Onar Holding Corp 10-K for FY2024
Onar Holding Corp (ONAR)
About this 10-K
Onar Holding Corp filed this 10-K on April 15, 2025, covering the fiscal year ended December 31, 2024 (FY2024).
Headline figures
Fiscal year ended December 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.57M
- down 8.2% from $2.8M a year earlier
- Net loss
- $3.08M
- compared with a net loss of $1.74M a year earlier
- Diluted EPS
- -$0.15
- compared with -$0.11 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from: _____________to______________
Commission File Number:
(Exact name of registrant as specified in its charter) |
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(State or Other Jurisdiction of Incorporation or Organization) |
| (I.R.S. Employer Identification No.) |
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(Address of Principal Executive Offices) |
| (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $
As of April 8, 2025, there were 111,002,035 shares of common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
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PART I
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K (this “Report”) contains forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Report. These factors include:
| · | unfavorable economic conditions; |
| · | changes in client demand; |
| · | our ability to maintain our existing clients; |
| · | our ability to develop new product offerings; |
| · | Our ability to deploy AI in our business and the development of AI by our competitors; |
| · | seasonal fluctuations in marketing, research, communications and advertising activity; |
| · | the impact of future strategic transactions; |
| · | our lack of a significant operating history; |
| · | the need for additional funding, our ability to raise such funding, and the ultimate terms thereof; |
| · | the level of competition in the industries in which compete; |
| · | the security of our computer systems and our ability to securely store client data; |
| · | the loss of key personnel or failure to attract, integrate and retain additional personnel; |
| · | fluctuations in our operating results; |
| · | corporate governance risks; |
| · | the impacts of global epidemics, pandemics and similar health issues; |
| · | risks relating to our legacy swimming pool and home construction business; |
| · | material weaknesses in our internal controls; |
| · | dilution to existing stockholders caused by the issuance of additional shares of our common stock; |
| · | the lack of a significant market for our common stock, and the volatile nature thereof; |
| · | our failure to pay cash dividends; |
| · | the status of our common stock as a “penny stock”; |
| · | lack of liquidity in the market for our stock; |
| · | our blank check preferred stock and ability to issue significant shares of common stock; |
| · | costs and expenses associated with being a public company; and |
| · | other risk factors included under “Risk Factors” below. |
| · | unfavorable economic conditions; |
| · | changes in client demand; |
You should read the matters described and incorporated by reference in “Risk Factors” and the other cautionary statements made in this Report, and incorporated by reference herein, as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.
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ITEM 1. BUSINESS
Summary Matters and Definitions
In this Annual Report on Form 10-K (this “Report”), we may rely on and refer to information regarding the industries in which we operate in general from market research reports, analyst reports and other publicly available information. Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, none of this information has been commissioned by us, and we have not independently verified any of it.
Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “ONAR”, “ONAR Holding” and “ONAR Holding Corporation” refer specifically to ONAR Holding Corporation and its consolidated subsidiaries.
In addition, unless the context otherwise requires and for the purposes of this Report only:
| · | “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; |
| · | “SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and |
| · | “Securities Act” refers to the Securities Act of 1933, as amended. |
Organizational History
ONAR Holding Corporation (the “Company”) was formed as a Nevada corporation under the name Reliant Holdings, Inc. on May 19, 2014. On May 23, 2014, Reliant Holdings, Inc., along with Reliant Pools, Inc., formerly Reliant Pools, G.P., which was formed in September 2013 (“Reliant Pools”) and the shareholders of Reliant Pools, entered into an Agreement for the Exchange of common stock whereby Reliant Pools, Inc. became a wholly-owned subsidiary of Reliant Holdings, Inc. Reliant Holdings, Inc. designs, and installs swimming pools.
On July 25, 2024, the Company acquired HLDCO, LLC (“HLDCO”) and its subsidiary Integrum Group LLC (“Integrum”) through a reverse merger where the shareholders of HLDCO entered into an Agreement to Contribute the membership interests of HLDCO to the Company in return for common stock of the Company, whereby HLDCO became a wholly-owned subsidiary of Reliant Holdings Inc. Integrum was formed in July 2021 as a Delaware entity and is currently headquartered in Los Angeles, California. Integrum specializes in marketing solutions through a technology-enabled independent marketing agency brand network. Its services span various industries, including performance digital marketing, healthcare industry marketing, and experiential marketing.
On August 23, 2024, the Company filed with the Secretary of State for Nevada a Certificate of Amendment to the Articles of Incorporation, changing its name to ONAR Holding Corporation.
On September 12, 2024, Integrum filed a certificate of amendment to its certificate of formation with the Delaware Secretary of State, pursuant to which it changed its corporate name from Integrum Group, LLC to ONAR, LLC.
On September 17, 2024, the Company filed a Certificate of Cancelation of Limited Liability Company for HLDCO with the Secretary of State of Delaware to dissolve HLDCO, leaving ONAR, LLC as the Company's wholly owned subsidiary.
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Organizational Structure
The following chart reflects our current organization structure, including our wholly owned subsidiaries.
Description of Business Operations:
ONAR is a leading marketing technology company and agency network, built to drive innovation and strategic growth for growth-stage and middle-market companies. It delivers scalable solutions and strategic partnerships for ambitious companies, connecting market expertise with cutting-edge technologies to optimize marketing efficiency and drive sustainable growth. Led by a team of seasoned executives, our portfolio companies, spanning multiple industries, are unified under a single purpose: to deliver exceptional value and achieve superior business outcomes for our clients and stakeholders.
Since its inception, ONAR’s standing continues to strengthen as partners and clients recognize our portfolio companies’ performance—leading to accelerated growth trajectories—and as we work to strategically expand our capabilities and market reach. Throughout our development, we have maintained a collaborative ethos that is fundamental to its structure. We believe our ability to leverage a technology-first approach, proprietary artificial intelligence (“AI”), data, middle market focus, and synergies across our diverse holdings gives us a competitive advantage relative to traditional agency holding company models. While ONAR prioritizes growth, we believe we will soon establish the necessary scale, scope, and agility to navigate global market dynamics effectively. Our track record and focus on strategic acquisitions will soon show evidence that our diversified, technology-focused, and integrated approach resonates with our partners and stakeholders.
ONAR offers a broad spectrum of capabilities across key sectors: Technology & Innovation, Performance Digital Marketing, Healthcare Marketing, and Experiential Marketing. Our global team allows us to pursue significant market opportunities, including acquiring new businesses in developing and key established markets. ONAR operates in highly competitive and evolving industries, but we believe we possess a distinct advantage through our strategic diversification, global workforce, operational agility, and technology-first approach. Our commitment to technological advancement, artificial intelligence (AI), and data-driven decision-making also enables us to optimize performance and identify emerging opportunities. ONAR provides a suite of services and solutions designed to meet the evolving needs of our partners and stakeholders, as well as actively pursuing technology-driven innovations.
Through strategic investments and internal development, ONAR is investing in the future of industry, with a focus on leveraging artificial intelligence (AI) for operational optimization, data analytics for strategic insights, and advanced technologies for sustainable development. This is a core component of our long-term strategic vision.
ONAR has grown and will continue to grow through a combination of strategic acquisitions and organic expansion. Beginning with a focused portfolio in its initial phase, ONAR strategically acquired and developed companies in high-growth sectors. Between its founding and 2024, we acquired and integrated companies specializing in performance digital marketing, healthcare marketing, and experiential marketing. Recognizing the potential of these businesses, ONAR’s strategic management and operational expertise have driven significant value creation across the portfolio.
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ONAR’s unified corporate team serves as the cornerstone of a robust value creation platform focused on scaling our portfolio companies and driving continuous operational improvement. We plan to continue investing in our core business units, developing innovative solutions through strategic partnerships, enhancing our technological capabilities through research and development, and further expanding our global footprint both organically and through strategic alliances to deliver enduring value for our clients, partners, and shareholders.
Our Market
Industry Trends
The convergence of technological advancement and evolving market dynamics has fundamentally reshaped the global business landscape, creating a complex and interconnected ecosystem. Historically, industrial and commercial sectors were characterized by standardized production and mass-market distribution. Over the past decades, technological innovation has driven a shift toward personalized solutions, real-time data analysis, and integrated supply chains. In today's environment, every enterprise is, at its core, a technology-driven organization.
We believe five key trends describe the industry today:
First, digital transformation now pervades every sector, with data-driven decision-making and automation becoming essential for operational efficiency. The integration of the Internet of Things (IoT), cloud computing, and advanced analytics has expanded the scope of digital applications across all industries. Digital solutions now encompass a wide array of applications, including supply chain management, customer relationship management, and real-time performance monitoring.
Second, data analytics and artificial intelligence (AI) are driving strategic insights. The proliferation of data across various touchpoints has created a need for advanced analytical tools. Real-time data processing and AI-driven insights enable businesses to anticipate market trends, optimize resource allocation, and enhance decision-making. The ability to extract actionable intelligence from vast datasets is becoming a key differentiator.
Third, sustainable and responsible practices are gaining prominence. Environmental, social, and governance (ESG) factors are increasingly influencing business strategies. Companies are implementing more ethical practices. Stakeholders are demanding transparency and accountability, driving the adoption of sustainable business models.
Fourth, the proliferation of connectivity and technology has expanded the sheer volume and success of middle-market and growth-stage companies. With capital providers investing in these companies starting earlier and earlier, the need for the right partners to support that growth is ever-expanding, with the total addressable market becoming significantly larger.
Finally, technological innovation is transforming operational efficiency. SaaS and data-driven platforms are enhancing productivity, automating processes, and improving resource utilization. Technologies such as AI, robotics, and advanced materials are driving innovation across various sectors, enabling businesses to achieve higher levels of efficiency and competitiveness.
Competitive Landscape
ONAR generally operates in a highly competitive and diverse industry landscape. Still, due to its unique focus on the expanding middle market, it is not fighting for market share with the traditional large multinational conglomerates in the space. ONAR ’s portfolio companies compete for market share with highly specialized independent agencies and for talent with large multinational conglomerates, specialized industrial firms, technology startups, and other service providers. Our portfolio companies also face competition from consultancies, technology integrators, and other entities that offer related services. ONAR’s portfolio companies must compete with these other companies to maintain and grow existing client relationships and to obtain new clients and assignments.
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During the decades when traditional industrial models dominated, the industry experienced significant consolidation as large holding companies built substantial portfolios of often overlapping industrial, manufacturing, and technology businesses to achieve financial efficiencies by centralizing administrative operations. These holding companies grew significantly in size and market share.
The rapid rise of digital transformation, the convergence of technology and industry, and the explosion in data analytics and automation have created a paradigm shift in the industry. While legacy models still accounted for a significant share of the market in 2024, we see the traditional holding company model as evolving in this rapidly changing industry landscape. In recent years, a number of large consulting firms with information technology implementation backgrounds have entered the industrial and technology services market and, collectively, achieved significant market share. However, we believe these firms’ lack of deep industrial expertise and comprehensive operational capabilities limits their long-term growth potential as true challengers to integrated holding companies. We also believe most of these companies are chasing only the largest of enterprises and missing the opportunity of focusing on the exponentially faster growing middle market With a combination of strategic investments and technological innovation, we believe that ONAR is well positioned to take advantage of the continued transformation sweeping the industrial and technology ecosystem and to disrupt the traditional holding company landscape, as well as underserved middle market. ONAR was built on a foundation of strategic diversification and technological integration and has a global team that delivers the right combination of industry expertise and technological innovation for the modern, data-driven enterprise through a model that emphasizes agility and integration. In addition, as AI drives transformation across industrial sectors, we believe our focus on digital transformation and AI-enabled product development sets us apart.
Our Offerings
Through its diversified portfolio of subsidiaries and strategic technology investments, ONAR offers a comprehensive suite of technology-driven services. Specifically, through ONAR Labs, it is beginning to commercialize technology developed internally at its subsidiaries to offer products focused on data analytics and artificial intelligence aimed at optimizing operational efficiencies and enhancing strategic decision-making for its clientele.
In addition to its direct service offerings, ONAR engages in strategic investments and partnerships, facilitating the development and commercialization of innovative technologies and solutions. The Company leverages its extensive network to identify and support high-growth potential ventures, fostering synergistic relationships that enhance its overall market position. Through these diverse activities, ONAR aims to deliver comprehensive solutions that address its clients' complex and evolving needs while maintaining a commitment to sustainable and responsible business practices.
Network Structure & Service Offerings
ONAR maintains a 100% ownership position in all of its subsidiary companies.
The Company organizes its subsidiaries into three service offerings: "Performance Digital Marketing & Technology," "Healthcare Marketing," and "Experiential Marketing."
These three service offerings are:
| · | Performance Digital Marketing & Technology: This service offering is led by led by Storia Agency, LLC (“Storia”), a subsidiary specializing in performance marketing, digital transformation, and data analytics. Storia provides comprehensive technology and marketing services aimed at driving revenue and sales for customers through digital media, search engine optimization, e-mail marketing, conversion optimization, and other related services. This service offering focuses on delivering these scalable and innovative solutions by leveraging technology, including customized software applications, data-driven insights, and AI integration. |
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| · | Healthcare Marketing: This service offering is led by VMED Services, LLC (“Of Kos”), a wholly owned subsidiary engaged in the provision of integrated healthcare solutions. It specifically markets the expedited transmission of diagnostic laboratory results to medical practitioners and offers specialized marketing services designed to enhance patient engagement and improve the delivery of healthcare services. |
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| · | Experiential Marketing: This service offering is led by Chalk Experiences, LLC (“Chalk”), a subsidiary specializing in the provision of experiential marketing services. Chalk is characterized by the conceptualization and execution of unique and immersive experiences where brands drive revenue, exposure, and sales through real life experiences, sampling, trade shows, and events. It leverages a team of experiential marketers who design and implement innovative strategies to create memorable and impactful experiences that are measured and elevated by leveraging technology and data. Chalk is currently being reimagined and ONAR plans to relaunch the business in 2025 as part of merger and acquisition activities. |
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Our Strategy
ONAR's strategic objectives are predicated upon the acquisition and operational optimization of leading technology-enabled marketing agencies that cater to middle-market clientele. The Corporation's operational methodology involves the aggregation and analysis of acquired agency data, the deployment of proprietary artificial intelligence and technological solutions, and the application of seasoned management expertise to enhance the efficacy of marketing campaigns, thereby driving revenue growth for its clients. Simply said, it builds solutions that help its clients sell their products and/or services faster and better than their competition. Concurrently, ONAR prioritizes the development and commercialization of its proprietary marketing technology solutions.
The Company’s strategic trajectory is further propelled by its experienced leadership, a disciplined and accretive acquisition strategy, and its provision of advanced AI and technology-driven services. The transition to a publicly traded entity is intended to facilitate accelerated and efficient growth through enhanced access to capital markets.
ONAR leverages its proprietary artificial intelligence, digital transformation capabilities, and comprehensive digital marketing service offerings to capitalize on emerging market opportunities and secure market share from growing businesses.
The Company’s business model is characterized by a platform-light, technology-centric, and modular approach designed to enable independent agencies to scale business performance for middle-market and growth-stage companies.
Furthermore, the Company intends to utilize its publicly traded equity to support its acquisition-driven growth strategy, enabling the acquisition and development of companies at favorable multiples, thereby generating enhanced returns for both the Company and its acquired entities.
Extended Business
Reliant Holdings, Inc., together with its subsidiary, Reliant Pools, Inc., constitutes a non-core business segment within ONAR's portfolio. Reliant Pools, Inc., an entity recognized for its bespoke swimming pool construction services, operates within the greater Austin, Texas metropolitan area, specializing in the design and implementation of recreational aquatic installations. These installations are characterized by their integration with the surrounding environment and the architectural aesthetics of residential properties, including the incorporation of complementary water features. Notwithstanding ONAR's continued ownership of these entities, it is hereby stipulated that their operational activities are not considered integral to the Company’s principal business strategy.
Where You Can Find Other Information
We file annual, quarterly, and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC like us at http://www.sec.gov (our filings can be found at https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001682265). Copies of documents filed by us with the SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of this Report. Our website address is https://www.reliantholdingsinc.com. The information on, or that may be accessed through, our website is not incorporated by reference into this Report and should not be considered a part of this Report.
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ITEM 1A. RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below as well as the other information in this filing before deciding to invest in our company. Any of the risk factors described below could significantly and adversely affect our business, prospects, financial condition and results of operations. Additional risks and uncertainties not currently known or that are currently considered to be immaterial may also materially and adversely affect our business, prospects, financial condition and results of operations. As a result, the trading price or value of our common stock could be materially adversely affected, and you may lose all or part of your investment.
Summary Risk Factors
We face risks and uncertainties related to our business, many of which are beyond our control. In particular, risks associated with:
| · | unfavorable economic conditions; | |
| · | changes in client demand; | |
| · | our ability to maintain our existing clients; | |
| · | our ability to develop new product offerings; | |
| · | Our ability to deploy AI in our business and the development of AI by our competitors; | |
| · | seasonal fluctuations in marketing, research, communications and advertising activity; | |
| · | the impact of future strategic transactions; | |
| · | our lack of a significant operating history; | |
| · | the need for additional funding, our ability to raise such funding, and the ultimate terms thereof; | |
| · | the level of competition in the industries in which compete; | |
| · | the security of our computer systems and our ability to securely store client data; | |
| · | the loss of key personnel or failure to attract, integrate and retain additional personnel; | |
| · | fluctuations in our operating results; | |
| · | corporate governance risks; | |
| · | the impacts of global epidemics, pandemics and similar health issues; | |
| · | risks relating to our legacy swimming pool and home construction business; | |
| · | material weaknesses in our internal controls; | |
| · | dilution to existing stockholders caused by the issuance of additional shares of our common stock; | |
| · | the lack of a significant market for our common stock, and the volatile nature thereof; | |
| · | our failure to pay cash dividends; | |
| · | the status of our common stock as a “penny stock”; | |
| · | lack of liquidity in the market for our stock; | |
| · | our blank check preferred stock and ability to issue significant shares of common stock; | |
| · | costs and expenses associated with being a public company; | |
| · | other risk factors included below. | |
Risks Related to Our Business Operations:
Our revenues are highly susceptible to declines as a result of unfavorable economic conditions.
Advertising, marketing and communications expenditures are sensitive to global, national and regional macroeconomic conditions, including inflationary pressures, currency fluctuations, geopolitical uncertainty and elevated interest rates, as well as specific budgeting levels and buying patterns. Adverse developments such as inflation or heightened economic uncertainty can reduce the demand for our services and pose a risk that clients may reduce, postpone or cancel spending on advertising, marketing and corporate communications projects. For example, inflation rates have increased in recent years, and the effects of increased inflation and other adverse conditions on our customers have in the past resulted and may in the future result in decreased demand for our products and services, decreased revenue, increases in our operating costs (including our labor costs), and decreased profitability, and may result in reduced liquidity and limits on our ability to access credit or otherwise raise capital. In cases of sustained inflation across several of our major markets, it becomes increasingly difficult to effectively control increases to our costs. If we are unable to increase our fees or take other actions to mitigate the effect of the resulting higher costs, our business, results of operations and financial position could be negatively impacted. In addition, in the past, some clients have responded to weakening economic conditions with reductions to their marketing budgets, which include discretionary components that are easier to reduce in the short term than other operating expenses. This pattern may recur in the future and could have a material adverse effect on our revenue, results of operations, cash flows and financial condition. In addition, elevated interest rates have had and may continue to have the effect of further increasing economic uncertainty and heightening these risks, as well as increasing the cost of capital.
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Our business depends on generating and maintaining ongoing, profitable client demand for our services and solutions.
Our revenue and profitability depend on the demand for our services and favorable margins, which have been and may continue to be negatively affected by numerous factors, many of which are beyond our control and unrelated to our work product. To increase our revenues and achieve favorable margins, we will need to attract additional clients or generate demand for additional services and products from existing clients, and such demand will depend on factors including clients’ and potential clients’ requirements, pre-existing vendor relationships, financial condition, strategic plans, internal resources and satisfaction with our work product and services, as well as broader economic conditions, competition and the quality of our Brands’ employees, services and reputation. In addition, developments in the markets we serve, which may be rapid, could shift demand to services and solutions where we are less competitive, or might require significant investment by us to upgrade, enhance or expand our services and solutions to meet that demand. To the extent that we are unable to generate sufficient and profitable client demand, our ability to grow our business, increase our revenues and achieve favorable margins will be limited, which could have a material adverse effect on our business, results of operations, financial condition and prospects.
Our business could be adversely affected if we fail to retain our existing clients.
Our clients may terminate or reduce the scope of their relationships with us on short notice. Our ability to attract and retain clients is an important aspect of our competitiveness, and client loss, including due to competitors, as a consequence of client consolidation, insolvency or a reduction in marketing budgets due to recessionary economic conditions, or a shift in client spending could have a material adverse effect on our business, results of operations, financial condition and prospects. Many companies, including companies with which we have long-standing relationships, put their advertising and marketing communications business up for competitive review from time to time, and we have lost client accounts in the past as a result of such reviews. Our clients may choose to terminate their contracts, or reduce their relationships with us, on a relatively short time frame and for any reason, including as a result of such competitive reviews, a reduction in marketing budgets due to external factors such as economic conditions or their own financial distress or insolvency, competition from other marketing services providers, clients’ consolidation, a shift in their spending or clients’ dissatisfaction with our services, reputation or personnel.
We face significant competition.
The advertising and marketing services business is highly competitive and constantly changing. We compete on the basis of many factors, including the quality (and clients’ perceptions of the quality) of our work, our ability to protect the confidentiality of clients’ and their customers’ data, our relationships with key client personnel, our expertise in particular areas or disciplines, the differentiation of our offerings and our ability to provide integrated services at the scale clients require. We compete with a diverse and growing set of marketing services firms and consultancies including other large multinational companies. We are smaller than many of our larger industry competitors, and an agency’s ability to serve clients on a broad basis and across a range of services and technologies is an important competitive consideration. We also compete with smaller businesses that operate in local or regional markets, and because an agency’s principal asset is often its people, barriers to entry are minimal, and relatively small brands are, on occasion, able to take all or some portion of a client’s business from a larger competitor. Consolidation of companies in our industry, including through strategic mergers or acquisitions, may also result in new competitors with greater scale than ours. Competitive challenges also arise from rapidly evolving and new technologies in the marketing and advertising space, which create opportunities for new and existing competitors and a need for continued significant investment in tools, technologies and process improvements.
In addition, our competitors may compete for client engagements by significantly discounting their services. Price competition could force us to choose between lowering our prices (and suffering reduced operating margins) or losing a client’s business.
Our future financial performance is largely dependent upon our ability to compete successfully in the markets we serve. If we are unable to compete successfully, we could lose market share and clients to competitors or be forced to accept engagements with unfavorable economic terms, which could have a material adverse effect on our business, results of operations, financial condition and prospects.
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We are making investments in new product offerings and technologies that are inherently risky.
We have made investments to develop new marketing services products and technologies, including marketing data, campaign martech, and AI and generative AI offerings, and we intend to continue investing significant resources in developing and/or acquiring new technologies, tools, features, services, products and offerings. Our new initiatives are inherently risky, as each involves development of new software platforms or other product offerings, unproven business strategies and technologies with which we may have limited prior development or operating experience. They may also involve additional claims and liabilities (including intellectual property claims), expenses, regulatory challenges, and other risks that we do not currently anticipate.
There can be no assurance that client demand for our new products, and technologies will exist or be sustained at the levels that we anticipate, or that any of these initiatives will gain sufficient traction or market acceptance to generate sufficient revenue to offset any new expenses or liabilities associated with these new investments. If we do not realize the expected benefits of our investments, our business, financial condition, results of operations and prospects may be harmed.
We are subject to risks related to our use of AI, including generative AI.
We are increasingly building generative AI features into some of our offerings, such as generative AI content creation tools, and are making investments in expanding our generative AI capabilities. As part of this process, we also utilize generative AI tools offered by third-party providers in the development and testing of our offerings. Generative AI is a new and emerging technology in its early stages of commercial use and presents certain inherent risks. Generative AI algorithms are based on machine learning and predictive analytics, which can create unintended biases and discriminatory outcomes, and outputs can be completely fabricated or false. There is a risk that our algorithms could produce such outcomes or other unexpected results or behaviors that could harm our reputation, business, or clients.
In addition, the use of AI and generative AI involves significant technical complexity and requires specialized expertise. Any disruption or failure in our AI and generative AI offerings, or those of our third-party providers, could result in delays or errors in our operations, which could harm our business and financial results. The use of generative AI tools could also result in a greater likelihood of cybersecurity incidents, privacy violations and inadvertent disclosures of our intellectual property or other confidential information, any of which could directly or indirectly harm our business, operations and reputation.
The AI regulatory landscape is still uncertain and evolving, and the development and use of AI technologies, including generative AI, in new or existing content creation tools and other offerings may result in new or enhanced governmental or regulatory scrutiny, litigation, ethical concerns or other complications that could be costly and time-consuming and could adversely affect our business, reputation or financial results.
We are impacted by seasonal fluctuations in marketing, research, communications and advertising activity.
Our revenue, cash flow, operating results and other key operating and performance metrics vary from quarter to quarter due to the seasonal nature of our clients’ spending on the services we provide. For example, clients tend to devote more of their advertising budgets to the fourth calendar quarter to coincide with consumer holiday spending, and we typically generate our highest quarterly revenue during the fourth quarter in each year. Political advertising and related activity have also historically caused our revenue to increase during election cycles, which is most pronounced in even years, in particular during the third and fourth quarters of such years, and to decrease during other periods. Seasonality could have a more significant impact on our revenue, cash flow and operating results from period to period in the event of declines in our growth rate or if seasonal spending becomes more pronounced.
We expect to enter into strategic transactions in the future that we expect to result in material changes in our operations.
