegar or his designee a total of 3,000,000 shares of the Company’s common stock on the first, second and third anniversary
of the Employment Agreement. The Employment Agreement was subsequently amended on or about December 30, 2016. Pursuant to the
amended Employment Agreement, Mr. Zarinegar agreed to waive his rights to this issuance in favor of a reduced issuance of 616,180
shares of the Company’s common stock for the period of February 25, 2016 through October 7, 2016. At the time of the amendment,
Mr. Zarinegar had already received 439,401 shares of common stock on August 1, 2016. Mr. Zarinegar agreed to waive his rights to the issuance of
the remaining 176,779 shares and therefore the Company has reversed stock based compensation of $530,337 previously recognized
during the year ended December 31, 2016.
Outstanding Equity Awards at Fiscal Year-End 2016
|
Name
|
Option awards
|
Stock awards
|
Number of securities underlying unexercised options (#) exercisable
|
Number of securities underlying unexercised options (#) unexercisable
|
Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)
|
Option exercise price ($)
|
Option expiration date
|
Number of shares or units of stock that
have not vested
(#)
|
Market value of shares of units of stock
that have not vested
($)
|
Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)
|
Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)
|
Sean Zarinegar (1)
|
-
|
-
|
-
|
$ -
|
-
|
-
|
$ -
|
-
|
$ -
|
Sean Zarinegar (2)
|
-
|
-
|
-
|
$ -
|
-
|
-
|
$ -
|
-
|
$ -
|
Jeff Howard
|
-
|
-
|
-
|
$ -
|
-
|
-
|
$ -
|
-
|
$ -
|
Kenneth Hedrick
|
-
|
-
|
-
|
$ -
|
-
|
-
|
$ -
|
-
|
$ -
|
James Stevens
|
-
|
-
|
-
|
$ -
|
-
|
-
|
$ -
|
-
|
$ -
|
Les Gutierrez
|
-
|
-
|
-
|
$ -
|
-
|
-
|
$ -
|
-
|
$ -
|
(1) This row represents the amount of outstanding
equity awards to Sean Zarinegar by American Realty.
(2) This row represents the amount of outstanding
equity awards to Sean Zarinegar by the Company.
2016 Director Compensation Table
Name
|
|
Fees Earned
|
|
Stock Awards
|
|
Option Awards
|
|
Non-Equity Incentive Plan Compensation
|
|
Deferred Compensation Earnings
|
|
All Other Compensation
|
|
Total
|
Sean Zarinegar
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
0
|
|
Jeff Howard
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
0
|
|
Kenneth Hedrick
|
|
$
|
0
|
|
|
$
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
0
|
|
James Stevens
|
|
$
|
0
|
|
|
$
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
30,000
|
|
Les Gutierrez
|
|
$
|
0
|
|
|
$
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
30,000
|
|
The dollar amounts in the Stock Awards column
reflect the values of equity awards as of the grant date, in accordance with ASC 718,
Compensation - Stock Compensation,
and,
therefore, do not necessarily reflect actual benefits received by the individuals.
Employment Agreement - Sean Zarinegar
Mr. Zarinegar initially worked for the
Company on an independent contractor basis. On February 25, 2016, Jeff Howard executed, with approval from the Board of Directors,
the Employment Agreement with Mr. Zarinegar on behalf of the Company (the “Employment Agreement”). As a result, Mr.
Zarinegar became the Chief Financial Officer of the Company. Mr. Zarinegar has agreed to continue to serve on the Board of Directors
at no cost (unless subsequently adjusted by the Board of Directors with Mr. Zarinegar abstaining). In exchange for his employment,
the Company agrees to pay Mr. Zarinegar an annual salary equal to $120,000 on the dates consistent with the Company’s payroll
schedule, or 1% of the Company’s assets as reported on its year-end balance sheet, whichever is greater, unless, an opinion
of counsel or the Company’s auditors conclude that the asset-based compensation limits or impairs the Company’s intent
of becoming a real estate investment trust or impairs the Company’s status as a publicly reporting company in good standing
under the rules promulgated by the United States Securities and Exchange Commission. On October 7, 2016, the Company amended the
employment agreement and Mr. Zarinegar agreed to serve as the CFO of the Company at no cost.
The Company
recognizes that Mr. Zarinegar is a significant employee to the Company, and has incurred and continues to incur risk and exposure
in guaranteeing the First Key debt service of the Company and the debt of its subsidiaries, which ultimately benefits the Company
and its shareholders. Recognizing that the consideration above does not completely compensate Mr. Zarinegar, the Company initially
agreed to issue Mr. Zarinegar or his designee a total of 3,000,000 shares of the Company’s common stock on the first, second
and third anniversary of the Employment Agreement. The Employment Agreement was subsequently amended on or about December 30,
2016. Pursuant to the amended Employment Agreement, Mr. Zarinegar agreed to waive his rights to this issuance in favor of a reduced
issuance of 616,180 shares of the Company’s common stock for the period of February 25, 2016 through October 7, 2016. At
the time of the amendment, Mr. Zarinegar had already received 439,401 shares of common stock on August 1, 2016. Mr. Zarinegar agreed to waive his rights to the issuance of the remaining 176,779 shares.
