Item 1.01Entry into a Material Definitive Agreement.
The disclosures set forth in Item 5.02 are incorporated by reference into this
Item 1.01
Item 5.02Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Amendment of Officer's Compensation
On January 10, 2023, the Board appointed Mark Thomas ("Thomas") as the new Chief
Executive Officer, Principal Executive Officer, President and Chief Technology
Officer of the Company. In lieu of an employment agreement, Thomas received a
written offer letter (the "Offer") that stated he will receive an annual salary
of $380,000, and he is eligible to participate in the Company's benefit plans.
The Offer also stated that by February 1, 2023, the Board will set milestones
for incentive compensation (in either annual salary increases or bonuses) in
such amounts that, if all of the milestones are met, Thomas' total annual
compensation will reach $500,000 or more (the "Incentive Compensation"). On
February 6, 2023, we entered into a supplement to the Offer (the "Supplement")
with Thomas that sets forth the following terms and conditions relating to the
Incentive Compensation.
Within 60 calendar days after we have $1,000,000 or more in gross gaming revenue
(defined as sports betting handle minus pass through betting wins, plus betting
fees), the Board (or its compensation committee, if any) will engage at least
two executive compensation consultants to provide reports to the Board regarding
compensation of Chief Executive Officers of comparable companies. The Board will
timely review and consider such reports in determining potential adjustments to
Thomas' annual salary. Any adjustments will be at the Board's sole discretion.
In the event that we receive a sports betting license (or equivalent) in the
State of Tennessee, within 30 days after the issue date, Thomas will receive a
cash bonus of $50,000.00.
For the next 24 months, in each event that we receive a sports betting license
(or equivalent) in a new jurisdiction (other than the State of Tennessee),
within 30 days after the issue date, Thomas will receive a cash bonus in an
amount equal to the lesser of: (i) $100,000; or (ii) the product of 0.01%
multiplied by the subject jurisdiction's trailing 12-month sports betting handle
(using the most recent 12 months reported by Legal Sports Report which currently
posts such data at www.legalsportsreport.com/sports-betting/revenue/). After the
24-month period, the Board (or its compensation committee, if any) will review
and consider an extension or adjustment to this bonus structure. Any extensions
or adjustments will be at the Board's sole discretion.
If our net loss for our 2022-2023 fiscal year, as determined by our Chief
Financial Officer, is less than $6,197,719, Thomas will be eligible for a cash
bonus in an amount equal to 8% of the difference of the actual net loss minus
and $6,197,719. The cash bonus will be due within 30 days after the
determination of the 2022-2023 fiscal year net loss.
If Thomas' employment is terminated without "cause," provided that he executes
and returns a general release of claims to us (in a form reasonably acceptable
to us), he will be entitled to a severance through continued payments of his
current annual base salary of $380,000 for 6 months. A change to Thomas's
title(s) or responsibilities will not constitute a termination without "cause'
if he is offered continued employment in a different role unless the continued
employment is offered at a lower annual base salary or unless he is asked to
permanently relocate outside of the Miami metro area for work. The Supplement
defines "cause" as: (i) gross negligence, recklessness, intentional
misrepresentation or willful misconduct by Thomas in the performance of his
duties; (ii) the commission by Thomas of any act of fraud, embezzlement, theft
or other financial dishonesty, or of any felony, or to any crime involving moral
turpitude; (iii) the breach by Thomas of his Employment Conditions Agreement (or
any other replacement agreement); (iv) Thomas' material violation of state or
federal law relating to sexual harassment or other prohibited harassment or
discrimination; or (v) Thomas' failure to comply with any policy of the Company
of which he had notice.
The foregoing summary of the Supplement is qualified in its entirety by
reference to the full text of the Supplement which is attached as Exhibit 10.1
hereto, and is incorporated by reference herein. You are urged to read said
exhibit attached hereto in its entirety.
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Item 7.01Regulation FD Disclosure.
On February 10, 2023, we issued a press release regarding submittal of a sports
betting license application with the State of Tennessee. A copy of the press
release is furnished as Exhibit 99.1 hereto and is incorporated by reference
herein.
The information in this report furnished pursuant to this Item 7.01 and the
press release furnished as Exhibit 99.1 shall not be deemed "filed" for the
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that Section. The furnishing of the
information in this report is not intended to, and does not, constitute a
representation that such furnishing is required by Regulation FD or that the
information contained in this report constitutes material investor information
that is not otherwise publicly available.
Forward-Looking Statements
This report, including the exhibits furnished herewith, contains forward-looking
statements within the meaning of the federal securities laws. Forward-looking
statements typically are identified by use of terms such as "may," "will,"
"should," "plan," "expect," "anticipate," "estimate" and similar words, and the
opposites of such words, although some forward-looking statements are expressed
differently. Forward-looking statements involve known and unknown risks and
uncertainties that exist in the Company's operations and business environment,
which may be beyond the Company's control, and which may cause actual results,
performance or achievements to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements. All statements other than statements of historical fact are
statements that could be forward- looking statements. For example,
forward-looking statements include, without limitation: statements regarding
prospects for additional customers; market forecasts; projections of earnings,
revenues, synergies, accretion or other financial information; and plans,
strategies and objectives of management for future operations. The risks and
uncertainties referred to above include, but are not limited to, risks detailed
from time to time in the Company's filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the year ended June 30,
2022. These risks could cause actual results to differ materially from those
expressed in any forward- looking statements made by, or on behalf of, the
Company. Forward-looking statements represent the judgment of management of the
Company regarding future events. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable at the
time that they are made, the Company can give no assurance that such
expectations will prove to be correct. Unless otherwise required by applicable
law, the Company assumes no obligation to update any forward-looking statements,
and expressly disclaims any obligation to do so, whether as a result of new
information, future events or otherwise
Item 9.01Financial Statements and Exhibits.
(d)Exhibits.
Exhibit No. Description
10.1 Offer Letter Supplement between KeyStar Corp. and Mark Thomas, dated
February 6, 2023
99.1 Press Release, dated February 10, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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