Our business strategy relies on our ability to identify strategic acquisition targets to scale our business, and we expect to enter into transactions with third parties. Any future transaction may also result in a change in our business focus. Any future strategic transaction involving the Company or its operations may have a material effect on our operations, cash flows, results of operations, prospects, plan of operations, the listing of our common stock on the OTCQB Market, our officers, directors and majority stockholders, and the value of our securities.
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We are an early-stage company operating across a number of rapidly developing industries.
ONAR, LLC was initially formed in July 2021 and our strategy revolves around the acquisition of multiple operating businesses. Because the Company has a limited operating history, you should consider and evaluate our operating prospects in light of the risks and uncertainties frequently encountered by early-stage companies in rapidly evolving markets. These risks include:
| · | That we may not have sufficient capital to achieve our acquisition and growth strategy; |
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| · | That we may not develop our product and service offerings in a manner that enables us to be profitable and meet our customers' requirements; |
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| · | That our growth strategy may not be successful; and |
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| · | That fluctuations in our operating results will be significant relative to our revenues |
These risks are described in more detail below. Our future growth will depend substantially on our ability to address these, and the other risks described in this section. If we do not successfully address these risks, our business could be significantly harmed. Because we have a limited operating history our future operations may not result in profitable operations.
We will require additional financing in order to execute our business strategy, and we may not be able to raise funds on favorable terms or at all, which raises questions about our ability to continue as a going concern.
We had working capital of $(4,033,419) as of December 31, 2024, as a result of costs associated with our reverse merger and other investments in growing the business. With our current cash on hand, expected revenues, and based on our current average monthly expenses, we currently anticipate the need for additional funding in order to continue our operations at their current levels and to pay the costs associated with being a public company for the next 12 months. We may also require additional funding in the future to expand or complete acquisitions. In the event we obtain additional funding in the future, the most likely source of future funds presently available to us will be through the sale of equity capital. Any sale of share capital will result in dilution to existing stockholders. Furthermore, we may incur debt in the future, and may not have sufficient funds to repay our future indebtedness or may default on our future debts, jeopardizing our business viability. While we believe we will retire a good portion of company debt as a result of converting debt into equity, we have an accumulated deficit of $4,681,009 as of December 31, 2024.
These conditions raise substantial doubt about our ability to continue as a going concern for the next twelve months. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The financial statements included herein also include a going concern footnote from our auditors.
We may not be able to borrow or raise additional capital in the future to meet our needs or to otherwise provide the capital necessary to expand our operations and business, which might result in the value of our common stock decreasing in value or becoming worthless. Additional financing may not be available to us on terms that are acceptable. Consequently, we may not be able to proceed with our intended business plans. Substantial additional funds will still be required if we are to reach our goals that are outlined in this Report. Obtaining additional financing contains risks, including:
| · | additional equity financing may not be available to us on satisfactory terms and any equity we are able to issue could lead to dilution for current stockholders; |
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| · | loans or other debt instruments may have terms and/or conditions, such as interest rate, restrictive covenants and control or revocation provisions, which are not acceptable to management or our sole director; |
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| · | the current environment in capital markets combined with our capital constraints may prevent us from being able to obtain adequate debt financing; and |
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| · | if we fail to obtain required additional financing to grow our business, we will need to delay or scale back our business plan, reduce our operating costs, or reduce our headcount, each of which would have a material adverse effect on our business, future prospects, and financial condition. |
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Furthermore, in order to pay amounts owed in connection with lawsuits, settlements, and judgments rendered against us, we may be forced to liquidate assets and/or abandon certain of our business plans. If we are unable to pay such amounts, we may be forced to cease operations and/or seek bankruptcy protection.
We operate across a number of a highly competitive industries.
As a holding company for operating businesses, we operate across a number of different industries and encounter competition from local, regional or national entities, some of which have superior resources or other competitive advantages. Intense competition may adversely affect our business, financial condition or results of operations. Our competitors may be larger and more highly capitalized, with greater name recognition. We will compete with such companies on brand name, quality of services, level of expertise, advertising, product and service innovation and differentiation of product and services. As a result, our ability to secure significant market share may be impeded.
The security of our computer systems may be breached, and any unauthorized access to our customer data will have an adverse effect on our business and reputation.
The use of our products will involve the storage, transmission and processing of our clients’ data and communications with those clients. Individuals or entities may attempt to penetrate our computer systems, or that of our third-party hosting and storage providers, and could gain access to our clients’ data, which could result in the destruction, disclosure or misappropriation of proprietary or confidential information of our clients’ or their customers, employees and business partners. If any of our clients’ private data is leaked, obtained by others or destroyed without authorization, it could harm our reputation, we could be exposed to civil and criminal liability, and we may lose our ability to access private data, which will adversely affect the quality and performance of our platform. In addition, our platform may be subject to computer malware, viruses and computer hacking, fraudulent use attempts and phishing attacks, all of which have become more prevalent. Any failure to maintain the performance, reliability, security and availability of our products or services and technical infrastructure to the satisfaction of our clients may harm our reputation and our ability to retain existing customers and attract new users. While we will implement procedures and safeguards that are designed to prevent security breaches and cyber-attacks, they may not be able to protect against all attempts to breach our systems, and we may not become aware in a timely manner of any such security breach. Unauthorized access to or security breaches of our platform, network or computer systems, or those of our technology service providers, could result in the loss of business, reputational damage, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, civil and criminal penalties for violation of applicable laws, regulations or contractual obligations, and significant costs, fees and other monetary payments for remediation. If customers believe that our systems do not provide adequate security for the storage of sensitive information or its transmission over the Internet, our business will be harmed.
We face legal, reputational and financial risks from any failure to protect client data from security incidents or cyberattacks.
We and our third-party service providers, such as our cloud service providers that store, transmit and process data, rely on information technologies and infrastructure, which we use to manage our business, including digital storage of client marketing and advertising information and developing new business opportunities. Increased cybersecurity threats and attacks, such as security breaches, are constantly expanding, evolving, and becoming more sophisticated and pose a risk to our systems and networks. In addition, given the increasing difficulty of detecting cybersecurity threats, undiscovered vulnerabilities in our products or services could expose us or our clients to hackers or other unscrupulous third parties who develop and deploy viruses and other malicious software programs that could attack our products, services and business.
We are dependent on information technology networks and systems to securely process, transmit and store electronic information and to communicate among our team around the world and with our people, clients, partners and vendors. As the breadth and complexity of this infrastructure continues to grow, including as a result of the increasing reliance on, and use of, mobile technologies, social media and cloud-based services, the risk of security incidents and cyberattacks has increased. Such incidents could lead to shutdowns or disruptions of or damage to our systems and those of our clients, partners and vendors, and unauthorized disclosure of sensitive or confidential information, including personal data and proprietary business information. Also, given the unpredictability of the timing, nature and scope of such cybersecurity threats and attacks, we may be unable to anticipate attempted security breaches and, in turn, implement adequate preventative measures.
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In providing services and solutions to clients, we often manage, utilize and store sensitive or confidential client or other data, including personal data and proprietary information, and we expect these activities to increase, including through the use of AI, bots and cloud-based analytics. Security breaches, improper use of our systems and other types of unauthorized access to our systems, data, and information by employees and others may pose a risk that data may be exposed to unauthorized persons or to the public. We have access to sensitive data, personal data, and information that is subject to various data privacy laws and regulations, which have obligations that are triggered in the event of a breach. Unauthorized disclosure of, denial of access to, or other incidents involving sensitive or confidential client, vendor, partner or our own data, whether through systems failure, employee negligence, fraud, misappropriation, or cybersecurity, ransomware or malware attacks, or other intentional or unintentional acts, could damage our reputation and our competitive positioning in the marketplace, disrupt our or our clients’ business, cause us to lose clients and result in significant financial exposure and legal liability. Similarly, unauthorized access to or through, denial of access to, or other incidents involving, our software and IT supply chain or SaaS providers, our service providers’ information systems or those we develop for our clients, whether by our employees or third parties, including a cyberattack by computer programmers, hackers, members of organized crime and/or state-sponsored organizations, who continuously develop and deploy viruses, ransomware, malware or other malicious software programs or social engineering attacks, could result in negative publicity, significant remediation costs, legal liability, damage to our reputation and government sanctions and could have a material adverse effect on our results of operations.
We are subject to extensive data privacy laws and regulations.
Laws and regulations related to consumer privacy, processing of personal data and use of digital tracking technologies have been proposed or enacted in the United States and certain international markets (including the European Union’s General Data Protection Regulation, or “GDPR” and the California Consumer Privacy Act, as amended by the California Privacy Rights Act, or “CCPA”). Further in the United States, both Congress and state legislatures, along with federal regulatory authorities, have continued to increase their attention on advertising and the collection and use of data, including personal data. The SEC has issued rules governing disclosures regarding cybersecurity incident response, governance and risk management. At the state level, consumer data privacy laws continue to be proposed and passed in a number of states across the country. As more privacy legislation continues to be introduced, the Company could be subject to such laws regardless of whether the Company has operations or a physical presence in the applicable state. In the United States, the Federal Trade Commission (the “FTC”) and other regulators continue to seek greater regulation of the collection and processing of personal data, as well as restrictions and requirements for certain targeted advertising practices. We are also subject to evolving privacy laws on data processing activities related to cookies and online marketing. In the European Union, regulators actively enforce privacy requirements related to online behavioral advertising.
We continue to face increasing costs of compliance in an uncertain regulatory environment and while we have taken steps to comply with data privacy laws, we cannot guarantee that our efforts will meet the evolving standards imposed by governmental and regulatory agencies, and any failure or perceived failure to comply with these legal requirements could result in regulatory inquiries and penalties, governmental investigations and proceedings, potential consumer, business partner, or securities litigation, damage to our reputation, or other legal liabilities, as well as divert management’s time and attention, all of which could have a material adverse effect on our business and results of operations. Also, any such laws may also have potentially conflicting requirements that would make compliance challenging, as well as potentially resulting in further uncertainty and requiring the Company to incur additional costs and expenses in an effort to comply. Furthermore, these laws and regulations may impact our ability to collect and commercialize data, as well as the efficacy and profitability of certain digital marketing and analytics services we provide to clients, making it difficult to achieve our clients’ goals. These and other related factors could affect our business and reduce demand for certain of our services, which could have a material adverse effect on our results of operations and financial condition.
Our business operations could suffer if we fail to adequately protect and enforce our intellectual property and other proprietary rights.
We rely on trademark, patent, copyright, trade secret and other intellectual property laws, as well as contractual provisions such as confidentiality clauses, to establish and protect our intellectual property and other proprietary rights, and our proprietary technologies. We cannot be sure that the actions we have taken to establish and protect our trademarks and other intellectual property rights will adequately protect us, and if our existing intellectual property rights are rendered invalid or unenforceable, or narrowed in scope, the intellectual property protections afforded our Brands, products and services would be impaired. Such impairment could impede our ability to market our products and services, negatively affect our competitive position, and harm our business and operating results. Even if we successfully maintain our intellectual property rights, we may be unable to enforce those rights against third parties.
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We also rely on patents to protect our products, services and designs. We have applied for, and expect to continue to apply for, additional patent protection for proprietary aspects of existing and proposed processes, services and products. Our patent applications may not result in issued patents, and any patents issued as a result of our patent applications may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage. Additionally, we seek to maintain the confidentiality of certain trade secrets and other proprietary information to preserve our position in the market. We employ various methods to protect such intellectual property, such as entering into confidentiality agreements with certain third parties and our employees, and controlling access to, and distribution of, our proprietary information. However, our efforts may not be effective in controlling access to our proprietary information, and we may not have adequate remedies for the misappropriation of such information.
As we expand our service offerings and the geographic scope of our sales and marketing, we may face additional intellectual property challenges. Certain foreign countries do not protect intellectual property rights as fully as they are protected in the United States and, accordingly, intellectual property protection may be limited or unavailable in some foreign countries where we choose to do business. It may therefore be more difficult for us to successfully challenge the use of our intellectual property rights by other parties in these countries, which could diminish the value of our Brands, products or services and cause our competitive position and growth to suffer. The lack of adequate legal protections of intellectual property or failure of legal remedies for related actions in jurisdictions outside of the United States could have an adverse effect on our business, results of operations, and financial condition.
We may be subject to intellectual property infringement or misappropriation claims.
We may in the future be the subject of patent or other litigation. Our products and services, including products and services that we may develop in the future, may infringe, or third parties may claim that they infringe, intellectual property rights covered by patents or patent applications under which we do not hold licenses or other rights. Third parties may own or control these patents and patent applications in the United States and abroad. These third parties could bring claims against us that would cause us to incur substantial expenses and, if successfully asserted against us, could cause us to pay substantial damages. Further, if a patent infringement or other intellectual property-related lawsuit were brought against us, we could be forced to stop or delay production or sales of the product that is the subject of the suit. From time to time, we may receive letters from third parties drawing our attention to their patent rights. While we take steps to ensure that we do not infringe upon, misappropriate or otherwise violate the rights of others, there may be other more pertinent rights of which we are currently unaware. The defense and prosecution of intellectual property lawsuits could result in substantial expense to us. An adverse determination of any litigation or interference proceeding to which we may become a party could subject us to significant liabilities. As a result of patent infringement claims, or in order to avoid potential claims, we may choose or be required to seek a license from the third party and be required to pay significant license fees, royalties or both. Licenses may not be available on commercially reasonable terms, or at all, in which event our business would be materially and adversely affected. Even if we were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, if we are unable to obtain such licenses, we could be forced to cease some aspects of our business operations, which could harm our business significantly.
Our products and services use open-source software.
Some of our solutions use software made available under open-source licenses, and we expect to continue to incorporate open-source software in our solutions in the future. Open-source software is typically freely available. While this may reduce development costs and speed up the development process, it may also present certain risks that may be greater than those associated with the use of third-party commercial software. For example, open-source software is generally provided without any warranties or other contractual protections regarding infringement or the quality of the code, including the existence of security vulnerabilities. We cannot guarantee we comply with all obligations under these licenses. If the owner of the copyright in the relevant open source software were to allege that we had not complied with the conditions of one or more open source licenses, we could be required to incur significant expenses defending against such allegations and could be subject to the payment of damages, enjoined from further use of the software, required to comply with conditions of the license (which may include releasing the source code of our proprietary software to third parties without charge), or forced to devote additional resources to re-engineer all or a portion of our solutions to avoid using the open source software. Any of these events could create liability for us, damage our reputation, and have an adverse effect on our business, result of operations, financial condition and prospects.
We rely on our management and if they were to leave our company our business plan could be adversely affected.
We are largely dependent upon the personal efforts and abilities of our existing management, currently consisting primarily of Claude Zdanow (Chief Executive Officer and sole member of the Board of Directors), Chris Becker (President), Patricia Kaelin (Chief Financial Officer) and Sam Mendez (Chief of Staff), who play an active role in our operations. Moving forward, should the services of Mr. Zdanow, Mr. Becker, Ms. Kaelin or Ms. Mendez be lost for any reason, the Company will incur costs associated with recruiting replacements and any potential delays in operations which this may cause. If we are unable to replace such individual with a suitably trained alternative individual(s), we may be forced to scale back or curtail our business plan.
We do not currently maintain key person life insurance policies on our executive officers. If our executive officer does not devote sufficient time towards our business, we may never be able to effectuate our business plan.
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Our business is dependent on our ability to keep our supply of skills and resources in balance with client demand.
Employees, including creative, research and data acquisition, analytics and data science, media, technology development, content development, account and practice group specialists, and their skills and relationships with clients, are among our most important assets. Our success is dependent, in large part, on our ability to keep our supply of marketing services skills and capabilities in balance with client demand around the world and our ability to attract, retain, and motivate personnel with the knowledge and skills to lead our business and serve clients globally, respond quickly to rapid and ongoing changes in demand and the macroeconomic environment, and continuously innovate to grow our business. There is competition for scarce talent with market-leading skills and capabilities in new technologies, and our competitors have directly targeted our employees with such skills and will likely continue to do so. At certain times and in certain geographies, we have found and may continue to find it difficult to hire and retain a sufficient number of employees with the skills or backgrounds to meet current and/or future demand in a cost-effective manner. In these cases, we might need to redeploy existing personnel or increase our reliance on subcontractors to fill our labor needs, and if not done effectively, our profitability could be negatively impacted. Additionally, we may be unable to hire and retain people with the skills necessary to meet the increasing client demand, and we have in the past experienced and may continue to experience wage inflation and other increases to compensation expense, which puts upward pressure on our costs and may adversely affect our profitability if we are unable to recover these increased costs.
We are particularly dependent on retaining management and leadership of our subsidiaries with critical capabilities. Our ability to expand depends, in large part, on our ability to attract, develop, retain and integrate both leaders for the local business and people with critical capabilities. If we are not successful in these initiatives, our business, results of operations, financial condition and prospects could be adversely affected.
Adverse macro-economic conditions, including inflation and high interest rates could adversely impact our operating results.
Heightened levels of inflation and the potential worsening of macro-economic conditions, including slower growth or recession, changes to fiscal and monetary policy, tighter credit, higher interest rates and currency fluctuations, present a risk for us and the stability of our industry. If inflation and interest rates remain at current levels for an extended period, or increase even further, and we are unable to successfully mitigate the impact, our costs are likely to increase, resulting in pressure on our profits, margins and cash flows, and we expect continued and/or further declines in demand for pool construction services. Any of the above may have a material adverse effect on our results of operations and the value of our securities.
Our operating results may fluctuate due to factors that are difficult to forecast and not within our control.
Our past operating results may not be accurate indicators of future performance, and you should not rely on such results to predict our future performance. Our operating results have fluctuated significantly in the past, and could fluctuate in the future. Factors that may contribute to fluctuations include:
| · | our ability to effectively manage our working capital; |
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| · | our ability to generate increased demand in our targeted markets, particularly those in which we have limited experience; |
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| · | global epidemics and pandemics and the U.S.’s responses thereto; |
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| · | our ability to satisfy consumer demands in a timely and cost-effective manner; |
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| · | pricing and availability of labor; |
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| · | increases in inflation and interest rates; |
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| · | declines in local, U.S. and global economic activities, including potential recessions; and |
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| · | our inability to adjust certain fixed costs and expenses for changes in demand and the timing and significance of expenditures that may be incurred to facilitate our growth. |
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Our executive officer controls a majority of our voting securities and therefore he has the ability to influence matters affecting our stockholders.
Our Chief Executive Officer and sole director, Claude Zdanow, beneficially owns approximately 67.57% of the issued and outstanding shares of our common stock and also holds all 1,000 outstanding shares of Series A Preferred Stock which have super majority voting rights, as described in greater detail under “We have established preferred stock which can be designated by the Company’s Board of Directors without stockholder approval and the board has established Series A Preferred Stock, which gives the holder thereof majority voting power over the Company”, below. As a result, he controls approximately 91.2% of the stockholder vote and has the ability to influence matters affecting our stockholders and will therefore exercise control in determining the outcome of all corporate transactions or other matters, including the election of directors, mergers, consolidations, the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. Any investor who purchases shares will be a minority stockholder and as such will have little to no say in the direction of the Company and the election of directors. Additionally, it will be difficult if not impossible for investors to remove our current director, which will mean he will remain in control of who serves as officers of the Company as well as whether any changes are made in the Board of Directors (currently consisting solely of Mr. Zdanow). As a potential investor in the Company, you should keep in mind that even if you own shares of the Company’s common stock and wish to vote them at annual or special stockholder meetings, your shares will likely have little effect on the outcome of corporate decisions. Because Mr. Zdanow controls the vote on all stockholder matters, investors may find it difficult to replace our management if they disagree with the way our business is being operated. Additionally, the interests of Mr. Zdanow may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other stockholders.
Our Chief Executive Officer and director lacks experience in and with publicly-traded companies.
While we rely heavily on Claude Zdanow, our Chief Executive Officer and sole director. Mr. Zdanow has no experience serving as an officer or director of a publicly-traded company, or experience with the reporting requirements which public companies are subject to, other than in his role as an officer and director of the Company. Additionally, Mr. Zdanow had little to no significant experience with the financial accounting and preparation requirements of financial statements which we are required to file on a quarterly and annual basis under the Exchange Act prior to his service with the Company. Consequently, our operations, earnings and ultimate financial success could suffer irreparable harm due to our executive’s ultimate lack of experience with publicly-traded companies in general and especially in connection with his lack of experience with the financial accounting and preparation requirements of the Exchange Act.
Our operations may be adversely affected by global epidemics, pandemics and similar health issues.
Health pandemics or epidemics, such as the COVID-19 pandemic, have in the past and could again in the future result in quarantines, stay-at-home orders, remote work policies or other similar events that may disrupt businesses, delay our research and development programs and timelines, negatively impact productivity and increase risks associated with cybersecurity, the future magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations. Economic conditions and business activity may be negatively impacted and may not recover as quickly as anticipated. The effects of epidemics and pandemic are highly uncertain and subject to change. If we are not able to respond to and manage the impact of such events effectively, our business, operating results, financial condition and cash flows could be adversely affected.
Our legacy swimming pool and home construction business may continue to expose us to risks.
While we consider the swimming pool and home construction services offered by Reliant Holdings, Inc. to be a non-core business segment and to not be integral to the Company’s principal business strategy, we may continue to be subject to liabilities associated with these businesses. Despite our deprioritization of the legacy swimming pool and home construction services business, we may continue to be subject to liabilities related to that business. In particular, we will continue to be subject to factors outside of our control that impact sales of pools, including general economic conditions, disposable income levels, consumer confidence and access to credit. We will also continue to be subject to liability claims in respect of the Reliant Holdings, Inc. swimming pool and home construction services business.
We face corporate governance risks and negative perceptions of investors associated with the fact that we currently have only one director, who is not independent.
Currently, Mr. Zdanow, our Chief Executive Officer, serves as our sole director. As such, Mr. Zdanow can, among other things, declare himself discretionary bonuses, and determine his own compensation level. As such, Mr. Zdanow has significant control over our business direction. Additionally, there are no independent members of the Board of Directors available to second and/or approve related party transactions involving Mr. Zdanow, including the compensation paid to Mr. Zdanow, and any future employment agreements we enter into with such individual. Therefore, investors may perceive that because no other directors are approving related party transactions involving Mr. Zdanow, that such transactions are not fair to the Company. The price of our common stock may be adversely affected and/or devalued compared to similarly sized companies with multiple unrelated and independent officers and directors due to the investing public’s perception of limitations facing our Company due to the above.
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We have identified material weaknesses in our disclosure controls and procedures and internal control over financial reporting. If not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements, a failure to meet our reporting and financial obligations, loss of revenue and theft, and such failure to maintain ineffective controls and procedures has already resulted in, and may in the future result in, a non-approved transaction, which could have a material adverse effect on our financial condition and the trading price of our common stock.
Maintaining effective internal control over financial reporting and effective disclosure controls and procedures are necessary for us to produce reliable financial statements. As reported under “Item 4. Controls and Procedures”, as of December 31, 2024, our Chief Executive Officer has determined that our disclosure controls and procedures were not effective. Separately, as of December 31, 2024, management has identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We determined that we had a material weakness because, due to our small size, and our limited number of personnel, and because we did not have in place an effective internal control environment with formal processes and procedures, to allow for a detailed review of accounting transactions that would identify errors in a timely manner. Separately, the Company did not implement appropriate approval requirements for non-routine transactions.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.
The Company has in the past, and may in the future, be subject to non-routine transactions that were not pre-approved by management. Such transactions may result in material losses, unrecoverable payments, significant decreases in assets and working capital, and ultimately result in a material adverse effect on the Company, its operations and results, any of which may cause the value of the Company’s securities to decline in value or become worthless.
Maintaining effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce reliable financial statements and the Company is committed to remediating its material weaknesses in such controls as promptly as possible. However, there can be no assurance as to when these material weaknesses will be remediated or that additional material weaknesses will not arise in the future. Any failure to remediate the material weaknesses, or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations, which in turn could have a material adverse effect on our financial condition and the trading price of our common stock, and/or result in litigation against us or our management. In addition, even if we are successful in strengthening our controls and procedures, those controls and procedures may not be adequate to prevent or identify irregularities or facilitate the fair presentation of our financial statements or our periodic reports filed with the SEC.
Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protections against interested director transactions, conflicts of interest and similar matters.
The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York Stock Exchange and The Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or The Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.
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Because we only have one director, who is not independent, we do not currently have an independent audit or compensation committee. As a result, our directors have the ability to, among other things, determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and any potential investors may be reluctant to provide us with funds necessary to expand our operations.
We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of the Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.
Risks relating to our common stock:
Stockholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional shares of our common stock.
We have no committed source of financing. Wherever possible, our Board of Directors (currently consisting solely of Mr. Zdanow) will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our Board of Directors has authority, without action or vote of the stockholders, to issue all or part of the authorized but unissued shares of common stock. In addition, if a trading market develops for our common stock, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in dilution of the ownership interests of existing stockholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management.
There is currently a limited public market for our common stock, which is volatile, sporadic and an illiquid market.
Although our common stock was approved for quotation on the OTC Pink Market maintained by OTC Markets in January 2020 and trading of our common stock has since moved to the OTCQB Market maintained by OTC Markets, to date only a limited number of shares of our common stock have traded and a significant market may not develop in the future. If for any reason a more robust public trading market does not develop, stockholders may have difficulty selling their shares of common stock should they desire to do so.
Even if a more significant trading market develops, we cannot predict how liquid that market might become. The trading price of our common stock, if any, in the future, is likely to be highly volatile and could be subject to wide fluctuations in price in response to various factors, some of which are beyond our control.
These factors include:
| · | Quarterly variations in our results of operations or those of our competitors; |
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| · | Announcements by us or our competitors; |
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| · | Disruption to our operations; |
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| · | Commencement of, or our involvement in, litigation; |
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| · | Any major change in our board or management; |
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| · | Changes in governmental regulations or in the status of our regulatory approvals; and |
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| · | General market conditions and other factors, including factors unrelated to our own operating performance. |
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In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such public companies. Such fluctuations may be even more pronounced in the future. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This type of litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
We also currently have a volatile, sporadic and illiquid market for our common stock, which is subject to wide fluctuations in response to several factors, including those discussed above. Our stock price may also be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, global epidemics or pandemics, interest rates or international currency fluctuations may adversely affect the market price and liquidity of our common stock.