Executive Agreement - Jeff Howard
On October 12, 2015, the Company hired
Jeff Howard, currently a Director on the Board of Directors, to fill the vacancy left by Mr. Zarinegar's resignation as Chief Executive
Officer and President. There were no disputes between Mr. Zarinegar and the Company prior to his resignation. Pursuant to the terms
of the Executive Agreement between the Company and Mr. Howard, Mr. Howard is to be compensated an annual salary of $64,800 between
October 12, 2015 and October 12, 2016 (the "Initial Term"), unless his employment is terminated as set forth in the Executive
Agreement. The Executive Agreement has successive one-year renewal periods (a "Renewal Term").
In addition to the compensation identified
above, the Company and Mr. Howard agreed to the following escalators either during the Initial Term or Renewal Term, if applicable:
(a) The Company agrees to increase Executive's compensation by an additional Twenty-Five Thousand Dollars ($25,000.00) per annum
and shall issue an additional issuance of Twenty-Five Thousand (25,000.00) shares of common stock in the Company to the Executive
when the Company achieves the milestone of a gross revenue of One Million Dollars ($1,000,000.00) per annum; (b) The Company agrees
to increase Executive's compensation by an additional Twenty-Five Thousand Dollars ($25,000.00) per annum when the Company has
achieved the milestone of a gross revenue of One Million Five Hundred Thousand Dollars ($1,500,000.00) per annum; and (c) The Company
agrees to increase Executive's compensation by an additional Twenty-Five Thousand Dollars ($25,000.00) per annum, and issue an
additional issuance of Twenty-Five Thousand (25,000.00) Shares of Common stock in the Company to the Executive when the Company
has achieved the milestone of a gross revenue of Two Million Dollars ($2,000,000.00) per annum. Mr. Howard resigned from the Company
on October 25, 2016.
Advisory Board Consulting and
Compensation Agreement - Kenneth Hedrick (Director)
Pursuant to the Resolutions, the Board of Directors
ratified and approved the Board Director Agreement for Director Kenneth Hedrick effective May 15, 2015. In consideration of Director's
services, the Company issued 25,000 shares of the Company’s restricted common stock to Mr. Hedrick. He did not receive any
compensation in fiscal year 2016 for his service as Director.
Board Director Agreement – James Stevens
Mr. Stevens was appointed to the Board of Directors
on July 21, 2016. Pursuant to the Board Director Agreement, the Company compensated Mr. Stevens for his services by issuing Mr.
Stevens 10,000 shares of the Company’s restricted common stock. Mr. Stevens served as the Chief Executive Officer and President
for approximately one month after the resignation of Mr. Howard. Mr. Stevens resigned from the Board of Directors on November 29,
2016.
Board Director Agreement – Lez Gutierrez
Les
Gutierrez was appointed to the Board of Directors on July 15, 2016. In connection with his appointment to the Board of Directors,
Mr. Gutierrez entered into a Board Director Agreement, which provided that Mr. Gutierrez may be compensated by an issuance of
10,000 shares of the Company’s restricted common stock. As of December 31, 2016, those shares have not been issued to Mr.
Gutierrez.
The Company has not yet adopted retirement,
pension, or profit sharing programs for the benefit of directors, officers or other employees, but our officers and directors may
recommend adoption of one or more such programs in the future. There are no family relationships among our officers or directors.
Other than as identified above regarding Mr. Zarinegar, during the past five years no director or executive officer of the company
(i) has been involved as a general partner or executive officer of any business which has filed a bankruptcy petition; (ii) has
been convicted in any criminal proceeding nor is subject to any pending criminal proceeding; (iii) has been subjected to any order,
judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities; and (iv) has been found by a court, the Commission or the Commodities
Futures Trading Commission to have violated a federal or state securities or commodities law.
The Company has 2 employees. Because of
our limited resources, our Board does not currently have an established audit committee or executive committee. The current members
of the Board perform the functions of an audit committee, governance/nominating committee, and any other committee on an as needed
basis. If and when the Company grows its business and/or becomes profitable, the Board intends to establish such committees.
We do not have an Audit Committee or Nominating
Committee. Our Chief Executive Officer and Chief Financial Officer perform some of the same functions of an Audit Committee,
such as: recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the
independent auditor’s independence, the financial statements and their audit report; and reviewing management's administration
of the system of internal accounting controls. We do not currently have a written audit committee charter or similar document.
We have no financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive. Further,
because we have no business operations, management believes the services of a financial expert are not warranted.
A code of ethics relates to written standards that are reasonably
designed to deter wrongdoing and to promote:
|
1.
|
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
|
|
2.
|
Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;
|
|
3.
|
Compliance with applicable governmental laws, rules and regulations;
|
|
4.
|
The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
|
|
5.
|
Accountability for adherence to the code.
|
We have not adopted a corporate code of ethics that applies to our
principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar
functions
Compliance with Section 16(a) of the Securities Exchange Act
of 1934
Section 16(a) of the Exchange Act requires
our executive officers and directors, and persons who beneficially own more than 10% of our equity securities (collectively, the
“Reporting Persons”), to file reports of ownership and changes in ownership with the SEC. Reporting Persons are required
by SEC regulation to furnish us with copies of all forms they file pursuant to Section 16(a). We are of the opinion
that our officers and directors have complied with their reporting requirements to reflect ownership and changes in ownership with
the SEC.
Director Independence
Our securities are quoted on the OTC Bulletin
Board which does not have any director independence requirements. Once we engage further directors and officers, we plan
to develop a definition of independence and scrutinize our Board of Directors with regard to this definition.