We have not paid any cash dividends in the past and have no plans to issue cash dividends in the future, which could cause the value of our common stock to have a lower value than other similar companies which do pay cash dividends.
We have not paid any cash dividends on our common stock to date and do not anticipate any cash dividends being paid to holders of our common stock in the foreseeable future. While our dividend policy will be based on the operating results and capital needs of the business, it is anticipated that any earnings will be retained to finance our future expansion. As we have no plans to issue cash dividends in the future, our common stock could be less desirable to other investors and as a result, the value of our common stock may decline, or fail to reach the valuations of other similarly situated companies who have historically paid cash dividends in the past.
Our common stock is considered a “penny stock” under SEC rules and it may be more difficult to resell securities classified as “penny stock.”
Our common stock is a “penny stock” under applicable SEC rules (generally defined as non-exchange traded stock with a per-share price below $5.00). Unless we maintain a per-share price above $5.00 (or obtain a listing on a national securities exchange), our common stock will continue to be a “penny stock.” These rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as “established customers” or “accredited investors.” For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks. Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish monthly account statements showing the market value of each penny stock held in the customer’s account, provide a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s written agreement to the transaction.
Legal remedies available to an investor in “penny stocks” may include the following:
| · | If a “penny stock” is sold to the investor in violation of the requirements listed above, or other Federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment. |
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| · | If a “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages. |
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These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.
Many brokerage firms will discourage or refrain from recommending investments in penny stocks. Most institutional investors will not invest in penny stocks. In addition, many individual investors will not invest in penny stocks due to, among other reasons, the increased financial risk generally associated with these investments.
For these reasons, penny stocks may have a limited market and, consequently, limited liquidity. We can give no assurance at what time, if ever, our common stock will not be classified as a “penny stock” in the future.
There may not be sufficient liquidity in the market for our securities in order for investors to sell their shares. The market price of our comment stock has been, and may continue to be, volatile.
The market price of our common stock has been, and is likely to continue to be, highly volatile, as is the stock market in general. Some of the factors that may materially affect the market price of our common stock are beyond our control, such as conditions or trends in the industry in which we operate or sales of our common stock. This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk‑averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.
As a consequence, there have been, and may be, periods of several days or more when trading activity in our shares is minimal or non‑existent, as compared to a mature issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. It is possible that a broader or more active public trading market for our common stock will not develop or be sustained, or that trading levels will not continue. These factors have, and may in the future, materially adversely affect the market price of our common stock, regardless of our performance. In addition, the public stock markets have experienced extreme price and trading volume volatility. This volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelated to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our common stock.
Sales of our common stock could reduce the price of our stock.
As of the date of this Report, we have 36,002,035 shares of our common stock held by non-affiliates and 75,000,000 shares held by affiliates which Rule 144 of the Securities Act defines as “restricted securities.” All of the restricted shares outstanding are available for sale under Rule 144, although shares held by affiliates are subject to restrictions relating to the amount that may be sold in any 90-day period and manner in which such sales may be made, among other limitations. In addition, shares of preferred stock that are convertible into approximately 295,223,892 shares of our common stock are outstanding. The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.
We have established preferred stock which can be designated by the Company’s Board of Directors without stockholder approval and the board has established Series A Preferred Stock, which gives the holder thereof majority voting power over the Company.
We have authorized capital stock consisting of 450,000,000 shares of common stock, $0.001 par value per share and 5,000,000 shares of preferred stock, $0.001 par value per share. As of the date of this Report, we have 111,002,035 shares of common stock issued and outstanding, 1,000 shares of Series A Preferred Stock designated and issued and outstanding, 9,000 shares of Series B Preferred Stock designated and issued and outstanding and 6,570 shares of Series C Preferred Stock designated and issued and outstanding. The shares of preferred stock of the Company may be issued from time to time in one or more series, each of which shall have a distinctive designation or title as shall be determined by the board of directors of the Company (currently consisting solely of Mr. Zdanow) prior to the issuance of any shares thereof. The preferred stock may have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as adopted by the board of directors. The Series A Preferred Stock has the right, voting in aggregate, to vote on all stockholder matters equal to fifty-one percent (51%) of the total vote (the “Super Majority Voting Rights”). For example, if there are 1,000,0000 shares of the Company’s common stock issued and outstanding at the time of a stockholder vote, the holders of Series A Preferred Stock, voting separately as a class, will have the right to vote an aggregate of 510,000 shares, out of a total number of 1,000,000 shares voting. A total 1,000 shares of Series A Preferred Stock are currently outstanding and held by Mr. Zdanow, our sole director, providing him sole voting rights over the Company.
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Mr. Zdanow’s ownership and control over the Company, due to his ownership of the Series A Preferred Stock, is non-dilutive and as such, he will continue to control the stockholder vote on all stockholder matters, regardless of the number of shares of common stock outstanding or the ownership of common stock by any other holders of the Company’s common stock.
Because the board of directors is able to designate the powers and preferences of the preferred stock without the vote of a majority of the Company’s stockholders, stockholders of the Company will have no control over what designations and preferences the Company’s preferred stock will have. Investors should keep in mind that the Board of Directors has the authority to issue additional shares of common stock and preferred stock, which could cause substantial dilution to our existing stockholders. Additionally, the dilutive effect of any preferred stock, which we may issue may be exacerbated given the fact that such preferred stock may have super majority voting rights (similar to the Series A Preferred Stock) and/or other rights or preferences which could provide the preferred stockholders with voting control over us subsequent to such offering and/or give those holders the power to prevent or cause a change in control. As a result, the issuance of shares of common stock and/or preferred stock may cause the value of our securities to decrease and/or become worthless.
Risks related to our governing documents and Nevada law:
Our Articles of Incorporation and Bylaws limit the liability of, and provide indemnification for, our officers and directors.
Our Articles of Incorporation and Bylaws, as amended, generally limit our officers’ and directors’ personal liability to the Company and its stockholders for breach of fiduciary duty as an officer or director except for breach of the duty of loyalty or acts or omissions not made in good faith, or which involve intentional misconduct or a knowing violation of law. Our Articles of Incorporation, and Bylaws, each as amended and restated, provide indemnification for our officers and directors to the fullest extent authorized by the Nevada Revised Statutes against all expenses, liability, and loss, including attorneys’ fees, judgments, fines excise taxes or penalties and amounts to be paid in settlement reasonably incurred or suffered by an officer or director in connection with any action, suit or proceeding, whether civil or criminal, administrative or investigative (hereinafter a “Proceeding”) to which the officer or director is made a party or is threatened to be made a party, or in which the officer or director is involved by reason of the fact that he is or was an officer or director of the Company, or is or was serving at the request of the Company as an officer or director of another corporation or of a partnership, joint venture, trust or other enterprise whether the basis of the Proceeding is an alleged action in an official capacity as an officer or director, or in any other capacity while serving as an officer or director. Thus, the Company may be prevented from recovering damages for certain alleged errors or omissions by the officers and directors for liabilities incurred in connection with their good faith acts for the Company. Such an indemnification payment might deplete the Company’s assets. Stockholders who have questions regarding the fiduciary obligations of the officers and directors of the Company should consult with independent legal counsel. It is the position of the Securities and Exchange Commission that exculpation from and indemnification for liabilities arising under the Securities Act, and the rules and regulations thereunder is against public policy and therefore unenforceable.
The foregoing indemnification obligations could result in us incurring substantial expenditures to cover the cost of settlement or damage awards against our directors and officers, which the Company may be unable to recoup. These provisions and resultant costs may also discourage us from bringing a lawsuit against our directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by our stockholders against our directors and officers, even though such actions, if successful, might otherwise benefit us and our stockholders.
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Our Articles of Incorporation contain a specific provision that limits the liability of our directors and officers for monetary damages to the Company and the Company’s stockholders to the fullest extent permitted by Nevada law and requires us, under certain circumstances, to indemnify officers, directors and employees.
The limitation of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights to them may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees.
Anti-takeover provisions in our Articles of Incorporation, as amended and our Bylaws, as well as provisions of Nevada law, might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.
Our Articles of Incorporation, as amended and Bylaws and Nevada law contain provisions that may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent or delay attempts by our stockholders to replace or remove our management. Our corporate governance documents include the following provisions:
| · | the removal of directors only with the approval of stockholders holding at least two-thirds of the voting power of the issued and outstanding stock entitled to vote in the election of directors; |
| · | requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our Board of Directors; |
| · | authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock; and |
| · | limiting the liability of, and providing indemnification to, our directors and officers. |
Any provision of our Articles of Incorporation, as amended or Bylaws or Nevada law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.
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| · | the difficulty of integrating acquired products, services or operations; |
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| · | the potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies; |
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| · | difficulties in maintaining uniform standards, controls, procedures and policies; |
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| · | the potential impairment of relationships with employees and customers as a result of any integration of new management personnel; |
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| · | the potential inability or failure to achieve additional sales and enhance our customer base through cross-marketing of the products to new and existing customers; |
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| · | the effect of any government regulations which relate to the business acquired; |
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| · | potential unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition or modify the marketing and sales of acquired products or operations, or the defense of any litigation, whether or not successful, resulting from actions of the acquired company prior to our acquisition; and |
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| · | potential expenses under the labor, environmental and other laws of various jurisdictions. |
Our business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems encountered in connection with an acquisition, many of which cannot be presently identified. These risks and problems could disrupt our ongoing business, distract our management and employees, increase our expenses, and adversely affect our results of operations.
We incur ongoing costs and expenses for SEC reporting and compliance and without sufficient revenues we may not be able to remain in compliance, making it difficult for investors to sell their shares, if at all.
In order for us to remain in compliance with our on-going reporting requirements, we may require additional capital and/or future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources or require us to obtain additional capital through the sale of equity or debt. If we are unable to further capitalize the Company or generate sufficient revenues to remain in compliance, it may be difficult for you to resell any shares you may purchase, if at all. There are ongoing costs and expenses for SEC reporting, including the general booking and accounting costs for the preparation of the financial quarterly (Form 10-Qs) and annual filings (Form 10-Ks), and auditor’s fees. Further, there are processing costs in preparing and converting documents and disclosures through the EDGAR filing system, including certain costs for the XBRL that are required as part of the EDGAR filing. We estimate that these costs could result in more than $100,000 per year of ongoing costs.
We may experience adverse impacts on our reported results of operations as a result of adopting new accounting standards or interpretations.
Our implementation of and compliance with changes in accounting rules, including new accounting rules and interpretations, could adversely affect our reported financial position or operating results or cause unanticipated fluctuations in our reported operating results in future periods.
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If persons engage in short sales of our common stock, the price of our common stock may decline.
Selling short is a technique used by a stockholder to take advantage of an anticipated decline in the price of a security. In addition, holders of options and warrants will sometimes sell short knowing they can, in effect, cover through the exercise of an option or warrant, thus locking in a profit. A significant number of short sales or a large volume of other sales within a relatively short period of time can create downward pressure on the market price of a security. Stockholders could, therefore, experience a decline in the value of their investment as a result of short sales of our common stock.
Our insurance may not provide adequate levels of coverage against claims.
We maintain insurance that we believe is customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Moreover, any loss incurred could exceed policy limits and policy payments made to us may not be made on a timely basis. Such losses could adversely affect our business prospects, results of operations, cash flows and financial condition.
Increasing attention to environmental, social, and governance (ESG) matters may impact our business.
Increasing attention to ESG matters, including those related to climate change and sustainability, increasing societal, investor and legislative pressure on companies to address ESG matters, may result in increased costs, reduced profits, increased investigations and litigation or threats thereof, negative impacts on our stock price and access to capital markets, and damage to our reputation. In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters, including climate change and climate-related risks. Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable ESG ratings and investment community divestment initiatives, among other actions, may lead to negative investor sentiment toward the Company and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital. Additionally, evolving expectations on various ESG matters, including biodiversity, waste and water, may increase costs, require changes in how we operate and lead to negative stakeholder sentiment.
Climate change, climate change regulations and greenhouse gas effects may adversely impact our operations.
There is a growing political and scientific consensus that greenhouse gas (“GHG”) emissions continue to alter the composition of the global atmosphere in ways that are affecting and are expected to continue affecting the global climate. We may become subject to legislation and regulation regarding climate change, and compliance with any new rules could be difficult and costly. Concerned parties, such as legislators and regulators, stockholders and nongovernmental organizations, as well as companies in many business sectors, are considering ways to reduce GHG emissions. Many states and countries have announced or adopted programs to stabilize and reduce GHG emissions and in the past federal legislation has been proposed in Congress. If such legislation is enacted, we could incur increased energy, environmental and other costs and capital expenditures to comply with the limitations. Unless and until legislation is enacted and its terms are known, we cannot reasonably or reliably estimate its impact on our financial condition, operating performance, or ability to compete. Climate change could have a material adverse effect on our financial condition, results of operations and cash flow.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
Item 1C. CYBERSECURITY.
Risk Management and Strategy
The Company’s cybersecurity environment is led by its Chief of Staff with input from the Chief Executive Officer and sole director, who in addition to cybersecurity matters, oversees the Company’s IT infrastructure and is responsible for monitoring and managing the security of the Company's corporate network and enterprise systems, including technical controls, and safety protocols and responding to security threats.
The Company establishes safeguards for protecting the confidentiality, integrity, and availability of our data, technology, and information systems.
As of and for the year ended December 31, 2024, there have been
ITEM 2. PROPERTIES
The Company leases approximately 1,010 square feet of office space in Austin, Texas at 12343 Haymeadow Dr., Suite 3A. On March 28, 2022, the Company entered into a new lease agreement for the office space, which has a term of 24 months, through March 31, 2024, and a monthly rental cost of $1,515 for the period from April 1, 2022 to March 31, 2023 and $1,560 per month from April 1, 2023 to March 31, 2024, together with costs and expenses of approximately $725 per month for 2023. On March 13, 2024, the Company extended the office space lease from April 1, 2024, through November 30, 2025 for a rental rate of $2,320 per month from April 1, 2024 to March 31, 2025, and $2,400 per month from April 1, 2025, to November 30, 2025.
Lease expense was approximately $90,000 and $73,000 for the years ended December 31, 2024, and 2023, respectively.
ITEM 3. LEGAL PROCEEDINGS
Although we may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business, we are not currently a party to any material legal proceeding. In addition, we are not aware of any material legal or governmental proceedings against us or contemplated to be brought against us.
Prior litigation and other matters which have since been settled, are described in, and incorporated by reference in, this “Item 3. Legal Proceedings” of this Annual Report on Form 10-K from, “Part II” - “Item 8. Financial Statements and Supplementary Data” in the Notes to Consolidated Financial Statements in “Note 7. Commitments and Contingencies”.
The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
Payroll tax liabilities
For the year ended December 31, 2023, the Company did not remit federal income tax, social security, Medicare or local and state income taxes which were withheld from the Company’s employees payroll. The Company has estimated and accrued fines and penalties associated with the amounts which have not been remitted and includes this amount in accrued expenses in the accompanying consolidated balance sheets. As of December 31, 2024 and 2023, the balance due was $516,807 and $462,267, respectively. The Company’s tax representatives are engaged in active conversations to resolve this issue and settle the amounts owed via a negotiated payment plan arrangement.
Customer legal dispute
VMed Services, LLC a subsidiary of the Company, is a plaintiff in a lawsuit that was filed on April 22, 2024 against Meridian Diagnostics LLC in State Court of Fulton County, Georgia. The Company is seeking approximately $170,000 for claims related to the provision of marketing services to the defendant. In response to the filing of the complaint, Meridian Diagnostics filed a counterclaim against the Company and denies the allegations and seeks attorney's fees. This litigation is in the discovery phase, and as such, the Company is unable to estimate the range of potential loss.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market for Common Stock
Our common stock was approved for quotation on the OTC Pink Market maintained by OTC Markets under the symbol “RELT” on or around January 24, 2020, and trading of our common stock has since moved to the OTCQB Market maintained by OTC Markets. On February 3, 2025, the symbol was changed to “ONAR”. The OTC Market is a network of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current “bids” and “asks”, as well as volume information.
The following table sets forth the range of high and low sales prices for our common stock for each of the periods indicated as reported by the OTCQB Market. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Due to the fact that trading in our common stock is extremely sporadic, with multiple trading days where no trading occurs, and limited, with many trading days trading less than 3,000 shares of common stock, we believe the high and low sales prices below should not be relied upon as a basis for determining the value of our common stock.
12 Month Period Ended December 31, 2024 |
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Quarter ended December 31, 2024 |
| $ | 0.10 |
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| $ | 0.06 |
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Quarter ended September 30, 2024 |
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| 0.12 |
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| 0.06 |
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Quarter ended June 30, 2024 |
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| 0.28 |
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| 0.03 |
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Quarter ended March 31, 2024 |
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| 0.28 |
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| 0.06 |
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12 Month Period Ended December 31, 2023 |
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Quarter ended December 31, 2023 |
| $ | 0.30 |
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| $ | 0.02 |
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Quarter ended September 30, 2023 |
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| 0.12 |
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| 0.06 |
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Quarter ended June 30, 2023 |
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| 0.11 |
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| 0.05 |
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Quarter ended March 31, 2023 |
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| 0.15 |
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| 0.09 |
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Holders
As of April 8, 2025, we had 111,002,035 shares of common stock outstanding, held by 58 stockholders of record, 1,000 shares of Series A Preferred Stock designated and issued and outstanding, held by one stockholder of record, 9,000 shares of Series B Preferred Stock designated and issued and outstanding, held by two stockholders of record and 6,570 shares of Series C Preferred Stock designated and issued and outstanding, held by three stockholders of record.
Dividends
To date, we have not declared or paid any dividends on our outstanding shares. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings to finance our operations and future growth, our Board of Directors (currently consisting solely of Mr. Zdanow) will have discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements and other factors, which our Board of Directors may deem relevant.
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There are no restrictions in our Articles of Incorporation or Bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:
1. | We would not be able to pay our debts as they become due in the usual course of business, or; |
| 2. | Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution. |
Recent Sales of Unregistered Securities
During the year ended December 31, 2024, we issued $2,110,000 of notes payable. In connection with the issuance of the notes, we issued 6,205,882 shares of our common stock to the holders thereof as bonus shares. The notes and the shares of common stock were exempt from registration under Section 4(a)(2) of the Securities Act.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company’s historical performance and financial condition should be read together with the consolidated financial statements and related notes in “Item 8. Financial Statements and Supplemental Data” of this Report. This discussion contains forward-looking statements based on the views and beliefs of our management, as well as assumptions and estimates made by our management, see “Cautionary Statement Regarding Forward-Looking Information”. These statements by their nature are subject to risks and uncertainties, and are influenced by various factors. As a consequence, actual results may differ materially from those in the forward-looking statements. See “Item 1A. Risk Factors” of this report for the discussion of risk factors.
Summary of The Information Contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:
| ● | Plan of Operations. A description of our plan of operations for the next 12 months including required funding. |
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| ● | Results of Operations. An analysis of our financial results comparing the years ended December 31, 2024, and 2023. |
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| ● | Liquidity and Capital Resources. An analysis of changes in our consolidated balance sheets and cash flows and discussion of our financial condition. |
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| ● | Critical Accounting Policies and Estimates. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. |
Plan of Operations
We had working capital of $(4,033,419) as of December 31, 2024. With our current cash on hand, expected revenues, and based on our current average monthly expenses, we anticipate the need for additional funding in order to continue our operations at their current levels and to pay the costs associated with being a public company for the next 12 months. We will require additional funding in the future to expand or complete acquisitions and as of the date of this filing are in the process of finalizing the terms of further investment from existing and new investors to fund our business operations and our pending acquisition under letter of intent “LOI” as of February 17, 2025. Our plan for the next twelve months is to continue using the same marketing and management strategies while also seeking to expand our operations organically or through acquisitions as funding and opportunities arise. We plan to raise additional required funding the sale of debt or equity, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders. If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate future revenues and may require us reducing expenses to continue operating the business.
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Results of Operations
For the Year Ended December 31, 2024, Compared to the Year Ended December 31, 2023
We had revenue of $2,573,386 for the year ended December 31, 2024, compared to revenue of $2,802,065 for the year ended December 31, 2023, an decrease of $228,679 or 8% from the prior period. Revenues declined due to changes in the Company’s customer mix and an emphasis higher margin customers, which was partially offset by our acquisition of Reliant Pools during the period.
We had cost of goods sold of $2,613,942 for the year ended December 31, 2024, compared to cost of goods sold of $2,928,523 for the year ended December 31, 2023, a decrease of $314,581 or 11% from the prior period. Cost of goods sold decreased mainly due a reduction in staff costs and general cost saving initiatives undertaken by management.
We had general and administrative expenses of $1,354,528 for the year ended December 31, 2024, compared to general and administrative expenses of $886,822 for the year ended December 31, 2023. General and administrative expenses increased by $467,706 or 53% from the prior period mainly due to increased costs for costs attributable to being a public company.
We had depreciation and amortization of $585,109 for the year ended December 31, 2024, compared to depreciation and amortization of $557,631 for the year ended December 31, 2023. Depreciation and amortization increased by $27,478 or 5% from the prior period mainly due to increased in fixed assets and additions of intangible assets during the period.
We had interest expense of $436,861 for the year ended December 31, 2024, compared to interest expense of $88,039 for the year ended December 31, 2023, due to interest costs in connection with new loans during 2024 to fund operations as described in greater detail under “Liquidity and Capital Resources” below.
We had merger and transaction related expenses of $461,115 for the year ended December 31, 2024 and compared to $-0- for the year ended December 31, 2023. This increase is the result of additional costs incurred for the acquisition of Reliant Holdings during the period as well as the investigation of other potential acquisitions none of which resulted in any binding commitments.
We had a change in fair value of investments of $178,387 for the year ended December 31, 2024 and compared to $-0- for the year ended December 31, 2023. This increase is the result of changes in the market price of our investments which we received as compensation for services provided during the year ended December 31, 2024.
We had a loss on extinguishment of debt of $363,871 for the year ended December 31, 2024 and compared to $-0- for the year ended December 31, 2023. This increase is the result of the issuance of replacement notes payable and common to certain note holders as a result of the acquisition of Reliant Holdings during year ended December 31, 2024.
Liquidity and Capital Resources
We had total assets of $2,449,974 as of December 31, 2024, consisting of total current assets of $967,279. We had total liabilities of $5,000,698 as of December 31, 2029, all of which was current as of December 31, 2024. We had working capital of $(4,033,419) as of December 31, 2024, compared to working capital of $(1,818,769) as of December 31, 2023.
We used $1,717,888 of cash in operating activities for the year ended December 31, 2024, as compared to $377,300 of net used in operating activities for the year ended December 31, 2023. Net cash used in operating activities for the 2024 period was mainly due to our net loss $3,083,156,
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We had $69,079 of net cash used in investing activities for the year ended December 31, 2024 as compared to $415,123 used in investing activities for the year ended December 31, 2023. The key drivers for the change were the cash acquired in our acquisition of Reliant Holdings of $374,294 which was offset by a loan to an affiliate of $400,700 for the purpose of effecting the reverse merger.
We had $2,125,150 of cash provided by financing activities for the year ended December 31, 2024, which was mainly due to $2,110,000 of proceeds from the issuance of notes payable during the period. We had $778,868 of net cash provided by financing activities for the year ended December 31, 2023, which was mainly due to proceeds provided by a shareholder of $542,500 during the period.
We do not currently have any additional commitments or identified sources of additional capital from third parties or from our officers, directors or majority stockholders. Additional financing may not be available on favorable terms, if at all.
In the future, we may be required to seek additional capital by selling additional debt or equity securities, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then stockholders. Financing may not be available in amounts or on terms acceptable to us, or at all. In the event we are unable to raise additional funding and/or obtain revenues sufficient to support our expenses, we may be forced to curtail or abandon our business operations, and any investment in the Company could become worthless.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.
Revenue Recognition
The Company accounts for revenue in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codifications (“ASC”) 606, ‘Revenue from Contracts with Customers’ (“ASC 606”).
A performance obligation is a promise in a contract to transfer a distinct good or service to the client and is the unit of accounting in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the relative standalone selling price. Determining relative standalone selling price and identifying separate performance obligations requires judgment. Contract modifications may occur in the performance of the Company’s contracts. Contracts may be modified to account for changes in the contract specifications, requirements or duration. If a contract modification results in the addition of performance obligations priced at a standalone selling price or if the post-modification services are distinct from the services provided prior to the modification, the modification is accounted for separately. If the modified services are not distinct, they are accounted for as part of the existing contract.
Pool Sale Revenues
Performance Obligations
The Company’s contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct.
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Performance Obligations Satisfied Over Time
The majority of the Company’s pool services revenue is derived from construction contracts and projects that typically span between 4 to 12 months. The Company’s construction contracts will continue to be recognized over time because of the continuous transfer of control to the customer as all of the work is performed at the customer’s site and, therefore, the customer controls the asset as it is being constructed. Contract costs include labor, material, and indirect costs.
Performance Obligations Satisfied at a Point in Time
Revenue for the Company’s pool services contracts that do not satisfy the criteria for over time recognition is recognized at a point in time. Substantially all of the Company’s revenue recognized at a point in time is for work performed for pool maintenance or repairs. Unlike the Company’s construction contracts that use a cost-to-cost input measure for performance, the pool maintenance or repairs utilize an output measure for performance based on the completion of a unit of work. The typical time frame for completion of these services is less than one month. Upon fulfillment of the performance obligation, the customer is provided with an invoice (or equivalent) demonstrating transfer of control or completion of service to the customer. We believe that point in time recognition remains appropriate for these contracts and will continue to recognize revenues upon completion of the performance obligation and the issuance of an invoice.
Contract modifications are routine in the performance of the Company’s contracts. Contracts are often modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract.
Backlog
On December 31, 2024, we had approximately $154,000 of remaining performance obligations on the Company’s construction contracts, which we also refer to as backlog. We expect to recognize the Company’s backlog as revenue during the next 12 months.
Contract Estimates
Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract.
Contract estimates are based on various assumptions to project the outcome of future events. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and the performance of subcontractors.
Variable Consideration
Transaction price for the Company’s contracts may include variable consideration, which includes increases to transaction price for approved and unapproved change orders, claims and incentives, and reductions to transaction price for liquidated damages. Change orders, claims and incentives are generally not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation. We estimate variable consideration for a performance obligation at the most likely amount to which we expect to be entitled (or the most likely amount we expect to incur in the case of liquidated damages), utilizing estimation methods that best predict the amount of consideration to which we will be entitled (or will be incurred in the case of liquidated damages). We include variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of The Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. The effect of variable consideration on the transaction price of a performance obligation is recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders and claims reflected in transaction price (or excluded from transaction price in the case of liquidated damages) are not resolved in the Company’s favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue. No adjustments on any one contract was material to the Company’s consolidated financial statements for the years ended December 31, 2024 and 2023.
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Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) on the consolidated balance sheet. On the Company’s construction contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs prior to revenue recognition, resulting in contract liabilities. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period.
Advertising & Marketing Services
The Company enters into Master Services Agreement (“MSA”) and Scope of Work (“SOW”) which govern the terms of the Company’s performance obligation for purposes of revenue recognition.
The Company’s performance obligation of Advertising & Marketing Services which encompasses the following integrated and interdependent services:
| 1. | Strategic Consulting: Development of marketing strategies, including competitive analysis, campaign performance evaluations, and recommendations for campaign execution and optimization in the digital space. |
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| 2. | Paid Advertising: Execution of digital advertising campaigns leveraging data analytics, machine learning, and artificial intelligence across a range of digital platforms. Ongoing optimization of these campaigns to achieve optimal results for the client is part of the process, as well as iterative creative services to help achieve results. Continuous monitoring and adjustment of the advertising campaigns is achieved through bi-weekly consultations with the client to review performance and implement optimizations. |
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| 3. | Web Development: The creation and development of websites, landing pages, ecommerce platforms, and other web assets is often supplemental to the Paid Advertising being executed for clients. This includes optimization of existing web assets with services such as search engine optimization and conversion rate optimization. |
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| 4. | Creative Services: The creation or redevelopment of creative assets is another service area offered. Typically, the creative services are limited to Web Development or the execution of creative services needed to support Paid Advertising. In some cases, full brand development and brand strategy work is included in the Creative Services offering. |
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| 5. | Data, Analytics, and AI: The implementation, measurement, and management of data, as well as leveraging AI to forecast and interpret the data. Data is derived from historical advertising campaigns, new advertising campaigns, client data, third party data, and an array of sources depending on the needs and requirements of the client. |
These services can be integrated and interdependent, all contributing to the goal of improving the client's business performance, revenue, and brand awareness over time. Revenue is recognized over time as the services are provided and the performance obligation is satisfied, consistent with the ongoing optimization efforts. Amounts recognized but not yet invoiced to the customer are included as ‘contract assets’ within the accompanying consolidated balance sheets.
A monthly fee is charged for ongoing services. Any additional services outside the agreed-upon scope, such as the inclusion of additional services, are subject to prior written approval and will result in additional fees. Retainers received for future services are classified as ‘deferred revenue’ within the accompanying consolidated balance sheets.
Executive Management Services
The Company’s chief executive officer and financial team provide executive management services to certain affiliated entities at a fixed monthly rate. Revenue is recognized over time as the services are provided and the performance obligation is satisfied, consistent with the ongoing benefits the affiliated entities receive as the services are rendered.
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Accounts Receivable and Accounts Receivables, Related Party
The Company does not charge interest to its customers and carries its customers’ receivables at their face amounts, less an allowance for doubtful accounts. Included in accounts receivable are balances billed to customers pursuant to retainage provisions in certain contracts that are due upon completion of the contract and acceptance by the customer, or earlier as provided by the contract. Based on the Company’s experience in recent years, the majority of customer balances at each balance sheet date are collected within twelve months. As is common practice in the industry, the Company classifies retainage, as current assets. The contracting cycle for certain long-term contracts may extend beyond one year, and accordingly, collection of retainage on those contracts may extend beyond one year.
The Company grants trade credit, on a non-collateralized basis (with the exception of lien rights against the property in certain cases), to its customers and is subject to potential credit risk related to changes in business and overall economic activity. The Company records an allowance for credit losses to allow for any amounts that may not be recoverable, which is based on an analysis of the Company’s prior collection experience, customer credit worthiness, current economic trends and expected future losses. Accounts are considered delinquent when payments have not been received within 30 days and are written off when management determines that collection is not probable. During the years ended December 31, 2024 and 2023, the Company recognized allowances for future credit losses totaling $- and $504,612 respectively. During the year ended December 31, 2024, and 2023, $25,679 and $47,594 of accounts receivable were charged off against the allowance for doubtful accounts. As of December 31, 2022, the Company’s accounts receivable balance was $3,800 and accounts receivables, related party, was $-0-. As of December 31, 2024 and 2023, the Company’s allowance for doubtful accounts was $274,309 and $497,745, respectively.
Intangible Assets
Intangible assets are amortized over their estimated useful lives. Each period, the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Management tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets but at least annually on December 31st.
Impairment Assessment
The Company evaluates intangible assets and other long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable and at least annually on December 31st. This includes but is not limited to significant adverse changes in business climate, market conditions or other events that indicate an asset’s carrying amount may not be recoverable. The recoverability of these assets is measured by comparing the carrying amount of each asset to the future cash flows the asset is expected to generate. If the cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value.
Recently Issued Accounting Standards
For more information on recently issued accounting standards, see “Note 1. The Company and Summary of Significant Accounting Policies” to the Notes to Consolidated Financial Statements included herein under “Item 8. Financial Statement and Supplemental Data”.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
TABLE OF CONTENTS TO FINANCIAL STATEMENTS
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To:
The Board of Directors and Stockholders of
Onar Holding Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Onar Holding Corporation (the “Company”) as of December 31, 2024, and the related consolidated statement of operations, stockholders’ deficit, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a working capital deficit that raises substantial doubt about its ability to continue as a going concern. Management's plans with regards to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, audits of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal controls over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal controls over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of Goodwill
Description of the Matter
As disclosed in Note 1 to the consolidated financial statements, the Company reviewed the carrying value of goodwill annually and whenever events or changes in circumstances indicate that impairment may have occurred. The Company’s goodwill totaled $458,335 as of December 31, 2024. We identified the auditing of the valuation of goodwill as a critical audit matter because it represents a significant portion of the Company’s total assets, and it requires complex and a significant amount of judgment to evaluate management’s assumptions, including the method used to allocate the goodwill to a reporting unit (“the reporting unit”), the Company’s assessment over the qualitative factors to determine whether the carrying value of reporting unit exceeded their fair value.
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The primary procedures we performed to address this critical audit matter included the following, among others:
| · | We obtained an understanding of the process utilized by the Company’s management to evaluate the fair value of the reporting unit. |
| · | We tested the Company’s process and evaluated the reasonableness of the qualitative factors that management used in its analysis, including the management’s historical performance at the reporting unit level, and market and industry overall trends. |
/s/ WWC, P.C.
Certified Public Accountants
PCAOB ID:
We have served as the Company’s auditor since 2024.
April 15, 2025
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Member of Integrum Group LLC
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Integrum Group LLC (the Company) as of December 31, 2023 and the related consolidated statement of operations, member’s equity, and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Explanatory paragraph – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 “Going Concern” to the financial statements, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1 “Going Concern”. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. We determined that there were no critical audit matters.
Farber Hass Hurley LLP
We have served as the Company’s auditor since 2024. Oxnard, CA
January 31, 2025
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ONAR HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
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ASSETS |
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Current assets: |
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Cash |
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Investments in equity securities, related party |
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Total current assets |
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Other assets: |
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Goodwill |
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Total other assets |
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Total assets |
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Current liabilities: |
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Total liabilities and stockholders’ deficit |
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*Shares and per share data are presented on a retroactive basis to give effect to the reverse recapitalization.
The accompanying notes are an integral part of these consolidated financial statements.
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ONAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
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Revenue (including $81,955 and $606,000 of related party revenue, respectively, Note 5) |
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Transaction costs for merger |
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|
|
|
| ||
Other (income) expense |
|
|
|
|
| |||
Change in fair value of investments |
|
| ( | ) |
|
|
| |
Loss on extinguishment of notes payable |
|
|
|
|
|
| ||
Total other(income)expense |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Provision for income tax |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net loss |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Net loss per share - basic and diluted |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
|
|
|
| ||
The accompanying notes are an integral part of these consolidated financial statements.
| F-6 |
| Table of Contents |
ONAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
|
| Preferred Stock |
|
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| Members' |
|
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| |||||||||||||||||||||||||||||||||||||||
|
| Series A* |
|
| Series B* |
|
| Series C* |
|
| Series D* |
|
| Common Stock* |
|
| Additional |
|
|
|
| Capital |
|
|
| |||||||||||||||||||||||||||||||
|
| Shares |
|
| Par Value |
|
| Shares |
|
| Par Value |
|
| Shares |
|
| Par Value |
|
| Shares |
|
| Par Value |
|
| Shares |
|
| Par Value |
|
| Paid in Capital |
|
| Accumulated Deficit |
|
| of HLDCO |
|
| Total |
| ||||||||||||||
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|
|
| ||||||||||||||
Balance December 31, 2022 - Pre reverse merger |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
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| |||||||
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|
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|
|
|
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|
|
|
|
|
Effect of reverse merger (Note 2) |
|
|
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|
|
|
|
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|
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|
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|
|
|
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|
|
| ( | ) |
|
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| |||||||||||||
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|
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|
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|
|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
Balance December 31, 2022 - Post reverse merger |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
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| ||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
Contributions by members of HLDCO |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
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| |||||||||
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|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Distributions to members of HLDCO |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | |||||||
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||||||
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions by members of HLDCO |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to members of HLDCO |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | |||||||
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration transferred for acquisition of HLDCO |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
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|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of preferred shares |
|
| - |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares upon issuance of replacement notes payable |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
|
| ( | ) |
| $ |
|
| $ | ( | ) | |||||||||||
*Shares and per share data are presented on a retroactive basis to give effect to the reverse recapitalization.
The accompanying notes are an integral part of these consolidated financial statements.
| F-7 |
| Table of Contents |
ONAR HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
|
| 2024 |
|
| 2023 |
| ||
Operating Activities |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
| ||
Amortization of employee loan receivable |
|
|
|
|
|
| ||
Lease expense |
|
|
|
|
|
| ||
Change in fair value of investment in equity securities |
|
| ( | ) |
|
|
| |
Expenses paid directly from proceeds of note payable |
|
|
|
|
|
| ||
Expenses paid by members |
|
|
|
|
|
| ||
Allowance for credit losses |
|
|
|
|
|
| ||
Loss on extinguishment of notes payable |
|
|
|
|
|
| ||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| ( | ) |
|
| ( | ) |
Accounts receivable, related party |
|
|
|
| ( | ) | ||
Prepaid expenses and other assets |
|
| ( | ) |
|
| ( | ) |
Accounts payable |
|
|
|
|
| ( | ) | |
Accrued expenses and other liabilities |
|
|
|
|
|
| ||
Accrued expenses and advances, related party |
|
| ( | ) |
|
| ||
Deferred revenue |
|
|
|
|
| ( | ) | |
Customer contracts |
|
|
|
|
|
| ||
Net cash provided by (used in) operating activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
| ( | ) |
|
|
| |
Cash acquired on acquisition of Reliant Holdings, Inc. |
|
|
|
|
|
| ||
Loan receivable |
|
|
|
|
| ( | ) | |
Advance to affiliate |
|
| ( | ) |
|
|
| |
Acquisition of intangible assets |
|
|
|
|
| ( | ) | |
Net cash used in investing activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
Proceeds from issuance of notes payable |
|
|
|
|
|
| ||
Repayment of notes payable |
|
| ( | ) |
|
|
| |
Proceeds from issuance of notes payable, related party |
|
|
|
|
|
| ||
Repayment of notes payable, related party |
|
| ( | ) |
|
|
| |
Repayment of advances, to related party |
|
| ( | ) |
|
|
|
|
Advances, to related party |
|
|
|
|
|
|
| |
Advances from member of HLDCO, the legal acquiree |
|
|
|
|
|
| ||
Repayment of advances from member of HLDCO, the legal acquiree |
|
|
|
|
| ( | ) | |
Repayment of line of credit |
|
| ( | ) |
|
| ( | ) |
Proceeds from line of credit |
|
|
|
|
| |||
Distributions to members of HLDCO, the legal acquiree |
|
| ( | ) |
|
| ( | ) |
Contributions from members of HLDCO, the legal acquiree |
|
|
|
|
|
| ||
Net cash provided financing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net change in cash |
|
|
|
|
| ( | ) | |
Cash - beginning of year |
|
|
|
|
|
| ||
Cash - end of year |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental cash flow disclosures | ||||||||
Interest paid |
| $ |
|
| $ |
| ||
Income taxes paid |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities | ||||||||
Recognition of right of use asset and lease liability |
| $ |
|
| $ |
| ||
Contribution of accrued guaranteed payments to member to capital |
| $ |
|
| $ |
| ||
Intangible assets acquired through accounts payable |
| $ |
|
| $ |
| ||
Cash acquired on acquisition of Reliant Holdings, Inc. |
| $ |
|
| $ |
| ||
Investment in equity securities received in settlement of accounts receivables, related party |
| $ | |
|
| $ | |
|
Investment in equity securities received for services |
| $ | |
|
| $ | |
|
Conversion of preferred stock to common stock |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these consolidated financial statements.
| F-8 |
| Table of Contents |
ONAR Holding Corporation
Notes to the Consolidated Financial Statements
Note 1. The Company and Summary of Significant Accounting Policies
The Company
ONAR Holding Corporation (the “Company”) was formed as a Nevada corporation under the name Reliant Holdings, Inc. on May 19, 2014. On May 23, 2014, Reliant Holdings, Inc., along with Reliant Pools, Inc., formerly Reliant Pools, G.P., which was formed in September 2013 (“Reliant Pools”) and the shareholders of Reliant Pools, entered into an Agreement for the Exchange of common stock whereby Reliant Pools, Inc. became a wholly-owned subsidiary of Reliant Holdings, Inc. Reliant Holdings, Inc. designs, and installs swimming pools.
On July 25, 2024, the Company acquired HLDCO, LLC (“HLDCO”) and its subsidiary Integrum Group LLC (“Integrum”) through a reverse merger where the shareholders of HLDCO entered into an Agreement to Contribute the membership interests of HLDCO to the Company in return for common stock of the Company, whereby HLDCO became a wholly-owned subsidiary of Reliant Holdings Inc. Integrum was formed in July 2021 as a Delaware entity and is currently headquartered in Los Angeles, California. Integrum specializes in marketing solutions through a technology-enabled independent marketing agency brand network. Its services span various industries, including performance digital marketing, healthcare industry marketing, and experiential marketing.
On August 23, 2024, the Company filed with the Secretary of State for Nevada a Certificate of Amendment to the Articles of Incorporation, changing its name to ONAR Holding Corporation.
On September 12, 2024, Integrum filed a certificate of amendment to its certificate of formation with the Delaware Secretary of State, pursuant to which it changed its corporate name from Integrum Group, LLC to ONAR, LLC.
On September 17, 2024, the Company filed a Certificate of Cancelation of Limited Liability Company for HLDCO with the Secretary of State of Delaware to dissolve HLDCO, leaving ONAR, LLC as the Company's wholly owned subsidiary.
Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred losses since inception, has negative working capital and has not generated positive cash flows from operations since inception. The Company generated a loss of $
The Company’s ability to continue in existence is dependent on its ability to develop additional sources of capital, and/or achieve profitable operations and positive cash flows. Management’s plans with respect to operations include aggressive marketing and raising additional capital through sales of equity or debt securities as may be necessary to pursue its business plans and sustain operations until such time as the Company can achieve profitability. Management believes that aggressive marketing combined additional financing, as necessary, will result in improved operations and cash flows in the future. However, there can be no assurance that management will be successful in obtaining additional funding or in attaining profitable operations. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
| F-9 |
| Table of Contents |
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.
Revenue Recognition
The Company accounts for revenue in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codifications (“ASC”) 606, ‘Revenue from Contracts with Customers’ (“ASC 606”).
A performance obligation is a promise in a contract to transfer a distinct good or service to the client and is the unit of accounting in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the relative standalone selling price. Determining relative standalone selling price and identifying separate performance obligations requires judgment. Contract modifications may occur in the performance of the Company’s contracts. Contracts may be modified to account for changes in the contract specifications, requirements or duration. If a contract modification results in the addition of performance obligations priced at a standalone selling price or if the post-modification services are distinct from the services provided prior to the modification, the modification is accounted for separately. If the modified services are not distinct, they are accounted for as part of the existing contract.
Pool Sale Revenues
Performance Obligations
The Company’s contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct.
Performance Obligations Satisfied Over Time
Performance Obligations Satisfied at a Point in Time
Revenue for The Company’s contracts that do not satisfy the criteria for over time recognition is recognized at a point in time. Substantially all of The Company’s revenue recognized at a point in time is for work performed for pool maintenance or repairs. Unlike The Company’s construction contracts that use a cost-to-cost input measure for performance, the pool maintenance or repairs utilize an output measure for performance based on the completion of a unit of work. The typical time frame for completion of these services is less than one month. Upon fulfillment of the performance obligation, the customer is provided with an invoice (or equivalent) demonstrating transfer of control or completion of service to the customer. We believe that point in time recognition remains appropriate for these contracts and will continue to recognize revenues upon completion of the performance obligation and the issuance of an invoice.
Contract modifications are routine in the performance of The Company’s contracts. Contracts are often modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract.
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Backlog
On December 31, 2024, we had approximately $
Contract Estimates
Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract.
Contract estimates are based on various assumptions to project the outcome of future events. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and the performance of subcontractors.
Variable Consideration
Transaction price for The Company’s contracts may include variable consideration, which includes increases to transaction price for approved and unapproved change orders, claims and incentives, and reductions to transaction price for liquidated damages. Change orders, claims and incentives are generally not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation. We estimate variable consideration for a performance obligation at the most likely amount to which we expect to be entitled (or the most likely amount we expect to incur in the case of liquidated damages), utilizing estimation methods that best predict the amount of consideration to which we will be entitled (or will be incurred in the case of liquidated damages). We include variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of The Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. The effect of variable consideration on the transaction price of a performance obligation is recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders and claims reflected in transaction price (or excluded from transaction price in the case of liquidated damages) are not resolved in The Company’s favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue. No adjustments on any one contract was material to The Company’s consolidated financial statements for the years ended December 31, 2024 and 2023.
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) on the consolidated balance sheet. On The Company’s construction contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs prior to revenue recognition, resulting in contract liabilities. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period.
Advertising Management Services
The Company enters into Master Services Agreement (“MSA”) and Scope of Work (“SOW”) which govern the terms of the Company’s performance obligation for purposes of revenue recognition.
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| Table of Contents |
The Company’s performance obligation is a single performance obligation, Advertising Management Services which encompasses the following integrated and interdependent services:
| 1. | Strategic Consulting: Development of marketing strategies, including competitive analysis, campaign performance evaluations, and recommendations for campaign execution and optimization in the digital space. |
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| 2. | Paid Advertising: Execution of digital advertising campaigns leveraging data analytics, machine learning, and artificial intelligence across a range of digital platforms. Ongoing optimization of these campaigns to achieve optimal results for the client is part of the process, as well as iterative creative services to help achieve results. Continuous monitoring and adjustment of the advertising campaigns is achieved through bi-weekly consultations with the client to review performance and implement optimizations. |
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| 3. | Web Development: The creation and development of websites, landing pages, ecommerce platforms, and other web assets is often supplemental to the Paid Advertising being executed for clients. This includes optimization of existing web assets with services such as search engine optimization and conversion rate optimization. |
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| 4. | Creative Services: The creation or redevelopment of creative assets is another service area offered. Typically, the creative services are limited to Web Development or the execution of creative services needed to support Paid Advertising. In some cases, full brand development and brand strategy work is included in the Creative Services offering. |
These services are integrated and interdependent, all contributing to the goal of improving the Client's business performance, revenue, and brand awareness over time. Revenue is recognized over time as the services are provided and the performance obligation is satisfied, consistent with the ongoing optimization efforts. Amounts recognized but not yet invoiced to the customer are included as ‘contract assets’ within the accompanying consolidated balance sheets.
A monthly retainer is charged for ongoing services. Any additional services outside the agreed-upon scope, such as the inclusion of additional services, are subject to prior written approval and will result in additional fees. Retainers received for future services are classified as ‘deferred revenue’ within the accompanying consolidated balance sheets.
Executive Management Services
The Company’s chief executive officer and financial team provide executive management services to certain affiliated entities at a fixed monthly rate. Revenue is recognized over time as the services are provided and the performance obligation is satisfied, consistent with the ongoing benefits the affiliated entities receive as the services are rendered. See Note 5.
Accounts Receivable and Accounts Receivable, Related Party
The Company does not charge interest to its customers and carries its customers’ receivables at their face amounts, less an allowance for doubtful accounts. Included in accounts receivable are balances billed to customers pursuant to retainage provisions in certain contracts that are due upon completion of the contract and acceptance by the customer, or earlier as provided by the contract. Based on the Company’s experience in recent years, the majority of customer balances at each balance sheet date are collected within twelve months. As is common practice in the industry, the Company classifies retainage, as current assets. The contracting cycle for certain long-term contracts may extend beyond one year, and accordingly, collection of retainage on those contracts may extend beyond one year.
the Company adopted ASU 2016-13, “Financial Instruments — Credit Losses (Accounting Standards Codification (“ASC”) Topic 326): Measurement on Credit Losses on Financial Instruments” The Company grants trade credit, on a non-collateralized basis (with the exception of lien rights against the property in certain cases), to its customers and is subject to potential credit risk related to changes in business and overall economic activity. The Company evaluates its accounts receivable for expected credit losses on a regular basis. The Company records an allowance for credit losses to allow for any amounts that may not be recoverable, which is based on an analysis of the Company’s prior collection experience, customer credit worthiness, current economic trends and expected future losses. Accounts are considered delinquent when payments have not been received within 30 days and are written off when management determines that collection is not probable. During the years ended December 31, 2024 and 2023, the Company recognized allowances for future credit losses totaling $
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Classification of Construction Contract-related Assets and Liabilities
Contract assets are presented as a current asset in the accompanying consolidated balance sheets, and contract liabilities are presented as a current liability in the accompanying consolidated balance sheets. The Company’s contracts vary in duration, with the duration of some larger contracts exceeding one year. Consistent with industry practices, the Company includes the amounts realizable and payable under contracts, which may extend beyond one year, in current assets and current liabilities.
Investments in Equity Securities
The Company holds investments in equity securities of publicly listed companies. The Company remeasures any equity securities held at each reporting period and recognizes a gain or losses for any changes in the fair value of those equity securities. The Company determines the fair value of its equity securities using quoted market prices for markets which it can access.
Property and Equipment
The Company accounts for property and equipment such as office furniture and equipment and vehicles at cost. Repairs and maintenance are expensed as incurred and significant replacements and improvements are capitalized. The Company considers the period of future benefit of an asset to determine its appropriate useful life. Depreciation is recorded using the straight-line method over the respective useful lives of the assets. Upon the retirement or other disposition of property and equipment, the related cost and accumulated depreciation are charged to operations. During the year ended December 31, 2024 and 2023, depreciation expense was $
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Office furniture and equipment |
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Leases
ASC 842, “Leases”, requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. A number of the lease agreements may contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised. The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, and unamortized lease incentives provided by lessors. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities.
Intangible Assets
Intangible assets are amortized over their estimated useful lives. Each period, the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Management tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets but at least annually on December 31st.
Goodwill
Goodwill represents the excess of the consideration paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiaries at the date of acquisition. Goodwill is not amortized and is tested for impairment on December 31st or when circumstances indicate an impairment may have occurred. Goodwill is carried at cost less accumulated impairment losses. If impairment exists, goodwill is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations. Impairment losses on goodwill are not reversed.
The Company has the option to assess qualitative factors to determine whether it is necessary to perform further impairment testing in accordance. If the Company believes, as a result of the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company performs further analysis by comparing the fair value of each reporting unit to its carrying amount, including goodwill. A reporting unit is an operating segment or sub-segment to which goodwill is assigned when initially recorded. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment is recognized for the difference, limited to the amount of goodwill recognized for the reporting unit. The Company has determined that no impairment of its goodwill or indefinite lived intangible assets occurred as of December 31, 2024.
Impairment Assessment
The Company evaluates its intangible assets and goodwill and other long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable and at least annually on December 31st. This includes but is not limited to significant adverse changes in business climate, market conditions or other events that indicate an asset’s carrying amount may not be recoverable. The recoverability of these assets is measured by comparing the carrying amount of each asset to the future cash flows the asset is expected to generate. If the cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value.
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Marketing and Advertising Costs
Marketing and advertising costs are expensed as incurred in accordance with ASC 720-35, Other Expenses – Advertising Costs. These costs primarily include media placements, promotional materials, and digital marketing campaigns. Total marketing and advertising expenses for the years ended December 31, 2024 and 2023, were approximately $
Earnings Per Share
In accordance with accounting guidance now codified as ASC Topic 260, “Earnings (Loss) per Share,” basic earnings per share is computed by dividing net income by weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. There were no dilutive shares outstanding during the years ended December 31, 2024 and 2023.
Income Taxes
The Company accounts for its income taxes in accordance with ASC 740 “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. The Company has a net operating loss carryforward, however, due to the uncertainty of realization, the Company has provided a full valuation allowance for deferred tax assets resulting from this net operating loss carryforward.
Fair Value Measurements
The Company’s financial instruments consist of cash, accounts receivable, investments, accounts payable, notes payable, accrued expenses and advances, related party. The estimated fair value of cash, accounts receivable, accounts payable, notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments.
Certain non-financial assets are measured at fair value on a nonrecurring basis but are subject to periodic impairment tests. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:
Level 1 - Valuation is based upon unadjusted quoted market prices for identical assets or liabilities in accessible active markets.
Level 2 - Valuation is based upon quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable in the market.
Level 3 - Valuation is based on models where significant inputs are not observable. The unobservable inputs reflect a company’s own assumptions about the inputs that market participants would use.
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about reportable segment’s profit or loss and assets that are currently required annually. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.
The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to our condensed consolidated financial statements.
Note 2. Acquisition of HLDCO LLC
On June 13, 2024 Claude Zdanow via Mount Olympus Ventures, Inc (“Mount Olympus”), purchased the
On June 17, 2024, the Company entered into the acquisition of
The nature and amount of consideration given or received for the assets was exactly
On July 18, 2024, the Company filed the designations for the Series B, Series C, and Series D preferred shares pursuant the Agreement. On July 25, 2024, the Board of Directors issued those shares of respective preferred stock to the members of HLDCO, LLC, to complete the acquisition (the “Closing”).
Management determined that the acquisition of HLDCO was a reverse acquisition as defined within ASC 805, and that HLDCO was the accounting acquirer or legal acquiree. The Company determined that HLDCO was the accounting acquirer based on the guidance contained within ASC 805-40. The significant factors that led to the Company’s conclusion were (i) the Mr. Zdanow and the members of HLDCO obtained 98% of the voting interest of the Company through the preferred shares held by these parties, (ii) at Closing, the remaining Company shareholders held 2% of the voting interest of the Company, (iii) the composition of executive management and the governing body changed such that the sole director and executive officer of HLDCO became the sole director and shareholder of the Company which provided control over the operations of the Company, and (iv) HLDCO was significantly larger than the Company when considering both total assets and operations. As a result, the Company has applied purchase accounting as of the Closing of the acquisition and reflected the historical financial position and operations of HLDCO as the surviving entity. The assets and liabilities the Company were recognized at fair value as of the Closing and the results of its operations have been included within the consolidated statements of operations from that date forward with all historical activity reflective of the operations of HLDCO.
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The assets acquired and liabilities assumed are recognized provisionally in the accompanying consolidated balance sheets at their estimated fair values as of the acquisition date. The initial accounting for the business combination is not complete as the Company is in the process of obtaining additional information for the valuation of acquired intangible assets and deferred tax liabilities, if any. The provisional amounts are subject to change to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. Under U.S. GAAP, the measurement period shall not exceed one year from the acquisition date and the Company will finalize these amounts no later than July 25, 2025. The estimated fair values as of the acquisition date are based on information that existed as of the acquisition date. During the measurement period the Company may adjust provisional amounts recorded for assets acquired and liabilities assumed to reflect new information that the Company has subsequently obtained regarding facts and circumstances that existed as of the acquisition date.
Shares by the Company shareholders post-Closing |
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stock price on Closing |
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Fair value transferred for acquisition |
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The Company determined the fair value of the consideration transferred using the fair value based on the number of shares that would have needed to be issued to provide the Company’s shareholders with an equivalent ownership interest in the combined entities post-Closing. The fair value of the Company’s common shares issued as consideration was based on the closing price of the Company’s common stock as of the Closing.
The consideration transferred was allocated to the assets acquired and liabilities assumed on a preliminary basis as follows:
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Goodwill |
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Assets and liabilities acquired |
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The goodwill recognized as a result of the acquisition of the Company is attributable primarily to expected synergies and the assembled workforce. None of the goodwill is expected to be deductible for income tax purposes.
The amounts of revenue and net loss of Reliant, included in the Company’s consolidated statements of operations for the year ended December 31, 2024 are as follows:
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Consolidated unaudited pro forma information:
The following consolidated pro forma information assumes that the acquisition of HLDCO took place on January 1, 2023, for the statement of operations for the years ended 2024 and 2023. These amounts have been estimated after applying the Company’s accounting policies
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Note 3. Contracts in Process
The net asset (liability) position for pool construction contracts in process consisted of the following as of December 31, 2024 are:
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The net asset (liability) position for contracts in process is included in the accompanying consolidated balance sheets as of December 31, 2024 are:
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Note 4. Concentrations of Risk
For the years ended December 31, 2024 and 2023, the Company had the follow customer concentrations:
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As of December 31, 2023, one customer accounted for
Note 5. Related Party Transactions
Executive Expense Reimbursements
During the years ended December 31, 2024 and 2023, the Company recognized expense reimbursements in the form of informal, undocumented due on demand advances to the Company made by its CEO using his personal finances. This includes cash infusions as well as paying expenses on behalf of the Company.
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The Company repaid these advances as funds were available and in some instances remitted amounts in excess of the advances made which were applied to future expenses of the Company. The following tables detail the cash loaned, direct expenses paid and cash repayments made by the Company during the years ended December 31, 2024 and 2023.
Year ended December 31, 2024 |
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As of December 31, 2024 and 2023, $
Advance to Affiliated Entity
During the year ended December 31, 2024, the Company advanced an entity controlled by the Company’s CEO $
On March 11, 2025, this advanced was formalized into a promissory note receivable. Under the new terms, the note bears interest at
Accrued Expenses, Related Party
As of December 31, 2024, the Company owed a related party $
Revenues and Accounts Receivable, related party
During the years ended December 2024 and 2023, the Company recognized revenues of approximately $
During the year ended December 31, 2024, as part of a settlement agreement, the Company received publicly listed securities as payment for the balance due from an affiliated entity. The Company recognized approximately $
Notes Payable
The Company has 5 notes payable due to a related party as described in Note 8. As of December 31, 2024 and 2023, accrued interest due under these notes was $-
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Note 6. Equity
Series A Preferred Stock
The Series A Preferred Stock (Series A Stock) consists of
On June 13, 2024 Claude Zdanow purchased
Series B Preferred Stock
The Series B Preferred Stock (Series B Stock) consists of
On December 30, 2024 and December 31, 2024, the holders of the Series B Stock converted
Series C Preferred Stock
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The Series C Preferred Stock (Series C Stock) consists of
Series D Preferred Stock
The Series D Preferred Stock (Series D Preferred Stock) consisted of
On December 23, 2024, all
Common Shares
The Company is authorized to issue
During the year ended December 31, 2024, the Company recognized the issuance of
Note 7. Commitments and Contingencies
Leases
The Company leases approximately
On June 9, 2023, HLDCO entered into a one-year lease arrangement with a third party for apartment space in Los Angeles, California, for the Company’s Chief Executive Officer. This lease requires monthly minimum payments of $
Initially, the Company measured the right of use asset and liability associated with this lease using the following inputs:
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The Company records rent on straight-line basis over the terms of the underlying lease. Estimated future minimum lease payments under the lease as of December 31, 2024 are as follows:
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Rent expense for the years ended December 31, 2024 and 2023 was approximately $
Payroll tax liabilities
For the year ended December 31, 2023, the Company did not remit federal income tax, social security, Medicare or local and state income taxes which were withheld from the Company’s employees payroll. The Company has estimated and accrued fines and penalties associated with the amounts which have not been remitted and includes this amounts in accrued expenses in the accompanying consolidated balance sheets. As of December 31, 2024 and 2023, the balance due was $
Customer legal dispute
VMed Services, LLC a subsidiary of the Company, is a plaintiff in a lawsuit that was filed on April 22, 2024 against Meridian Diagnostics LLC in State Court of Fulton County, Georgia. The Company is seeking approximately $
Note 8. Debt
Notes payable
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Promissory note due to a related party which matured during March 2024, requiring interest only payments monthly, bearing interest at 18% per annum and secured by all HLDCO’s assets. |
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Promissory note due to a related party maturing on December 20, 2024, requiring interest only payments monthly, bearing interest at 18% per annum and secured by all HLDCO’s assets. |
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Promissory note due to a related party matured on November 21, 2023, requiring interest only payments monthly, bearing interest at 12% per annum and secured by all HLDCO’s assets. This note was past due as of December 31, 2023 and was repaid during 2024. |
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Promissory note due to a related party maturing on August 16, 2025, requiring interest only payments monthly, bearing interest at 18% per annum and secured by all HLDCO’s assets. |
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Promissory note due to a related party maturing on September 27, 2024, requiring interest only payments monthly, bearing interest at 12% per annum and secured by all HLDCO’s assets. |
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Promissory note due to a related party maturing on November 10, 2024, requiring interest only payments monthly, bearing interest at 18% per annum and secured by all HLDCO’s assets. |
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Promissory notes issued between March 2024 and July 2024 due one year from issuance, requiring interest only payments monthly, bearing interest at 18% per annum and are unsecured. These notes mature March 2025 through July 2025. |
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Promissory note due to a related party maturing on December 20, 2025, requiring interest only payments monthly, bearing interest at 18% per annum and secured by all HLDCO’s assets. |
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Term note with a bank secured by car, payable in monthly installments of $939, including interest at 6.79% through October 4, 2030 |
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Replacement Notes
As a result of the acquisition of HLDCO (See Note 2), the Company became obligated to issue shares of common stock and replacement notes payable to holders of Integrum’s notes payable none of which were related parties. The Company was required to issue new notes with itself as borrower with such new notes being convertible six months after the closing of the HLDCO acquisition (the “Replacement Notes”). The Replacement Notes have substantially similar terms as the original notes payable except that six months after the Closing the Replacement Notes will become convertible into the common stock of the Company. The conversion price is determined after the six months has lapsed and is fixed after that date.
Additionally, three months after the closing of the HLDCO acquisition, the Company was required to issue common stock in settlement of accrued interest through the date of issuance plus a bonus equal to 25% of the outstanding principal of the related note payable.
The Company determined that the issuance of the Replacement Notes along with the shares of common stock represented an extinguishment of the original notes payable under US GAAP. Accordingly, the Company recognized a loss on extinguishment of $
Line of Credit
On July 28, 2022, The Company entered into a $
Note 9. Intangible assets
The Company’s intangible assets as of December 31, 2024 are summarized as follows:
|
|
|
| Historical |
|
| Accumulated |
|
|
|
| |||
Type |
| Useful Life |
| Cost |
|
| Amortization |
|
| Net |
| |||
Customer relationships |
|
| $ |
|
| $ |
|
| $ |
| ||||
The Company’s intangible assets as of December 31, 2023, are summarized as follows:
|
|
|
| Historical |
|
| Accumulated |
|
|
|
| |||
Type |
| Useful Life |
| Cost |
|
| Amortization |
|
| Net |
| |||
Customer relationships |
|
| $ |
|
| $ |
|
| $ |
| ||||
| F-21 |
| Table of Contents |
Future amortization of the Company’s intangible assets as of December 31, 2024 are as follows:
December 31, |
| Amount |
| |
2025 |
| $ |
| |
2026 |
|
|
| |
2027 |
|
|
| |
|
| $ |
| |
Note 10. Employee Loans Receivable
Forgivable Loans
In order to attract and retain highly skilled professionals, the Company may issue forgivable loans to employees and non-employee experts. The principal amount of forgivable loans and accrued interest is forgiven by the Company over the term of the loans, so long as the employee or non-employee expert continues employment or affiliation with the Company and complies with certain contractual conditions.
On March 30, 2023, the Company entered into a forgivable loan agreement with an independent contractor in the amount of $
In order to reflect the services received through the issuance of these forgivable loans, the Company amortizes the balance of such loans as a component of ‘salaries and related expenses’ over the requisite service period of the loan. During the years ended December 31, 2024 and 2023, the Company recognized amortization related to forgivable loans of $
Other Loans
On June 20, 2023, the Company entered into a promissory note in the amount of $
Note 11. Segments
As a result of the Reliant acquisition, the Company determined that there are two reportable segments. These segments have different strategic and economic goals and are managed separately because they require different technology and marketing strategies.
Reportable Segment |
| Description |
Advertising and Marketing |
| Providing a single source for all technology enabled digital advertising, experiential marketing, healthcare marketing, and brand development strategies. |
| Pools |
| Providing the installation and maintenance of residual pools within the Dallas/Fort Worth Metroplex in Texas, United States. |
The Company’s Chief Executive Officer is the chief operating decision maker and reviews the internal management reports for each segment at least quarterly. During the years ended December 31, 2024 and 2023, there were no significant inter-company revenues or expenses. The chief operating decision maker assesses performance for each segment and decides how to allocate resources based on segment operating losses that also is reported on the consolidated statement of operations. The measure of segment assets is reported on the balance sheet as total consolidated assets. The accounting policies of each segment are the same as those described in the summary of significant accounting policies.
Information regarding each reportable segment for the year ended December 31, 2024, is as follows:
|
| Pool Services |
|
| Advertising and Marketing |
|
| Total |
| |||
Revenue |
| $ |
|
| $ |
|
| $ |
| |||
Cost of revenues |
|
|
|
|
|
|
|
|
| |||
General and administrative |
|
|
|
|
|
|
|
|
| |||
Depreciation and amortization |
|
|
|
|
|
|
|
|
| |||
Segment operating loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Note 12 – Investment in Equities
The Company holds investments in equity securities of publicly listed companies. The Company remeasures any equity securities held at each reporting period and recognizes a gain or losses for any changes in the fair value of those equity securities. The Company determines the fair value of its equity securities using quoted market prices for markets which it can access. The following tables present the Company’s equity securities by class within the fair value hierarchy established in ASC 820.
As of December 31, 2024 | ||||||||||||
Class |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| |||
Common stock |
| $ |
|
| $ |
|
| $ |
| |||
Total |
| $ |
|
| $ |
|
| $ |
| |||
As of December 31, 2024,
Note 13 – Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled.
Components of Income Tax Expense:
|
| 2024 |
|
| 2023 |
| ||
Current tax expense |
| $ |
|
| $ |
| ||
Deferred tax expense |
|
|
|
|
|
| ||
Total income tax expense |
| $ |
|
| $ |
| ||
The reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate is as follows:
|
| 2024 |
|
| 2023 |
| ||||||||||
Estimated federal income benefit at U.S. federal statutory tax rate |
| $ | ( | ) |
| ( | %) |
| $ | ( | ) |
| ( | %) | ||
Temporary differences |
|
|
|
|
| % |
|
|
|
|
| % | ||||
Permanent differences |
|
|
|
|
| % |
|
|
|
|
| % | ||||
Valuation allowance |
|
|
|
|
| % |
|
|
|
|
| % | ||||
Estimated federal income benefit at Effective tax rate |
| $ |
|
|
| % |
| $ |
|
|
| % | ||||
The Company’s effective tax rate was
Components of deferred tax assets and liabilities are as follows:
Description |
| 2024 |
|
| 2023 |
| ||
Deferred tax assets: |
|
|
|
|
|
| ||
Net operating loss carryforwards |
| $ |
|
| $ |
| ||
Change in fair value of equity securities |
|
|
|
|
|
| ||
Total deferred tax assets |
|
|
|
| $ |
| ||
Less: Valuation allowance |
|
| ( | ) |
|
| ( | ) |
Net deferred tax assets |
| $ |
|
| $- |
| ||
|
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
| ||
Loss on debt extinguishment |
|
|
|
|
|
| ||
Net deferred tax liabilities |
|
|
|
|
|
| ||
Net deferred tax assets and liabilities |
|
|
|
|
|
| ||
As of December 31, 2024 and 2023, the Company maintained a full valuation allowance against its net deferred tax assets. Based on available evidence, including historical cumulative losses, the Company concluded it is more likely than not that the deferred tax assets will not be realized.
As of December 31, 2024, the Company had estimated federal and state net operating loss carryforwards (NOL) of approximately $
The utilization of NOLs and other tax attributes may be subject to annual limitations under Section 382 of the Internal Revenue Code due to ownership changes that occurred, or may occur in the future, including as a result of the Company’s recent acquisition of Reliant Holdings. If a Section 382 limitation is triggered, the Company’s ability to utilize its NOLs and other deferred tax assets to offset future taxable income may be significantly limited or delayed, and some portion of the tax attributes could expire before being utilized. The Company is currently evaluating the extent to which any such limitations apply.
The Company has evaluated its tax positions in accordance with ASC 740-10, Accounting for Uncertainty in Income Taxes, and concluded that there were no uncertain tax positions requiring recognition or disclosure in the financial statements as of December 31, 2024 or 2023. The Company does not expect any significant changes to its uncertain tax positions within the next 12 months. The Company’s policy is to recognize interest and penalties related to income taxes, if any, in income tax expense. No such amounts were recognized in 2024 or 2023.
Note 14. Subsequent events
Between January 1, 2025 and April 10, 2025, holders of $
The notes payable were previously issued to the holders in reliance on the exemption from registration under the Securities Act of 1933 provided by Section 4(a)(2). As a result of this transaction, the Company's outstanding debt has been reduced by the principal amount of the notes converted, and the equity capital of the Company has been increased by the issuance of the common shares. The conversion of the notes payable to equity is expected to improve the Company’s liquidity position by reducing its debt obligations.
This transaction was completed in accordance with the terms of the relevant debt agreements and does not have a material impact on the Company's financial position or results of operations as of the balance sheet date.
| F-22 |
| Table of Contents |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
During the Company’s two most recent fiscal years ended December 31, 2024 and December 31, 2023, and the subsequent interim period through the engagement of WWC, neither the Company nor anyone acting on its behalf consulted with WWC regarding (i) the application of accounting principles to a specified transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company’s financial statements; or (iii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or an event of the type described in Item 304(a)(1)(v) of Regulation S-K.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this Annual Report on Form 10-K, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2024, as required by Rule 13a-15 of the Exchange Act. Based on the evaluation described above, our management, including our Principal Executive Officer and Principal Financial Officer, concluded that, as of December 31, 2024, our disclosure controls and procedures were not effective.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act and is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
| · | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
|
| |
| · | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of our management and directors; and |
|
| |
| · | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - integrated Framework (2013).
Based on its evaluation, our management has concluded that, as of December 31, 2024, our internal control over financial reporting were not effective.
We are a smaller reporting company and are exempt from the requirement for an attestation report on the Company’s internal controls over financial reporting by our registered public accounting firm.
| 34 |
| Table of Contents |
Limitations on the Effectiveness of Controls
The Company’s disclosure controls and procedures are designed to provide the Company’s Principal Executive Officer and Principal Financial Officer with reasonable assurances that the Company’s disclosure controls and procedures will achieve their objectives. However, the Company’s management does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting can or will prevent all human error. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are internal resource constraints, and the benefit of controls must be weighed relative to their corresponding costs. Because of the limitations in all control systems, no evaluation of controls can provide complete assurance that all control issues and instances of error, if any, within the Company are detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human error or mistake. Additionally, controls, no matter how well designed, could be circumvented by the individual acts of specific persons within the organization. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and such design may not succeed in achieving its stated objectives under all potential future conditions.
Changes in Internal Control Over Financial Reporting.
We regularly review our system of internal control over financial reporting to ensure we maintain an effective internal control environment. There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Plans. During the quarter ended December 31, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f)) adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
| 35 |
| Table of Contents |
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information about our Executive Officer and Director
The following table sets forth the name, age and position of each director and executive officer of the Company. The sole officer and director of the Company is as follows:
Name |
| Age |
| Position |
| Date First Appointed as Officer or Director |
|
|
|
|
|
|
|
Claude Zdanow |
| 37 |
| Chief Executive Officer and Director (sole director) |
| June 13, 2024 |
Patricia Kaelin |
| 62 |
| Chief Financial Officer |
| December 1, 2024 |
Christopher Becker |
| 35 |
| President |
| December 2, 2024 |
Our director and any additional directors we may appoint in the future are elected annually (or as often as we hold meetings of stockholders) and will hold office until our next annual meeting of the stockholders and until their successors are elected and qualified. Officers will hold their positions at the pleasure of the Board of Directors (currently consisting solely of Mr. Zdanow), absent any employment agreement. Our officers and directors may receive compensation as determined by us from time to time by vote of the Board of Directors. Such compensation might be in the form of stock options. Directors may be reimbursed by the Company for expenses incurred in attending meetings of the Board of Directors. Vacancies in the Board are filled by majority vote of the remaining directors.
The business experience of our officers and director is as follows:
Claude Zdanow has been our Chief Executive Officer and our sole director since June 2024. Mr. Zdanow served as Chief Executive Officer of Integrum Group, LLC (“Integrum”) from March of 2023 and from June 2021 until then as its President. Additionally, Mr. Zdanow is the founder of and serves as the Managing Partner of 35 Wellsona Holdings LLC, a position that he has held since January 2021. Mr. Zdanow is also a principal of Claude Philippe Wines LLC, which he founded in June 2021. Between July 2007 and May 2021, he served as the Chief Executive Officer of Stadiumred, Inc., a global marketing agency collective with agencies operating across multiple disciplines and industries. Mr. Zdanow serves as a director of Endexx Corporation, a Consumer Products (CPG) company specializing in Plant-Based formulations and Innovative delivery systems. He is the founder of Sona Hills, a boutique vineyard resort in Paso Robles, CA, and Claude Philippe Wines, where he combines his business acumen with his personal interests.
Patricia Kaelin was appointed as our Chief Financial Officer on December 1, 2024. Prior to that, she served as Chief Financial Officer of Safe & Green Holdings Corp. from May 1, 2023. Ms. Kaelin is a member of the AICPA with more than 25 years of financial leadership, strategic planning, and public company experience. She has served as Chief Financial Officer for public and privately held companies and has extensive experience in the construction, real estate, manufacturing and healthcare industries. She has expertise in mergers and acquisitions and corporate restructuring, as well as private and public equity and debt financing. Ms. Kaelin served as Chief Financial Officer of Buddies Brand, a privately held West Coast consumer packaged goods (“CPG”) company, from October 2021 through May 2023. Prior to that, she served as Chief Financial Officer of 1933 Industries, Inc., a publicly traded CPG company based in Vancouver, British Columbia, with operations in the United States from March 2020 to October 2021. Ms. Kaelin also served as Chief Financial Officer, Business Operations, at Clifton Larson Allen (“CLA”), one of the largest CPA and consulting firms in the United States from March 2019 to March 2020 and as Consulting Chief Financial Officer for multiple companies and on a fractional basis while at CLA and TGG Accounting, a provider of outsourced accounting and business advisory services for small to mid-sized businesses across various industries with offices throughout the Southwest United States, where she was employed beginning October 2017 until March 2019. She began her career at BDO USA, LLP, spending seven years in public accounting where she earned her CPA certificate. Ms. Kaelin earned her bachelor’s degree in Business Administration with a concentration in Accounting from California State University, Fullerton.
Christopher Becker was appointed as our President in December 2024. Mr. Becker was previously the President of Integrum Group, LLC., now a wholly owned subsidiary of the Company beginning in April 2023, where he was responsible for strategic leadership, operational oversight, managing mergers and acquisitions, agency support and development, stakeholder management, and team leadership and development. From August 2021 to April 2023, Mr. Becker was Managing Director of Storia, the Company’s flagship digital marketing agency. From September 2020 through August 2021, he was Head of Business Development for Stadiumred, Inc. Prior to that, Mr. Becker worked at various companies specializing in managing mergers and acquisitions, consulting on digital marketing, and developing and growing company goals and revenues. He has a Bachelor of Science in Communications Disorders from Eastern Kentucky University.
| 36 |
| Table of Contents |
Board Leadership Structure
Our Board of Directors (currently consisting solely of Mr. Zdanow) has the responsibility for selecting the appropriate leadership structure for the Company. In making leadership structure determinations, the Board of Directors considers many factors, including the specific needs of the business and what is in the best interests of the Company’s stockholders.
Risk Oversight
Effective risk oversight is an important priority of the Board of Directors. Because risks are considered in virtually every business decision, the Board of Directors (currently consisting solely of Mr. Zdanow) discusses risk throughout the year generally or in connection with specific proposed actions. The Board of Directors’ approach to risk oversight includes understanding the critical risks in the Company’s business and strategy, evaluating the Company’s risk management processes, allocating responsibilities for risk oversight, and fostering an appropriate culture of integrity and compliance with legal responsibilities. The directors exercise direct oversight of strategic risks to the Company.
Arrangements between Officers and Directors
To our knowledge, there is no arrangement or understanding between our sole officer and any other person, including our sole director, pursuant to which the officer was selected to serve as an officer.
Other Directorships
No director of the Company is also a director of issuers with a class of securities registered under Section 12 of the Exchange Act (or which otherwise are required to file periodic reports under the Exchange Act).
Involvement in Certain Legal Proceedings
Our sole officer and director was not involved in any of the following during the past ten years: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being a named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, (5) being the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (i) any Federal or State securities or commodities law or regulation; (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (6) being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Committees of the Board
Our Company currently does not have nominating, compensation or audit committees or committees performing similar functions, nor does our Company have a written nominating, compensation or audit committee charter. Our directors believe that it is not necessary to have such committees, at this time, because the functions of such committees can be adequately performed by our Board of Directors (consisting solely of Mr. Zdanow).
| 37 |
| Table of Contents |
Our Company does not have any defined policy or procedural requirements for stockholders to submit recommendations or nominations for directors. Our sole director believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Directors (consisting solely of Mr. Zdanow) will assess all candidates, whether submitted by management or stockholders, and make recommendations for election or appointment.
Stockholder Communications with the Board
A stockholder who wishes to communicate with our Board of Directors (consisting solely of Mr. Zdanow) may do so by directing a written request addressed to our Secretary, 8605 Santa Monica Boulevard, PMB 36522, Los Angeles, CA 90069, who, upon receipt of any communication other than one that is clearly marked “Confidential,” will note the date the communication was received, open the communication, make a copy of it for our files and promptly forward the communication to the director(s) to whom it is addressed. Upon receipt of any communication that is clearly marked “Confidential,” our Secretary will not open the communication, but will note the date the communication was received and promptly forward the communication to the director(s) to whom it is addressed.
Corporate Governance
The Company promotes accountability for adherence to honest and ethical conduct and strives to be compliant with applicable governmental laws, rules and regulations.
In lieu of an Audit Committee, the Company’s Board of Directors (consisting solely of Mr. Zdanow) is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company’s financial statements and other services provided by the Company’s independent public accountants. The Board of Directors reviews the Company’s internal accounting controls, practices and policies.
Director Independence
Our common stock is currently quoted on the OTCQB Market maintained by OTC Markets. The OTCQB Market does not require us to have independent members of our Board of Directors. We do not identify our sole member of our Board of Directors, Mr. Zdanow, as being independent.
As described above, we do not currently have a separately designated audit, nominating or compensation committee.
Code of Ethics and Code of Conduct
We have adopted a Code of Ethics and a Code of Conduct. The Code of Ethics and a Code of Conduct applies to all officers, directors and employees and includes compliance and reporting requirements, and procedures for conflicts of interest.
We intend to disclose any amendments or future amendments to our Code of Ethics and a Code of Conduct and any waivers with respect to our Code of Ethics and a Code of Conduct granted to our principal executive officer, our principal financial officer, or any of our other employees performing similar functions on our corporate website within four business days after the amendment or waiver. In such case, the disclosure regarding the amendment or waiver will remain available on our website for at least 12 months after the initial disclosure. There have been no waivers granted with respect to our Code of Ethics and a Code of Conduct to any such officers or employees to date.
| 38 |
| Table of Contents |
Board of Directors Meetings
During the year ending December 31, 2024, the Board held no formal meetings. The Company has not held an annual meeting since the Company went public in 2017.
Policy on Equity Ownership
The Company does not have a policy on equity ownership at this time.
Insider Trading/Policy Against Hedging
The Company is committed to maintaining the highest ethical standards in all aspects of its operations, including compliance with insider trading regulations. The Company maintains an Insider Trading Policy that prohibits any director, officer, employee or other insider of the Company from trading in securities of the Company or any other company while in possession of inside information concerning the Company or such other company, disseminating inside information of the Company or any other company to others (except for legitimate Company purposes in accordance with Company communications policies; provided that the disclosing person reasonably does not expect the recipient to trade in securities, or disseminate the information to others who may trade in securities, while in possession of such Inside Information); or engaging in any other action or conduct to take advantage of inside information. Under the Insider Trading Policy, employees are prohibited from entering into pledges or margin loans of Company securities. Our policy on insider trading is filed as Exhibit 19.1 to this Report.
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”)
Dodd-Frank requires public companies to provide shareholders with an advisory vote on compensation of the most highly compensated executives, which are sometimes referred to as “say on pay,” as well as an advisory vote on how often the company will present say on pay votes to its shareholders. The Company plans to provide its shareholders the right to vote on say-on-pay matters beginning at the next annual meeting of stockholders which the Company holds after this filing.
Compensation Recovery and Clawback Policies
Under the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), in the event of misconduct that results in a financial restatement that would have reduced a previously paid incentive amount, we can recoup those improper payments from our Chief Executive Officer and Chief Financial Officer (if any). The SEC also recently adopted rules which direct national stock exchanges to require listed companies to implement policies intended to recoup bonuses paid to executives if the company is found to have misstated its financial results. We plan to implement a clawback policy in the future, if required, although we have not yet implemented such policy and are not yet required to.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers and directors and persons who beneficially own more than 10% of our common stock to file reports of their ownership of, and transactions in, our common stock with the SEC and to furnish us with copies of the reports they file.
On February 26, 2025, each of Claude Zdanow, Tricia Kaelin and Christopher Becker filed a late Form 3 reporting their respective appointments as executive officers of the Company (and in the case of Mr. Zdanow, as a director) on June 13, 2024, December 1, 2024 and December 2, 2024, respectively.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation of (i) all individuals serving as our principal executive officer or acting in a similar capacity during the last completed fiscal year (“PEO”), regardless of compensation level; (ii) our two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year, if any; and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to paragraph (ii) but for the fact that the individual was not serving as an executive officer at the end of the last completed fiscal year (collectively, the “Named Executive Officers”).
| 39 |
| Table of Contents |
Summary Compensation Table*
Name And Principal Position |
| Fiscal Year Ended December 31 |
| Salary ($) |
|
| Bonus ($) |
|
| Stock Awards ($)# |
|
| Option Awards ($)# |
|
| All Other Compensation ($) |
|
| Total ($) |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Claude Zdanow(1) |
| 2024 |
|
| 360,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
| 45,000** |
|
|
| 405,000 |
| |
CEO |
| 2023 |
|
| 240,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
| 90,000** |
|
|
| 330,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Patricia Kaelin(2) |
| 2024 |
|
| 20,833 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 20,833 |
|
CFO |
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 191,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher Becker |
| 2024 |
|
| 191,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 170,707 |
|
President |
| 2023 |
|
| 170,707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elijah May, (3) |
| 2024 |
|
| 83,701 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 83,701 |
|
CEO, President and COO |
| 2023 |
|
| 115,682 |
|
|
| 37,500 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 153,182 |
|
________________
* | Does not include perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is more than $10,000. No executive officer earned any non-equity incentive plan compensation or nonqualified deferred compensation during the periods reported above. | ||
** | Consists of a home office stipend. | ||
# | The fair value of stock issued for services computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 on the date of grant. The fair value of options granted computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 on the date of grant. | ||
(1) | Mr. Zdanow became our Chief Executive Officer on June 13, 2024. | ||
(2) | Ms. Kaelin joined the Company on December 1, 2024. | ||
(3) | Mr. May resigned from his role as Chief Executive Officer effective June 13, 2024. | ||
We do not provide our officers or employees with pension, stock appreciation rights, long-term incentive, profit sharing, retirement or other plans, although we may adopt one or more of such plans in the future.
We do not maintain any life or disability insurance on any of our officers.
We do not have any outstanding options, warrants or other securities which provide for the issuance of additional shares of our common stock as compensation for services of directors or officers.
We have no directors other than Mr. Zdanow, who is our sole executive officer and whose compensation is included above.
Employment Agreements; Outstanding Equity Awards; Key Man Insurance
Employment Agreements
Claude Zdanow
Mr. Zdanow is employed as the Chief Executive Officer of ONAR, LLC under an employment agreement with a term that commenced on August 1, 2024. Mr. Zdanow’s annual base salary is $360,000. In addition to his base salary, Mr. Zdanow is entitled to an annual cash performance bonus, which Mr. Zdanow can elect to take in the Company’s common stock based on the attainment of individual and/or other performance objectives as determined by the Board. Mr. Zdanow will be entitled to earn a one-time $1,000,000 bonus payable in cash or stock at Mr. Zdanow’s election, or deferred if we do not have sufficient cash to make the bonus payment, upon our successful acquisition or acquisitions of a company or companies that increase our EBITDA by at least $1,000,000. In addition, Mr. Zdanow will be entitled to receive stock options to purchase 300% of his base salary under the 2025 Plan. These stock options will vest (a) 12.5% after 6 months, (b) 37.5% after 1 year, (c) 25% after 2 years, and (d) 25% after 3 years following the commencement of Mr. Zdanow’s employment. Additionally, he is also entitled to participate in the health, dental and retirement benefit plans as are made available by the Company for its other US-based executive officers, as well as indemnification by the Company to the fullest extent permitted by law, and the Company’s organizational documents. The employment agreement may be terminated by either party at any time on three-months’ notice. If Mr. Zdanow is terminated by the Company without cause and not due to Mr. Zdanow’s disability, then, upon Mr. Zdanow’s separation from service, subject to Mr. Zdanow’s compliance with the employment agreement, in addition to the accrued obligations, the Company shall pay to Mr. Zdanow an amount in cash equal to twelve (12) months of Mr. Zdanow’s base salary. In addition, the Company will continue to provide medical insurance to Mr. Zdanow (at the same standard as prior to termination) for the period Mr. Zdanow is eligible for severance payments. Mr. Zdanow’s employment agreement contains customary non-competition and non-solicitation of Company customers or employees’ provisions during the term of the agreement.
Patricia Kaelin
Ms. Kaelin is employed as the Chief Financial Officer of ONAR, LLC under an employment agreement with a term that commenced on December 1, 2024. Ms. Kaelin’s annual base salary is $250,000. In addition to her base salary, Mr. Zdanow is entitled to a bonus in the amount of 100% of Ms. Kaelin’s annual base salary for achieving budgeted EBITDA in any fiscal year plus an additional 1% for every 1% over budgeted EBITDA up to a total of 200% of annual base salary, as calculated by the Company in good faith. In addition, Ms. Kaelin will be entitled to receive a grant of common stock of $400,000 that will vest (a) 25% after 90 days, (b) 25% after 1 year, (c) 25% after 2 years, and (d) 25% after 3 years. Additionally, she is also entitled to participate in the health, dental and retirement benefit plans as are made available by the Company for its other executive officers. Upon a termination of the employment agreement by the Company for any reason other than cause, disability or death or by Ms. Kaelin for good reason, the Company must pay Ms. Kaelin an amount of severance of up to 35% of Ms. Kaelin’s base salary, calculable as set forth in the employment agreement. Ms. Kaelin’s employment agreement contains customary non-competition and non-solicitation of Company customers or employees’ provisions during the term of the agreement.
Outstanding Equity Awards at Fiscal Year-End
The Company: (i) did not grant any stock options to its executive officers or directors during the year ended December 31, 2024; (ii) did not have any outstanding unvested equity awards as of December 31, 2024; and (iii) had no options exercised by its Named Executive Officers in the fiscal year ended December 31, 2024.
Key Man Insurance
The Company does not hold “Key Man” life insurance on any of its officers or directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table presents certain information regarding the beneficial ownership of all shares of common stock as of April 8, 2025 by (i) each person who owns beneficially more than five percent (5%) of the outstanding shares of common stock based on 111,002,035 shares outstanding as of April 8, 2025, (ii) each of our directors, (iii) each named executive officer and (iv) all directors and officers as a group. Except as otherwise indicated, all shares are owned directly.
| 40 |
| Table of Contents |
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting and/or investing power with respect to securities. We believe that, except as otherwise noted and subject to applicable community property laws, each person named in the following table has sole investment and voting power with respect to the shares of common stock shown as beneficially owned by such person. Additionally, shares of common stock subject to options, warrants or other convertible securities that are currently exercisable or convertible, or exercisable or convertible within 60 days of April 8, 2025, are deemed to be outstanding and to be beneficially owned by the person or group holding such options, warrants or other convertible securities for the purpose of computing the percentage ownership of such person or group, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person or group.
We believe that, except as otherwise noted and subject to applicable community property laws, each person named in the following table has sole investment and voting power with respect to the shares of common stock shown as beneficially owned by such person. Unless otherwise indicated, the address for each of the officers or directors listed in the table below is 8605 Santa Monica Boulevard, PMB 36522, Los Angeles, CA 90069.
Name and Address of Beneficial Owner |
| Common Shares Beneficially Owned |
|
| Common Ownership Percentage |
| Series A Preferred Stock Shares Beneficially Owned |
|
| Series A Preferred Stock Percentage (1) |
|
| Total Voting Percentage (2) |
| ||
Officers and Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Claude Zdanow (3) |
| 75,000,000 | (3) |
| 67.57 | % |
| 1,000 |
|
|
| 100 | % |
| 91.2 | % |
Patricia Kaelin |
| 0 |
|
| * |
|
| 0 |
|
|
| * |
|
| * |
|
Christopher Becker |
| 0 |
|
| * |
|
| 0 |
|
|
| * |
|
| * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All officers and directors as a group (3 persons) |
| 75,000,000 |
|
| 67.57 | % |
| 1,000 |
|
|
| 100 | % |
| 91.2 | % |
___________
* Less than 1%.
(1) The 1,000 shares of Series A Preferred Stock have the right, voting in aggregate, to vote on all stockholder matters equal to fifty-one percent (51%) of the total vote.
(2) Based on 408,171,051 total voting shares, including 111,002,035 shares voted by our common stockholders 208,167,236 voting shares voted by our Series A Preferred Stockholder, and 89,001,780 shares issuable upon conversion of outstanding shares of our Series C Preferred Stock Mr. Zdanow (see also footnote 1).
(3) Shares are held indirectly through Mt Olympus Ventures, Inc. (“Mt Olympus”). Mr. Zdanow is the sole owner of Mt Olympus. The business address of Mt Olympus is 15442 Ventura Blvd., Suite 101, Sherman Oaks, CA 91403.
| 41 |
| Table of Contents |
Change of Control
The Company is not aware of any arrangements which may at a subsequent date result in a change of control of the Company.
Equity Compensation Plan Information
The following table sets forth information, as of December 31, 2024, with respect to our compensation plans under which common stock is authorized for issuance.
Plan Category |
| Number of securities to be issued upon exercise of outstanding options, warrants and rights (A) |
|
| Weighted-average exercise price of outstanding options, warrants and rights (B) |
|
| Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in Column A) (C) |
| |||
Equity compensation plans approved by stockholders |
|
| - |
|
| $ | - |
|
|
| - |
|
Equity compensation plans not approved by stockholders (1) |
|
| - |
|
| $ | - |
|
|
| 45,000,000 |
|
Total |
|
| - |
|
| $ | - |
|
|
| 45,000,000 |
|
(1) Consists of awards available for future issuance under the ONAR Holding Corporation 2025 Omnibus Incentive Plan.
ONAR Holding Corporation 2025 Omnibus Incentive Plan
On February 6, 2025, the Board approved and adopted the Company’s 2025 Omnibus Incentive Plan (the “2025 Plan”). The 2025 Plan provides an opportunity for any employee, officer, director or consultant of the Company, subject to any limitations provided by federal or state securities laws, to receive (i) options, (ii) stock appreciation rights, (iii) restricted shares, (iv) restricted stock units, (v) performance-based awards, (vi) other share-based awards, (vii) other cash-based awards, or (viii) any combination of the foregoing. In making such determinations, the Board may take into account the nature of the services rendered by such person, his or her present and potential future contribution to the Company’s success, and such other factors as the Board in its discretion shall deem relevant. A total of 45,000,000 shares of common stock are authorized for awards under the 2025 Plan. No shareholder approval is required for the adoption of the 2025 Plan, which became effective upon approval by the Board.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
| 42 |
| Table of Contents |
During the years ended December 31, 2024 and 2023, the Company recognized expense reimbursements in the form of informal, undocumented due on demand advances to the Company made by its CEO using his personal finances. This includes cash infusions as well as paying expenses on behalf of the Company.
The Company repaid these advances as funds were available and in some instances remitted amounts in excess of the advances made which were applied to future expenses of the Company. The following tables detail the cash loaned, direct expenses paid and cash repayments made by the Company during the years ended December 31, 2024 and 2023.
Year ended December 31, 2024 |
| |||||||||||||
Cash Advances |
|
| Directly Paid Expenses |
|
| Expense Reimbursements |
|
| Cash Repayments |
| ||||
| $ | 844,202 |
|
| $ | - |
|
| $ | 395,829 |
|
| $ | (681,755 | ) |
Year ended December 31, 2023 |
| |||||||||||||
Cash Advances |
|
| Directly Paid Expenses |
|
| Expense Reimbursements |
|
| Cash Repayments |
| ||||
| $ | 955,116 |
|
| $ | 3,848 |
|
| $ | - |
|
| $ | (884,940 | ) |
As of December 31, 2024 and 2023, $190,579 and $170,616 was due from the Company’s CEO and is reflected in ‘accrued expenses advances, related party’ in the accompanying consolidated balance sheets.
Advance to Affiliated Entity
During June 2024, the Company advanced an entity controlled by Claude Zdanow $400,700. The proceeds of this advance were used to purchase the shares of Series A Preferred Stock owned by Elijah May. This advance is informal, due on demand, bears no interest and is unsecured. As of December 31, 2024 the balance remains outstanding and is included in ‘employee loans receivable, net’ on the accompanying consolidated balance sheets.
On March 11, 2025, this advanced was formalized into a promissory note receivable. Under the new terms, the note bears interest at 5% per annum, requires no monthly payments, is unsecured and is due on March 11, 2035. The Company classifies this 10-year promissory note as a held-to-maturity debt instrument under ASC 320, as it has the positive intent and ability to hold the note until its maturity date. The note is initially recognized at fair value and is measured at amortized cost using the effective interest method subsequently. The note is presented on the balance sheet at its amortized cost, inclusive of accrued interest. The stated interest rate reflects the effective yield, resulting in a carrying value that equals the principal plus accumulated interest receivable.
| 43 |
| Table of Contents |
Accrued Expenses, Related Party
As of December 31, 2024, the Company owed a related party $37,500 in the form of an advance. This advance was included in the acquisition of Reliant and has not been repaid. The advance is due on demand, bears no interest and unsecured. This advance is reflected in ‘accrued expenses and advances, related party’ in the accompanying consolidated balance sheets.
Revenues and Accounts Receivable, Related Party
During the years ended December 2024 and 2023, the Company recognized revenues of approximately $640,000 and $606,000 to entities which share common management. As of December 31, 2024 and 2023, approximately $0 and $19,000 was due from these entities and is included in ‘Accounts receivables, related party’ on the accompanying consolidated balance sheets.
During the year ended December 31, 2024, as part of a settlement agreement, the Company received publicly listed securities as payment for the balance due from an affiliated entity. The Company recognized approximately $118,000 of the fair value of these securities as payment for approximately $363,000 due from this entity and recognized a loss on settlement of approximately $249,000.
Notes payable
|
| December 31, 2024 |
|
| December 31, 2023 |
| ||
Promissory note due to a related party which matured during March 2024, requiring interest only payments monthly, bearing interest at 18% per annum and secured by all HLDCO’s assets. |
| $ | - |
|
| $ | 400,000 |
|
Promissory note due to a related party maturing on December 20, 2024, requiring interest only payments monthly, bearing interest at 18% per annum and secured by all HLDCO’s assets. |
|
| 164,450 |
|
|
| 130,000 |
|
Promissory note due to a related party matured on November 21, 2023, requiring interest only payments monthly, bearing interest at 12% per annum and secured by all HLDCO’s assets. This note was past due as of December 31, 2023 and was repaid during 2024. |
|
| - |
|
|
| 17,000 |
|
Promissory note due to a related party maturing on August 16, 2025, requiring interest only payments monthly, bearing interest at 18% per annum and secured by all HLDCO’s assets. |
|
| 105,000 |
|
|
| - |
|
Promissory note due to a related party maturing on September 27, 2024, requiring interest only payments monthly, bearing interest at 12% per annum and secured by all HLDCO’s assets. |
|
| 61,000 |
|
|
| - |
|
Promissory note due to a related party maturing on December 20, 2025, requiring interest only payments monthly, bearing interest at 18% per annum and secured by all HLDCO’s assets. |
|
| 20,000 |
|
|
| - |
|
Promissory note due to a related party maturing on November 10, 2024, requiring interest only payments monthly, bearing interest at 18% per annum and secured by all HLDCO’s assets. |
|
| 210,000 |
|
|
| - |
|
Review, Approval and Ratification of Related Party Transactions
Given our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval or ratification of transactions, such as those described above, with our executive officers, directors and significant stockholders. However, all of the transactions described above were approved and ratified by our sole director. In connection with the approval of the transactions described above, our sole director took into account various factors, including his fiduciary duty to the Company; the relationships of the related parties described above to the Company; the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such benefits; whether comparable products or services were available; and the terms the Company could receive from an unrelated third party.
We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional directors. On a moving forward basis, our sole director will continue to approve any related party transaction based on the criteria set forth above.
Conflict of Interest
The officers and directors of the Company are not involved in other business activities but may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The policy of the Board is that any personal business or corporate opportunity incurred by an officer or director of the Company must be examined by the Board and turned down by the Board in a timely basis before an officer or director can engage or take advantage of a business opportunity which could result in a conflict of interest.
| 44 |
| Table of Contents |
Director Independence
Our common stock is currently quoted on the OTCQB Market maintained by OTC Markets. The OTCQB Market does not require us to have independent members of our Board of Directors. We do not identify our sole member of our Board of Directors, Mr. Zdanow, as being independent.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our Audit Committee of the Board of Directors approves in advance the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services.
The following table sets forth the fees billed by our independent accounting firm WWC, P.C., for each of our last two fiscal years for the categories of services indicated.
|
| Years Ended |
| |||||
|
| December 31, |
| |||||
Category |
| 2024 |
|
| 2023 |
| ||
Audit Fees |
| $ | 100,000 |
|
| $ | 22,900 |
|
Audit Related Fees |
|
| - |
|
|
| - |
|
Tax Fees |
|
| - |
|
|
| - |
|
All Other Fees |
|
| - |
|
|
| - |
|
Total |
| $ | 100,000 |
|
| $ | 22,900 |
|
Audit fees. Consists of fees billed for the audit of our annual financial statements and review of our interim financial information and services that are normally provided by the accountant in connection with year-end and quarter-end statutory and regulatory filings or engagements.
Audit-related fees. Consists of fees billed for services relating to review of other regulatory filings including registration statements, periodic reports and audit related consulting.
Tax fees. Consists of professional services rendered by our principal accountant for tax compliance, tax advice and tax planning.
Other fees. Other services provided by our accountants.
We do not use the auditors for financial information system design and implementation. Such services, which include designing or implementing a system that aggregates source data underlying the financial statements or that generates information that is significant to our financial statements, are provided internally or by other service providers. We do not engage the auditors to provide compliance outsourcing services.
| 45 |
| Table of Contents |
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES
(a) Documents filed as part of this Annual Report:
| (1) | Consolidated Financial Statements |
|
|
|
|
| The consolidated financial statements and notes are included herein under “Part II”-“Item 8. Financial Statements and Supplementary Data”. |
|
| Page |
|
Report of Independent Registered Public Accounting Firms |
| F-2 |
|
|
|
|
|
| F-3 |
| |
|
|
|
|
| F-4 |
| |
|
|
|
|
| F-5 |
| |
|
|
|
|
| F-6 |
| |
|
|
|
|
| F-7 |
|
| (2) | Consolidated Financial Statement Schedules |
All schedules are omitted because they are inapplicable or not required or the required information is shown in the consolidated financial statements or notes thereto.
| 46 |
| Table of Contents |
| (3) | Exhibits required by Item 601 of Regulation S-K |
Exhibit |
| Filed/ Furnished | Incorporated By Reference | ||||||||||
Number |
| Description of Exhibit |
| Herewith | Form |
| Exhibit | Filing Date |
| File Number |
| ||
|
|
| 8-K |
| 3.1 |
| 2/3/2025 |
| 000-56012 | ||||
|
|
| 8-K |
| 3.1 |
| 6/17/2021 |
| 000-56012 | ||||
|
|
|
| 8-K/A |
| 4.1 |
| 7/31/2024 |
| 00-56012 |
| ||
|
|
|
| 8-K/A |
| 4.2 |
| 7/31/2024 |
| 00-56012 |
| ||
|
|
|
| 8-K/A |
| 4.3 |
| 7/31/2024 |
| 00-56012 |
| ||
| ☒ |
|
|
|
|
|
|
|
| ||||
| ☒ |
|
|
|
|
|
|
| |||||
| 351 Contribution Agreement between the Company and the members of HLDCO, LLC |
|
| 8-K/A |
| 10.1 |
| 7/31/2024 |
| 000-56012 | |||
|
|
| 8-K |
| 10.1 |
| 2/12/2025 |
| 000-56012 | ||||
| Employment Agreement dated as of December 1, 2024 by and between the Company and Tricia Kaelin | ☒ |
|
|
|
| |||||||
| Employment Agreement dated as of September 27, 2024 by and between the Company and Claude Zdanow | ☒ |
|
|
|
| |||||||
| 47 |
| Table of Contents |
|
|
|
| S-1 |
| 14.1 |
| 10/27/2016 |
| 333-214274 |
| ||
|
| ☒ |
|
|
|
|
|
|
|
|
| ||
|
| ☒ |
|
|
|
|
|
|
| ||||
|
| ☒ |
|
|
|
|
|
|
|
|
| ||
| Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act |
| ☒ |
|
|
|
|
|
|
| |||
| Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act |
| ☒ |
|
|
|
|
|
|
| |||
| Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act |
| ☒ |
|
|
|
|
|
| ||||
| Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act |
| ☒ |
|
|
|
|
|
|
|
|
| |
101.INS* |
| Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| ☒ |
|
|
|
|
|
|
| ||
101.SCH* |
| XBRL Taxonomy Extension Schema Document |
| ☒ |
|
|
|
|
|
|
| ||
101.CAL* |
| XBRL Taxonomy Extension Calculation Linkbase Document |
| ☒ |
|
|
|
|
|
|
| ||
101.DEF* |
| XBRL Taxonomy Extension Definition Linkbase Document |
| ☒ |
|
|
|
|
|
|
| ||
101.LAB* |
| XBRL Taxonomy Extension Label Linkbase Document |
| ☒ |
|
|
|
|
|
|
| ||
101.PRE* |
| XBRL Taxonomy Extension Presentation Linkbase Document |
| ☒ |
|
|
|
|
|
|
| ||
104* |
| Inline XBRL for the cover page of this Annual Report on Form 10-K included in the Exhibit 101 Inline XBRL Document Set |
| ☒ |
|
|
|
|
|
|
|
* Filed herewith.
** Furnished Herewith.
† Exhibit constitutes a management contract or compensatory plan or agreement.
ITEM 16. FORM 10-K SUMMARY
None.
| 48 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ONAR Holding Corp |
| |
|
|
|
|
Date: April 15, 2025 | By: | /s/ Claude Zdanow |
|
|
| Claude Zdanow |
|
|
| Chief Executive Officer |
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Name |
| Title |
| Date |
|
|
|
|
|
By: /s/ Claude Zdanow |
| Chief Executive Officer (Principal Executive Officer) and Sole Director |
| Date: April 15, 2025 |
Claude Zdanow |
|
|
|
|
|
|
|
|
|
By: /s/ Patricia Kaelin |
| Chief Financial Officer (Principal Financial/ Accounting Officer) |
| Date: April 15, 2025 |
Patricia Kaelin |
|
|
|
|
| 49 |
EXHIBIT 3.6
AMENDED AND RESTATED BYLAWS
OF
ONAR HOLDING CORPORATION
a Nevada corporation
ARTICLE 1.
DEFINITIONS
1.1 Definitions. Unless the context clearly requires otherwise, in these Amended and Restated Bylaws:
|
| (a) | “Articles of Incorporation” or “Articles” means the Articles of Incorporation of Reliant Holdings, Inc., as filed with the Secretary of State of the State of Nevada and includes all amendments thereto and restatements thereof subsequently filed. |
|
|
|
|
|
| (b) | “Board” means the board of directors of the Company and/or an authorized Committee of the Board, as applicable. |
|
|
|
|
|
| (c) | “Bylaws” means these Amended and Restated Bylaws as adopted by the Board and includes amendments subsequently adopted by the Board or by the Stockholders. |
|
|
|
|
|
| (d) | “Company” means Reliant Holdings, Inc., a Nevada corporation. |
|
|
|
|
|
| (e) | “Section” refers to sections of these Bylaws. |
|
|
|
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| (f) | “Stockholder” means stockholders of record of the Company. |
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| (g) | “Nevada Law” means the Nevada Revised Statutes, as amended from time to time. |
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| (h) | “Stockholder” means stockholders of record of the Company. |
1.2 Offices. The title of an office refers to the person or persons who at any given time perform the duties of that particular office for the Company.
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| Amended and Restated Bylaws of Reliant Holdings, Inc. |
ARTICLE 2.
OFFICES
2.1 Principal Office. The Company may locate its principal office within or without the state of incorporation as the Board may determine.
2.2 Registered Office. The registered office of the Company required by law to be maintained in the state of incorporation may be, but need not be, the same as the principal place of business of the Company. The Board may change the address of the registered office from time to time.
2.3 Other Offices. The Company may have offices at such other places, either within or without the state of incorporation, as the Board may designate or as the business of the Company may require from time to time.
ARTICLE 3.
MEETINGS OF STOCKHOLDERS
3.1 Annual Meetings. The Stockholders of the Company shall hold their annual meetings for the purpose of electing directors and for the transaction of such other proper business as may come before such meetings at such time, date and place as the Board shall determine by resolution.
3.2 Special Meetings. The Board, the Chairman of the Board, the President, a majority of the members of the Board or a committee of the Board duly designated and whose powers and authority include the power to call meetings may call special meetings of the Stockholders of the Company at any time for any purpose or purposes. Special meetings of the Stockholders of the Company may also be called by the holders of at least 25% of all shares entitled to vote at the proposed special meeting.
If any person(s) other than the Board or the Chairman call a special meeting, the request shall:
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| (i) | be in writing; |
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| (ii) | specify the general nature of the business proposed to be transacted; and |
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| (iii) | be delivered personally or sent by registered mail or by facsimile transmission to the Secretary of the Company. |
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| (iv) | additionally, if the special meeting is called by Stockholders as provided above, the request shall include documentation sufficient to confirm the Stockholder(s) total ownership of shares entitled to vote at the proposed special meeting. |
Upon receipt of such a request, the Board shall determine the date, time and place of such special meeting, which must be scheduled to be held on a date that is within ninety (90) days of receipt by the Secretary of the request therefor, and the Secretary of the Company shall prepare a proper notice thereof. No business may be transacted at such special meeting other than the business specified in the notice to Stockholders of such meeting.
3.3 Place of Meetings. The Stockholders shall hold all meetings at such places, within or without the State of Nevada, as the Board or a committee of the Board shall specify in the notice or waiver of notice for such meetings.
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| Amended and Restated Bylaws of Reliant Holdings, Inc. |
3.4 Notice of Meetings. Except as otherwise required by law, the Board or a committee of the Board shall give notice of each meeting of Stockholders, whether annual or special, not less than 10 nor more than 60 days before the date of the meeting. The Board or a committee of the Board shall deliver a notice to each Stockholder entitled to vote at such meeting by delivering a typewritten or printed notice thereof to him personally, or by depositing such notice in the United States mail, in a postage prepaid envelope, directed to him at his address as it appears on the records of the Company, or by transmitting a notice thereof to him at such address by telegraph, telecopy, cable or wireless. If mailed, notice is given on the date deposited in the United States mail, postage prepaid, directed to the Stockholder at his address as it appears on the records of the Company. An affidavit of the Secretary or an Assistant Secretary or of the Transfer Agent of the Company that he has given notice shall constitute, in the absence of fraud, prima facie evidence of the facts stated therein.
Every notice of a meeting of the Stockholders shall state the place, date and hour of the meeting and, in the case of a special meeting, also shall state the purpose or purposes of the meeting. Furthermore, if the Company will maintain the list at a place other than where the meeting will take place, every notice of a meeting of the Stockholders shall specify where the Company will maintain the list of Stockholders entitled to vote at the meeting.
3.5 Notice of Stockholder Business and Nominations. Subject to the Articles of Incorporation, the Stockholders who intend to nominate persons to the Board of Directors, subject where applicable to these Bylaws and applicable law, or propose any other action at an annual meeting of Stockholders must timely notify the Secretary of the Company of such intent. To be timely, a Stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Company not earlier than the close of business on the day which falls 120 days prior to the one year anniversary of the Company’s last annual meeting of Stockholders and not later than the close of business on the day which falls 90 days prior to the one year anniversary of the Company’s last annual meeting of Stockholders, together with written notice of the shareholder’s intention to present a proposal for action at the meeting, unless the Company’s annual meeting date occurs more than 30 days before or 30 days after the one year anniversary of the Company’s last annual meeting of Stockholders. In that case, the Company must receive proposals not earlier than the close of business on the 120th day prior to the date of the annual meeting and not later than the close of business on the later of the 90th day prior to the date of the annual meeting or, if the first public announcement of the date of the annual meeting is less than 100 days prior to the date of the meeting, the 10th day following the day on which the Company first makes a public announcement of the date of the annual meeting. Such notice must be in writing and must include (a) the name and record address of the Stockholder who intends to propose the business and the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by such Stockholder; (b) a representation that the Stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to introduce the business specified in the notice; (c) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (d) any material interest of the Stockholder in such business; and (e) any other information that is required to be provided by the Stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (such act, and the rules and regulations promulgated thereunder, the “Exchange Act”), if the Company is subject to the Exchange Act. In the event the Stockholder proposal relates to a nomination for appointment of a director of the Company, the notice shall also forth (a) as to each person whom the Stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.
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| Amended and Restated Bylaws of Reliant Holdings, Inc. |
Nominations of persons for election to the Board of Directors may be made at any annual meeting of Stockholders, or at any special meeting of Stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any Stockholder of the Company (i) who is a Stockholder of record on the date of the giving of the notice provided for in this Section 3.5 and on the record date for the determination of Stockholders entitled to notice of and to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 3.5.
Notwithstanding the foregoing, in order to include information with respect to a Stockholder proposal in the proxy statement and form of proxy for a stockholder’s meeting, Stockholders must provide notice as required by, and otherwise comply with the requirements of, the Exchange Act and the regulations promulgated thereunder. The Board of Directors reserves the right to refuse to submit any such proposal to Stockholders at an annual meeting if, in its judgment, the information provided in the notice is inaccurate or incomplete. For the avoidance of doubt, the foregoing Section 3.5 shall be the exclusive means for a Stockholder to make nominations or propose business (other than business included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Exchange Act, if the Company is subject to the Exchange Act) at an annual meeting of stockholders. For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by a national service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. Notwithstanding the foregoing provisions of this Section 3.5, a stockholder shall also comply with all applicable requirements of the Exchange Act and applicable state law with respect to matters set forth in this Section 3.5. Nothing in this Section 3.5 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act, or the Company’s or the Board of Director’s rights and obligations under the Exchange Act and state law, as applicable.
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| Amended and Restated Bylaws of Reliant Holdings, Inc. |
3.6 Waiver of Notice. Whenever these Bylaws require written notice, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall constitute the equivalent of notice. Attendance of a person at any meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. No written waiver of notice need specify either the business to be transacted at, or the purpose or purposes of any regular or special meeting of the Stockholders, directors or members of a committee of the Board.
3.7 Adjournment of Meeting. When the Stockholders, the Board of Directors, or an officer (as provided in Section 3.8 below), adjourn a meeting to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Stockholders may transact any business which they may have transacted at the original meeting. If the adjournment is for more than 30 days or, if after the adjournment, the Board or a committee of the Board fixes a new record date for the adjourned meeting, the Board or a committee of the Board shall give notice of the adjourned meeting to each Stockholder of record entitled to vote at the meeting.
3.8 Quorum. Except as otherwise required by law, the holders of 33-1/3% of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes at any meeting of the Stockholders except as otherwise provided by applicable law, by the Articles of Incorporation or by these Bylaws. In the absence of a quorum at any meeting or any adjournment thereof, (A) the Board of Directors, without a vote of the Stockholders, may (1) postpone, reschedule, or cancel any previously scheduled annual meeting of stockholders and (2) postpone, reschedule, or cancel any previously scheduled special meeting of the Stockholders called by the Board of Directors or management (but not by the Stockholders); or (B) the holders of a majority of the shares of stock entitled to vote who are present, in person or by proxy, or, in the absence therefrom of all the Stockholders, any officer entitled to preside at, or to act as secretary of, such meeting may adjourn such meeting to another place, date or time.
If the chairman of the meeting gives notice of any adjourned special meeting of Stockholders to all Stockholders entitled to vote thereat, stating that the minimum percentage of Stockholders for a quorum as provided by Nevada Law shall constitute a quorum, then, except as otherwise required by law, that percentage at such adjourned meeting shall constitute a quorum and a majority of the votes cast at such meeting shall determine all matters.
Votes cast shall include votes cast against any proposal and shall exclude abstentions and broker non-votes, provided that votes cast against any proposal, abstentions and broker non-votes shall be counted in determining a quorum at any meeting.
3.9 Organization. Such person as the Board may have designated or, in the absence of such a person, the highest ranking officer of the Company who is present shall call to order any meeting of the Stockholders, determine the presence of a quorum, and act as chairman of the meeting. In the absence of the Secretary or an Assistant Secretary of the Company, the chairman shall appoint someone to act as the secretary of the meeting.
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| Amended and Restated Bylaws of Reliant Holdings, Inc. |
3.10 Conduct of Business. The chairman of any meeting of Stockholders shall determine the order of business and the procedure at the meeting, including such regulations of the manner of voting and the conduct of discussion as he deems in order.
3.11 List of Stockholders. At least 10 days before every meeting of Stockholders, the Secretary shall prepare a list of the Stockholders entitled to vote at the meeting or any adjournment thereof, arranged in alphabetical order, showing the address of each Stockholder and the number of shares registered in the name of each Stockholder. The Company shall make the list available for examination by any Stockholder for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting will take place or at the place designated in the notice of the meeting.
The Secretary shall produce and keep the list at the time and place of the meeting during the entire duration of the meeting, and any Stockholder who is present may inspect the list at the meeting. The list shall constitute presumptive proof of the identity of the Stockholders entitled to vote at the meeting and the number of shares each Stockholder holds.
A determination of Stockholders entitled to vote at any meeting of Stockholders pursuant to this Section shall apply to any adjournment thereof.
3.12 Fixing of Record Date. For the purpose of determining Stockholders entitled to notice of or to vote at any meeting of Stockholders or any adjournment thereof, or Stockholders entitled to receive payment of any dividend, or in order to make a determination of Stockholders for any other proper purpose, the Board or a committee of the Board may fix in advance a date as the record date for any such determination of Stockholders. However, the Board shall not fix such date, in any case, more than 60 days nor less than 10 days prior to the date of the particular action.
If the Board or a committee of the Board does not fix a record date for the determination of Stockholders entitled to notice of or to vote at a meeting of Stockholders, the record date shall be at the close of business on the day next preceding the day on which notice is given or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held or the date on which the Board adopts the resolution declaring a dividend.
3.13 Voting of Shares. Except as otherwise required by Nevada Law, the Articles or the Bylaws, (i) at all meetings of Stockholders for the election of directors, a plurality of votes cast shall be sufficient to elect such directors; (ii) any other action taken by Stockholders shall be valid and binding upon the Company if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action, at a meeting at which a quorum is present, except that adoption, amendment or repeal of the Bylaws by Stockholders will require the vote of a majority of the shares entitled to vote; and (iii) broker non-votes and abstentions are considered for purposes of establishing a quorum but not considered as votes cast for or against a proposal or director nominee. Each Stockholder shall have one vote for every share of stock having voting rights registered in his name on the record date for the meeting, except as otherwise provided in any preferred stock designation setting forth the right of preferred stock shareholders. The Company shall not have the right to vote treasury stock of the Company, nor shall another corporation have the right to vote its stock of the Company if the Company holds, directly or indirectly, a majority of the shares entitled to vote in the election of directors of such other corporation. Persons holding stock of the Company in a fiduciary capacity shall have the right to vote such stock. Persons who have pledged their stock of the Company shall have the right to vote such stock unless in the transfer on the books of the Company the pledgor expressly empowered the pledgee to vote such stock. In that event, only the pledgee, or his proxy, may represent such stock and vote thereon.
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| Amended and Restated Bylaws of Reliant Holdings, Inc. |
Where a separate vote by a class or classes is required, a majority of the outstanding shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter and the affirmative vote of the majority of shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class.
3.14 Inspectors. At any meeting in which the Stockholders vote by ballot, the chairman may appoint one or more inspectors. Each inspector shall take and sign an oath to execute the duties of inspector at such meeting faithfully, with strict impartiality, and according to the best of his ability. The inspectors shall ascertain the number of shares outstanding and the voting power of each; determine the shares represented at a meeting and the validity of proxies and ballots; count all votes and ballots; determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The certification required herein shall take the form of a subscribed, written report prepared by the inspectors and delivered to the Secretary of the Company. An inspector need not be a Stockholder of the Company, and any officer of the Company may be an inspector on any question other than a vote for or against a proposal in which he has a material interest.
3.15 Proxies. A Stockholder may exercise any voting rights in person or by his proxy appointed by an instrument in writing, which he or his authorized attorney-in-fact has subscribed and which the proxy has delivered to the Secretary of the meeting pursuant to the manner prescribed by law.
A proxy is not valid after the expiration of 6 months after the date of its execution, unless the person executing it specifies thereon the length of time for which it is to continue in force (which length may not exceed 7 years, unless coupled with an interest) or limits its use to a particular meeting. Each proxy is irrevocable if it expressly states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.
The attendance at any meeting of a Stockholder who previously has given a proxy shall not have the effect of revoking the same unless he notifies the Secretary in writing prior to the voting of the proxy.
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| Amended and Restated Bylaws of Reliant Holdings, Inc. |
3.16 Action by Consent. Any action required to be taken at any annual or special meeting of Stockholders of the Company or any action which may be taken at any annual or special meeting of such Stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action that is the subject of the consent at a meeting in which each Stockholder entitled to vote on the action is present and votes, and shall be delivered to the Company by delivery to its registered office, its principal place of business, or an officer or agent of the Company having custody of the book in which proceedings of meetings of stockholders are recorded.
Every written consent shall bear the date of signature of each Stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days (or such other period as provided by applicable law) of the earliest dated consent delivered in the manner required by this section to the Company, written consents signed by a sufficient number of holders to take action are delivered to the Company by delivery to its registered office, its principal place of business or an officer or agent of the Company having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Company’s registered office shall be by hand or by certified or registered mail, return receipt requested.
Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those Stockholders who have not consented in writing, provided further that failure to provide such notice shall not effect the validity of such action.
3.17 Cumulative Voting. Cumulative voting is expressly forbidden.
ARTICLE 4.
BOARD OF DIRECTORS
4.1 General Powers. The Board shall manage the property, business and affairs of the Company.
4.2 Number. The number of directors who shall constitute the Board shall equal not less than 1 nor more than 10, as the Board or majority Stockholders may determine by resolution from time to time.
4.3 Election of Directors and Term of Office. The Stockholders of the Company shall elect the directors at the annual or adjourned annual meeting (except as otherwise provided herein for the filling of vacancies). Each director shall hold office until his death, resignation, retirement, removal, or disqualification, or until his successor shall have been elected and qualified.
4.4 Resignations. Any director of the Company may resign at any time by giving written notice to the Board or to the Secretary of the Company. Any resignation shall take effect upon receipt or at the time specified in the notice. Unless the notice specifies otherwise, the effectiveness of the resignation shall not depend upon its acceptance.
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| Amended and Restated Bylaws of Reliant Holdings, Inc. |
4.5 Removal. Stockholders holding 2/3 of the outstanding shares entitled to vote at an election of directors may remove any director or the entire Board of Directors at any time, with or without cause.
4.6 Vacancies. Any vacancy on the Board, whether because of death, resignation, disqualification, an increase in the number of directors, or any other cause may be filled by a majority of the remaining directors, a sole remaining director, or the majority Stockholders. Any director elected to fill a vacancy shall hold office until his death, resignation, retirement, removal, or disqualification, or until his successor shall have been elected and qualified.
4.7 Chairman of the Board. At the initial and annual meeting of the Board, the directors may elect from their number a Chairman of the Board of Directors. The Chairman shall preside at all meetings of the Board and shall perform such other duties as the Board may direct. The Board also may elect a Vice Chairman and other officers of the Board, with such powers and duties as the Board may designate from time to time.
4.8 Compensation. The Board may compensate directors for their services and may provide for the payment of all expenses the directors incur by attending meetings of the Board or otherwise.
4.9 Insuring Directors, Officers, and Employees. The Company may purchase and maintain insurance on behalf of any director, officer, employee, or agent of the Company, or on behalf of any person serving at the request of the Company as a director, officer, employee, or agent of another company, partnership, joint venture, trust, or other enterprise, against any liability asserted against that person and incurred by that person in any such company, whether or not the Company has the power to indemnify that person against liability for any of those acts.
4.10 Delegation of Authority. Notwithstanding any provision of these Bylaws to the contrary, the Board may delegate the powers or duties of any officer to any other officer or agent.
ARTICLE 5.
MEETINGS OF DIRECTORS
5.1 Regular Meetings. The Board may hold regular meetings at such places, dates and times as the Board shall establish by resolution. If any day fixed for a meeting falls on a legal holiday, the Board shall hold the meeting at the same place and time on the next succeeding business day. The Board need not give notice of regular meetings.
5.2 Place of Meetings. The Board may hold any of its meetings in or out of the State of Nevada, at such places as the Board may designate, at such places as the notice or waiver of notice of any such meeting may designate, or at such places as the persons calling the meeting may designate.
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| Amended and Restated Bylaws of Reliant Holdings, Inc. |
5.3 Meetings by Telecommunications. The Board or any committee of the Board may hold meetings by means of conference telephone or similar telecommunications equipment that enable all persons participating in the meeting to hear each other. Such participation shall constitute presence in person at such meeting.
5.4 Special Meetings. The Chairman of the Board (or if there is no Chairman, any member of the Board of Directors), the President (or any Vice President if the President is absent or unable or refuses to act), or any two directors then in office (not including the Chairman, if the Company has a Chairman) may call a special meeting of the Board. The person or persons authorized to call special meetings of the Board may fix any place, either in or out of the State of Nevada as the place for the meeting.
5.5 Notice of Special Meetings. The person or persons calling a special meeting of the Board shall give written notice to each director of the time, place, date and purpose of the meeting of not less than three business days if by mail and not less than 24 hours if by facsimile (with confirmation of delivery), email or in person before the date of the meeting, or as otherwise provided by law. If mailed, notice is given on the date deposited in the United States mail, postage prepaid, to such director. A director may waive notice of any special meeting, and any meeting shall constitute a legal meeting without notice if all the directors are present or if those not present sign either before or after the meeting a written waiver of notice, a consent to such meeting, or an approval of the minutes of the meeting. A notice or waiver of notice need not specify the purposes of the meeting or the business which the Board will transact at the meeting. Generally, a tentative agenda will be included, but the meeting shall not be confined to any agenda included with the notice.
Upon providing notice, the Secretary or other officer sending notice shall sign and file in the Corporate Record Book a statement of the details of the notice given to each director. If such statement should later not be found in the Corporate Record Book, due notice shall be presumed.
5.6 Waiver by Presence. Except when expressly for the purpose of objecting to the legality of a meeting, a director’s presence at a meeting shall constitute a waiver of notice of such meeting.
5.7 Quorum. A majority of the directors then in office shall constitute a quorum for all purposes at any meeting of the Board. In the absence of a quorum, a majority of directors present at any meeting may adjourn the meeting to another place, date or time without further notice. No proxies shall be given by directors to any person for purposes of voting or establishing a quorum at a directors’ meeting.
5.8 Conduct of Business. The Board shall transact business in such order and manner as the Board may determine. Except as the law requires otherwise, the Board shall determine all matters by the vote of a majority of the directors present at a meeting at which a quorum is present. The directors shall act as a Board, and the individual directors shall have no power as such. At every meeting of the Board of Directors, the Chairman of the Board, if there is such an officer, and if not, the President, or in the President’s absence, a Vice President designated by the President, or in the absence of such designation, a Chairman chosen by a majority of the directors present, shall preside. The Secretary of the Company shall act as Secretary of the Board of Directors’ meetings. When the Secretary is absent from any meeting or in the discretion of the Chairman, the Chairman may appoint any person to act as Secretary of that meeting.
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| Amended and Restated Bylaws of Reliant Holdings, Inc. |
5.9 Action by Consent. The Board or a committee of the Board may take any required or permitted action without a meeting if all members of the Board or committee consent thereto in writing and file such consent with the minutes of the proceedings of the Board or committee.
5.10 Transactions with Interested Directors. Any contract or other transaction between the Company and any of its directors (or any corporation or firm in which any of its directors are directly or indirectly interested) shall be valid for all purposes notwithstanding the presence of that director at the meeting during which the contract or transaction was authorized, and notwithstanding the directors’ participation in that meeting. This section shall apply only if the contract or transaction is just and reasonable to the Company at the time it is authorized and ratified, the interest of each director is known or disclosed to the Board of Directors, and the Board (or an authorized committee thereof) nevertheless authorizes or ratifies the contract or transaction by a majority of the disinterested directors present (or by authorized committee of the Board). Each interested director is to be counted in determining whether a quorum is present, but shall not vote and shall not be counted in calculating the majority necessary to carry the vote. This section shall not be construed to invalidate contracts or transactions that would be valid in its absence.
ARTICLE 6.
COMMITTEES
6.1 Committees of the Board. The Board may designate, by a vote of a majority of the directors then in office, committees of the Board. The committees shall serve at the pleasure of the Board and shall possess such lawfully delegable powers and duties as the Board may confer.
6.2 Selection of Committee Members. The Board shall elect by a vote of a majority of the directors then in office a director or directors to serve as the member or members of a committee. By the same vote, the Board may designate other directors as alternate members who may replace any absent or disqualified member at any meeting of a committee. In the absence or disqualification of any member of any committee and any alternate member in his place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or they constitute a quorum, may appoint by unanimous vote another member of the Board to act at the meeting in the place of the absent or disqualified member.
6.3 Conduct of Business. Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as the law or these Bylaws require otherwise and except as the Board shall otherwise determine. Each committee shall make adequate provision for notice of all meetings to members. A majority of the members of the committee shall constitute a quorum, unless the committee consists of one or two members. In that event, one member shall constitute a quorum. A majority vote of the members present shall determine all matters. A committee may take action without a meeting if all the members of the committee consent in writing and file the consent or consents with the minutes of the proceedings of the committee.
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| Amended and Restated Bylaws of Reliant Holdings, Inc. |
6.4 Authority. Any committee, to the extent the Board provides, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company, and may authorize the affixation of the Company’s seal to all instruments which may require or permit it. However, no committee shall have any power or authority with regard to amending the Articles of Incorporation, adopting an agreement of merger or consolidation, recommending to the Stockholders the sale, lease or exchange of all or substantially all of the Company’s property and assets, recommending to the Stockholders a dissolution of the Company or a revocation of a dissolution of the Company, or amending these Bylaws of the Company. Unless a resolution of the Board expressly provides, no committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger.
6.5 Minutes. Each committee shall keep regular minutes of its proceedings and report the same to the Board when required.
6.6 Committees. All Committees and all powers provided to such Committees shall be consistent with Nevada Law, the Articles and the rules and regulations of the principal market or exchange on which the Company’s capital stock then trades.
ARTICLE 7.
OFFICERS
7.1 Officers of the Company. The officers of the Company shall consist of a President, a Secretary, a Treasurer and such Vice Presidents, a Chief Financial Officer, Assistant Secretaries, Assistant Treasurers, and other officers as the Board may designate and elect from time to time. The same person may hold at the same time any two or more offices.
7.2 Election and Term. The Board shall elect the officers of the Company. Each officer shall hold office until his death, resignation, retirement, removal or disqualification, or until his successor shall have been elected and qualified.
7.3 Compensation of Officers. The Board shall fix the compensation of all officers of the Company. No officer shall serve the Company in any other capacity and receive compensation, unless the Board authorizes the additional compensation.
7.4 Removal of Officers and Agents. The Board may remove any officer or agent it has elected or appointed at any time, with or without cause.
7.5 Resignation of Officers and Agents. Any officer or agent the Board has elected or appointed may resign at any time by giving written notice to the Board, the Chairman of the Board, the President, or the Secretary of the Company. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified. Unless otherwise specified in the notice, the Board need not accept the resignation to make it effective.
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| Amended and Restated Bylaws of Reliant Holdings, Inc. |
7.6 Bond. The Board may require by resolution any officer, agent, or employee of the Company to give bond to the Company, with sufficient sureties conditioned on the faithful performance of the duties of his respective office or agency. The Board also may require by resolution any officer, agent or employee to comply with such other conditions as the Board may require from time to time.
7.7 President. The President shall be the chief operating officer of the Company and, subject to the Board’s control, shall supervise and direct all of the business and affairs of the Company. When present, he shall sign (with or without the Secretary, an Assistant Secretary, or any other officer or agent of the Company which the Board has authorized) deeds, mortgages, bonds, contracts or other instruments which the Board has authorized an officer or agent of the Company to execute. However, the President shall not sign any instrument which the law, these Bylaws, or the Board expressly require some other officer or agent of the Company to sign and execute. In general, the President shall perform all duties incident to the office of President and such other duties as the Board may prescribe from time to time.
7.8 Vice Presidents. In the absence of the President or in the event of his death, inability or refusal to act, the Vice Presidents in the order of their length of service as Vice Presidents, unless the Board determines otherwise, shall perform the duties of the President. When acting as the President, a Vice President shall have all the powers and restrictions of the Presidency. A Vice President shall perform such other duties as the President or the Board may assign to him from time to time.
7.9 Chief Financial Officer. The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Company, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director.
The Chief Financial Officer shall deposit all money and other valuables in the name and to the credit of the Company with such depositories as the Board may designate. The Chief Financial Officer shall disburse the funds of the Company as may be ordered by the Board, shall render to the Chief Executive Officer or, in the absence of a Chief Executive Officer, any president and directors, whenever they request it, an account of all of his or her transactions as Chief Financial Officer and of the financial condition of the Company, and shall have other powers and perform such other duties as may be prescribed by the Board or these Bylaws.
The Chief Financial Officer may be the Treasurer of the Company.
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7.10 Secretary. The Secretary shall (a) keep the minutes of the meetings of the Stockholders and of the Board in one or more books for that purpose, (b) give all notices which these Bylaws or the law requires, (c) serve as custodian of the records and seal of the Company, (d) affix the seal of the Company to all documents which the Board has authorized execution on behalf of the Company under seal, (e) maintain a register of the address of each Stockholder of the Company (unless maintained by a duly appointed Transfer Agent), (f) sign, with the President, a Vice President, or any other officer or agent of the Company which the Board has authorized, certificates for shares of the Company, (g) have charge of the stock transfer books of the Company, and (h) perform all duties which the President or the Board may assign to him from time to time.
7.11 Assistant Secretaries. In the absence of the Secretary or in the event of his death, inability or refusal to act, the Assistant Secretaries in the order of their length of service as Assistant Secretary, unless the Board determines otherwise, shall perform the duties of the Secretary. When acting as the Secretary, an Assistant Secretary shall have the powers and restrictions of the Secretary. An Assistant Secretary shall perform such other duties as the President, Secretary or Board may assign from time to time.
7.12 Treasurer. The Treasurer shall (a) have responsibility for all funds and securities of the Company, (b) receive and give receipts for moneys due and payable to the Company from any source whatsoever, (c) deposit all moneys in the name of the Company in depositories which the Board selects, and (d) perform all of the duties which the President or the Board may assign to him from time to time.
7.13 Assistant Treasurers. In the absence of the Treasurer or in the event of his death, inability or refusal to act, the Assistant Treasurers in the order of their length of service as Assistant Treasurer, unless the Board determines otherwise, shall perform the duties of the Treasurer. When acting as the Treasurer, an Assistant Treasurer shall have the powers and restrictions of the Treasurer. An Assistant Treasurer shall perform such other duties as the Treasurer, the President, or the Board may assign to him from time to time.
7.14 Other Officers. The Board may appoint, or empower the Chief Executive Officer, or any other duly appointed officer of the Company, to appoint, such other officers and agents as the business of the Company may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these Bylaws or as the Board, Chief Executive Officer, or other designated officer may from time to time determine.
7.15 Delegation of Authority. Notwithstanding any provision of these Bylaws to the contrary, the Board may delegate the powers or duties of any officer to any other officer or agent.
7.16 Action with Respect to Securities of Other Corporations. Unless the Board directs otherwise, the President shall have the power to vote and otherwise act on behalf of the Company, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which the Company holds securities. Furthermore, unless the Board directs otherwise, the President shall exercise any and all rights and powers which the Company possesses by reason of its ownership of securities in another corporation.
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7.17 Vacancies. The Board may fill any vacancy in any office because of death, resignation, removal, disqualification or any other cause in the manner which these Bylaws prescribe for the regular appointment to such office.
7.18 Corporate Governance Compliance. Without otherwise limiting the powers of the Board set forth herein and provided that shares of capital stock of the Company are listed for trading on either the NASDAQ Stock Market (“NASDAQ”) or the New York Stock Exchange (“NYSE”)(including the NYSE MKT), the Company shall comply with the corporate governance rules and requirements of the NASDAQ or the NYSE, as applicable.
ARTICLE 8.
CONTRACTS, DRAFTS, DEPOSITS AND ACCOUNTS
8.1 Contracts. Except as otherwise provided in these Bylaws, the Board, or any officers of the corporation authorized thereby, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Company; such authority may be general or confined to specific instances.
8.2 Drafts. From time to time, the Board shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments.
8.3 Deposits. The Treasurer shall deposit all funds of the Company not otherwise employed in such banks, trust companies, or other depositories as the Board may select or as any officer, assistant, agent or attorney of the Company to whom the Board has delegated such power may select. For the purpose of deposit and collection for the account of the Company, the President or the Treasurer (or any other officer, assistant, agent or attorney of the Company whom the Board has authorized) may endorse, assign and deliver checks, drafts and other orders for the payment of money payable to the order of the Company.
8.4 General and Special Bank Accounts. The Board may authorize the opening and keeping of general and special bank accounts with such banks, trust companies, or other depositories as the Board may select or as any officer, assistant, agent or attorney of the Company to whom the Board has delegated such power may select. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient.
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ARTICLE 9.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
9.1 Certificates for Shares. Shares of the capital stock of the Company may be certificated or uncertificated, as provided under Nevada Law. Each Stockholder, upon written request to the Transfer Agent or registrar of the Company, shall be entitled to a certificate of the capital stock of the Company in such form as may from time to time be prescribed by the Board of Directors. The Secretary, Transfer Agent, or registrar of the Company shall number the certificates representing shares of the stock of the Company in the order in which the Company issues them. The President or any Vice President and the Secretary or any Assistant Secretary shall sign the certificates in the name of the Company. Any or all certificates may contain facsimile signatures. In case any officer, Transfer Agent, or registrar who has signed a certificate, or whose facsimile signature appears on a certificate, ceases to serve as such officer, Transfer Agent, or registrar before the Company issues the certificate, the Company may issue the certificate with the same effect as though the person who signed such certificate, or whose facsimile signature appears on the certificate, was such officer, Transfer Agent, or registrar at the date of issue. The Secretary, Transfer Agent, or registrar of the Company shall keep a record in the stock transfer books of the Company of the names of the persons, firms or corporations owning the stock represented by the certificates, the number and class of shares represented by the certificates and the dates thereof and, in the case of cancellation, the dates of cancellation. The Secretary, Transfer Agent, or registrar of the Company shall cancel every certificate surrendered to the Company for exchange or transfer. Except in the case of a lost, destroyed, stolen or mutilated certificate, the Secretary, Transfer Agent, or registrar of the Company shall not issue a new certificate in exchange for an existing certificate until he has canceled the existing certificate.
9.2 Transfer of Shares. A holder of record of shares of the Company’s stock, or his attorney-in-fact authorized by power of attorney duly executed and filed with the Secretary, Transfer Agent or registrar of the Company, may transfer his shares only on the stock transfer books of the Company. Such person shall furnish to the Secretary, Transfer Agent, or registrar of the Company proper evidence of his authority to make the transfer and shall properly endorse and surrender for cancellation his existing certificate or certificates for such shares. Whenever a holder of record of shares of the Company’s stock makes a transfer of shares for collateral security, the Secretary, Transfer Agent, or registrar of the Company shall state such fact in the entry of transfer if the transferor and the transferee request. When a transfer of shares is requested and there is reasonable doubt as to the right of the person seeking the transfer, the Company or its Transfer Agent, before recording the transfer of the shares on its books or issuing any certificate there for, may require from the person seeking the transfer reasonable proof of that person’s right to the transfer. If there remains a reasonable doubt of the right to the transfer, the Company may refuse a transfer unless the person gives adequate security or a bond of indemnity executed by a corporate surety or by two individual sureties satisfactory to the Company as to form, amount, and responsibility of sureties. The bond shall be conditioned to protect the Company, its officers, Transfer Agents, and registrars, or any of them, against any loss, damage, expense, or other liability for the transfer or the issuance of a new certificate for shares.
9.3 Lost Certificates. The Board may direct the Secretary, Transfer Agent, or registrar of the Company to issue a new certificate to any holder of record of shares of the Company’s stock claiming that he has lost such certificate, or that someone has stolen, destroyed or mutilated such certificate, upon the receipt of an affidavit from such holder to such fact. When authorizing the issue of a new certificate, the Board, in its discretion may require as a condition precedent to the issuance that the owner of such certificate give the Company a bond of indemnity in such form and amount as the Board may direct.
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9.4 Regulations. The Board may make such rules and regulations, not inconsistent with these Bylaws, as it deems expedient concerning the issue, transfer and registration of certificates for shares of the stock of the Company. The Board may appoint or authorize any officer or officers to appoint one or more Transfer Agents, or one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them.
9.5 Holder of Record. The Company may treat as absolute owners of shares the person in whose name the shares stand of record as if that person had full competency, capacity and authority to exercise all rights of ownership, despite any knowledge or notice to the contrary or any description indicating a representative, pledge or other fiduciary relation, or any reference to any other instrument or to the rights of any other person appearing upon its record or upon the share certificate. However, the Company may treat any person furnishing proof of his appointment as a fiduciary as if he were the holder of record of the shares.
9.6 Treasury Shares. Treasury shares of the Company shall consist of shares which the Company has issued and thereafter acquired but not canceled. Treasury shares shall not carry voting or dividend rights.
9.7 Consideration For Shares. Shares may be issued for such consideration as may be fixed from time to time by the Board of Directors, but not less than the par value stated in the Articles.
ARTICLE 10.
INDEMNIFICATION
10.1 Definitions. In this Article:
(a) “Indemnitee” means (i) any present or former director, advisory director or officer of the Company, (ii) any person who while serving in any of the capacities referred to in clause (i) hereof served at the Company’s request as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, and (iii) any person nominated or designated by (or pursuant to authority granted by) the Board of Directors or any committee thereof to serve in any of the capacities referred to in clauses (i) or (ii) hereof.
(b) “Official Capacity” means (i) when used with respect to a director, the office of director of the Company, and (ii) when used with respect to a person other than a director, the elective or appointive office of the Company held by such person or the employment or agency relationship undertaken by such person on behalf of the Company, but in each case does not include service for any other foreign or domestic corporation or any partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise.
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(c) “Proceeding” means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, any appeal in such an action, suit or proceeding, and any inquiry or investigation that could lead to such an action, suit or proceeding.
10.2 Indemnification. The Company shall indemnify every Indemnitee against all judgments, penalties (including excise and similar taxes), fines, amounts paid in settlement and reasonable expenses actually incurred by the Indemnitee in connection with any Proceeding in which he was, is or is threatened to be named defendant or respondent, or in which he was or is a witness without being named a defendant or respondent, by reason, in whole or in part, of his serving or having served, or having been nominated or designated to serve, in any of the capacities referred to in Section 10.1, if it is determined in accordance with Section 10.4 that the Indemnitee (a) conducted himself in good faith, (b) reasonably believed, in the case of conduct in his Official Capacity, that his conduct was in the Company’s best interests and, in all other cases, that his conduct was at least not opposed to the Company’s best interests, and (c) in the case of any criminal proceeding, had no reasonable cause to believe that his conduct was unlawful; provided, however, that in the event that an Indemnitee is found liable to the Company or is found liable on the basis that personal benefit was improperly received by the Indemnitee the indemnification (i) is limited to reasonable expenses actually incurred by the Indemnitee in connection with the Proceeding and (ii) shall not be made in respect of any Proceeding in which the Indemnitee shall have been found liable for willful or intentional misconduct in the performance of his duty to the Company. Except as provided in the immediately preceding proviso to the first sentence of this Section 10.2, no indemnification shall be made under this Section 10.2 in respect of any Proceeding in which such Indemnitee shall have been (a) found liable on the basis that personal benefit was improperly received by him, whether or not the benefit resulted from an action taken in the Indemnitee’s Official Capacity, or (b) found liable to the Company. The termination of any Proceeding by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, is not of itself determinative that the Indemnitee did not meet the requirements set forth in clauses (a), (b) or (c) in the first sentence of this Section 10.2. An Indemnitee shall be deemed to have been found liable in respect of any claim, issue or matter only after the Indemnitee shall have been so adjudged by a court of competent jurisdiction after exhaustion of all appeals therefrom. Reasonable expenses shall, include, without limitation, all court costs and all fees and disbursements of attorneys for the Indemnitee. The indemnification provided herein shall be applicable whether or not negligence or gross negligence of the Indemnitee is alleged or proven.
10.3 Successful Defense. Without limitation of Section 10.2 and in addition to the indemnification provided for in Section 10.2, the Company shall indemnify every Indemnitee against reasonable expenses incurred by such person in connection with any Proceeding in which he is a witness or a named defendant or respondent because he served in any of the capacities referred to in Section 10.1, if such person has been wholly successful, on the merits or otherwise, in defense of the Proceeding.
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10.4 Determinations. Any indemnification under Section 10.2 (unless ordered by a court of competent jurisdiction) shall be made by the Company only upon a determination that indemnification of the Indemnitee is proper in the circumstances because he has met the applicable standard of conduct. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors who, at the time of such vote, are not named defendants or respondents in the Proceeding; (b) if such a quorum cannot be obtained, then by a majority vote of a committee of the Board of Directors, duly designated to act in the matter by a majority vote of all directors (in which designated directors who are named defendants or respondents in the Proceeding may participate), such committee to consist solely of two (2) or more directors who, at the time of the committee vote, are not named defendants or respondents in the Proceeding; (c) by special legal counsel selected by the Board of Directors or a committee thereof by vote as set forth in clauses (a) or (b) of this Section 10.4 or, if the requisite quorum of all of the directors cannot be obtained therefor and such committee cannot be established, by a majority vote of all of the directors (in which directors who are named defendants or respondents in the Proceeding may participate); or (d) by the shareholders in a vote that excludes the shares held by directors that are named defendants or respondents in the Proceeding. Determination as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination that indemnification is permissible is made by special legal counsel, determination as to reasonableness of expenses must be made in the manner specified in clause (c) of the preceding sentence for the selection of special legal counsel. In the event a determination is made under this Section 10.4 that the Indemnitee has met the applicable standard of conduct as to some matters but not as to others, amounts to be indemnified may be reasonably prorated.
10.5 Advancement of Expenses. Reasonable expenses (including court costs and attorneys’ fees) incurred by an Indemnitee who was or is a witness or was, is or is threatened to be made a named defendant or respondent in a Proceeding shall be paid by the Company at reasonable intervals in advance of the final disposition of such Proceeding, and without making any of the determinations specified in Section 10.4, after receipt by the Company of (a) a written affirmation by such Indemnitee of his good faith belief that he has met the standard of conduct necessary for indemnification by the Company under this Article and (b) a written undertaking by or on behalf of such Indemnitee to repay the amount paid or reimbursed by the Company if it shall ultimately be determined that he is not entitled to be indemnified by the Company as authorized in this Article. Such written undertaking shall be an unlimited obligation of the Indemnitee but need not be secured and it may be accepted without reference to financial ability to make repayment. Notwithstanding any other provision of this Article, the Company may pay or reimburse expenses incurred by an Indemnitee in connection with his appearance as a witness or other participation in a Proceeding at a time when he is not named a defendant or respondent in the Proceeding.
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10.6 Employee Benefit Plans. For purposes of this Article, the Company shall be deemed to have requested an Indemnitee to serve an employee benefit plan whenever the performance by him of his duties to the Company also imposes duties on or otherwise involves services by him to the plan or participants or beneficiaries of the plan. Excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall be deemed fines. Action taken or omitted by an Indemnitee with respect to an employee benefit plan in the performance of his duties for a purpose reasonably believed by him to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Company.
10.7 Other Indemnification and Insurance. The indemnification provided by this Article shall (a) not be deemed exclusive of, or to preclude, any other rights to which those seeking indemnification may at any time be entitled under the Company’s Articles of Incorporation, any law, agreement or vote of shareholders or disinterested directors, or otherwise, or under any policy or policies of insurance purchased and maintained by the Company on behalf of any Indemnitee, both as to action in his Official Capacity and as to action in any other capacity, (b) continue as to a person who has ceased to be in the capacity by reason of which he was an Indemnitee with respect to matters arising during the period he was in such capacity, (c) inure to the benefit of the heirs, executors and administrators of such a person and (d) not be required if and to the extent that the person otherwise entitled to payment of such amounts hereunder has actually received payment therefor under any insurance policy, contract or otherwise.
10.8 Notice. Any indemnification of or advance of expenses to an Indemnitee in accordance with this Article shall be reported in writing to the shareholders of the Company with or before the notice or waiver of notice of the next shareholders’ meeting or with or before the next submission to shareholders of a consent to action without a meeting and, in any case, within the 12-month period immediately following the date of the indemnification or advance.
10.9 Construction. The indemnification provided by this Article shall be subject to all valid and applicable laws, including, without limitation, Nevada Law, and, in the event this Article or any of the provisions hereof or the indemnification contemplated hereby are found to be inconsistent with or contrary to any such valid laws, the latter shall be deemed to control and this Article shall be regarded as modified accordingly, and, as so modified, to continue in full force and effect.
10.10 Continuing Offer, Reliance, etc. The provisions of this Article (a) are for the benefit of, and may be enforced by, each Indemnitee of the Company, the same as if set forth in their entirety in a written instrument duly executed and delivered by the Company and such Indemnitee and (b) constitute a continuing offer to all present and future Indemnitees. The Company, by its adoption of these Bylaws, (a) acknowledges and agrees that each Indemnitee of the Company has relied upon and will continue to rely upon the provisions of this Article in becoming, and serving in any of the capacities referred to in Section 10.1 of this Article, (b) waives reliance upon, and all notices of acceptance of, such provisions by such Indemnitees and (c) acknowledges and agrees that no present or future Indemnitee shall be prejudiced in his right to enforce the provisions of this Article in accordance with its terms by any act or failure to act on the part of the Company.
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10.11 Effect of Amendment. No amendment, modification or repeal of this Article or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitees to be indemnified by the Company, nor the obligation of the Company to indemnify any such Indemnitees, under and in accordance with the provisions of the Article as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.
ARTICLE 11.
TAKEOVER OFFERS; ACQUISITION OF CONTROLLING INTEREST
11.1 Takeover Offers. In the event the Company receives a takeover offer, the Board of Directors shall consider all relevant factors in evaluating such offer, including, but not limited to, the terms of the offer, and the potential economic and social impact of such offer on the Company’s Stockholders, employees, customers, creditors and community in which it operates.
11.2 Nevada Controlling Interest Statutes. Pursuant to Nevada Revised Statutes (“NRS”) Section 78.378, the Company shall not be governed by the provisions of NRS 78.378 to 78.3793, inclusive, of the NRS, and such sections shall not apply to the Company or to an acquisition of a controlling interest by any stockholder of the Company.
ARTICLE 12.
DIVIDENDS
12.1 General. The Board, subject to any restrictions contained in either (i) Nevada Law, or (ii) the Articles, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property, or in shares of the Company’s capital stock.
12.2 Dividend Reserve. The Board may set apart out of any of the funds of the Company available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve.
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ARTICLE 13.
NOTICES
13.1 General. Whenever these Bylaws require notice to any Stockholder, director, officer or agent, such notice does not mean personal notice. A person may give effective notice under these Bylaws in every case by depositing a writing in a post office or letter box in a postpaid, sealed wrapper, or by dispatching a prepaid telegram addressed to such Stockholder, director, officer or agent at his address on the books of the Company. Unless these Bylaws expressly provide to the contrary, the time when the person sends notice shall constitute the time of the giving of notice.
13.2 Waiver of Notice. Whenever the law or these Bylaws require notice, the person entitled to said notice may waive such notice in writing, either before or after the time stated therein.
13.3 Electronic Notice. Without limiting the manner by which notice otherwise may be given effectively to Stockholders pursuant to Nevada Law, the Articles or these Bylaws, any notice to Stockholders given by the Company under any provision of Nevada Law, the Articles or these Bylaws shall be effective if given by a form of electronic transmission consented to by the Stockholder to whom the notice is given. Any such consent shall be revocable by the Stockholder by written notice to the Company. Any such consent shall be deemed revoked if:
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However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
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An affidavit of the Secretary or an Assistant Secretary or of the Transfer Agent or other agent of the Company that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein. An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
Notwithstanding the above, no notice by a form of electronic transmission shall be effective if prohibited by Nevada Law, the Articles or these Bylaws.
13.4 Undeliverable Notices. Whenever notice is required to be given, under any provision of the Nevada Law, the Articles or these Bylaws, to any Stockholder to whom (a) notice of two (2) consecutive annual meetings, or (b) all, and at least two (2) payments (if sent by first-class mail) of dividends or interest on securities during a twelve (12) month period, have been mailed addressed to such person at such person’s address as shown on the records of the Company and have been returned undeliverable, the giving of such notice to such person shall not be required. Any action or meeting which shall be taken or held without notice to such person shall have the same force and effect as if such notice had been duly given. If any such person shall deliver to the Company a written notice setting forth such person’s then current address, the requirement that notice be given to such person shall be reinstated. In the event that the action taken by the Company is such as to require the filing of an amendment to the Articles with the Secretary of State of Nevada, the amendment need not state that notice was not given to persons to whom notice was not required to be given pursuant to Nevada Law.
ARTICLE 14.
MISCELLANEOUS
14.1 Facsimile Signatures. In addition to the use of facsimile signatures which these Bylaws specifically authorize, the Company may use such facsimile signatures of any officer or officers, agents or agent, of the Company as the Board or a committee of the Board may authorize.
14.2 Corporate Seal. The Board may provide for a suitable seal containing the name of the Company, of which the Secretary shall be in charge. The Treasurer, any Assistant Secretary, or any Assistant Treasurer may keep and use the seal or duplicates of the seal if and when the Board or a committee of the Board so directs.
14.3 Fiscal Year. The Board shall have the authority to fix and change the fiscal year of the Company.
14.4 Bylaw Provisions Additional and Supplemental to Provisions of Law. All restrictions, limitations, requirements and other provisions of these Bylaws shall be construed, insofar as possible, as supplemental and additional to all provisions of law applicable to the subject matter thereof and shall be fully complied with in addition to the said provisions of law unless such compliance shall be illegal.
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14.5 Bylaw Provisions Contrary to or Inconsistent with Provisions of Law. Any article, section, subsection, subdivision, sentence, clause or phrase of these Bylaws which, upon being construed in the manner provided in Section 14.4 of these Bylaws, shall be contrary to or inconsistent with any applicable provision of law, shall not apply so long as said provisions of law shall remain in effect, but such result shall not affect the validity or applicability of any other portions of these Bylaws, it being hereby declared that these Bylaws, and each article, section, subsection, subdivision, sentence, clause, or phrase thereof, would have been adopted irrespective of the fact that any one or more articles, sections, subsections, subdivisions, sentences, clauses or phrases is or are illegal.
ARTICLE 15.
AMENDMENTS
15.1 Subject to the provisions of the Articles, the Stockholders or the Board may amend or repeal these Bylaws at any shareholders or directors meeting, subject to the voting and approval requirements of the shareholders and the directors, as applicable, set forth herein for general Company matters. All amendments shall be upon advice of counsel as to legality, except in emergency. Bylaw changes shall take effect upon adoption unless otherwise specified.
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EXHIBIT 4.1
DESCRIPTION OF SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF
THE SECURITIES EXCHANGE ACT OF 1934
The following summary describes the common stock of ONAR Holding Corporation, a Nevada corporation (“ONAR” or the “Company”), which is registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Only the Company’s common stock is registered under Section 12 of the Exchange Act.
DESCRIPTION OF COMMON STOCK
The following description of our common stock is a summary and is qualified in its entirety by reference to our Articles of Incorporation, as amended and our Bylaws, as amended, which are incorporated by reference herein, and by applicable law. For purposes of this description, references to “ONAR,” “we,” “our” and “us” refer only to ONAR and not to its subsidiaries.
Authorized Capitalization
We have authorized capital stock consisting of 450,000,000 shares of common stock, $0.001 par value per share and 5,000,000 shares of preferred stock, $0.001 par value per share (“Preferred Stock”).
Common Stock
Voting Rights. Each share of our common stock is entitled to one vote on all stockholder matters. Shares of our common stock do not possess any cumulative voting rights.
Except for the election of directors, if a quorum is present, an action on a matter is approved if it receives the affirmative vote of the holders of a majority of the voting power of the shares of capital stock present in person or represented by proxy at the meeting and entitled to vote on the matter, unless otherwise required by applicable law, Nevada law, our Articles of Incorporation, as amended or Bylaws, as amended. The election of directors will be determined by a plurality of the votes cast in respect of the shares present in person or represented by proxy at the meeting and entitled to vote, meaning that the nominees with the greatest number of votes cast, even if less than a majority, will be elected. The rights, preferences and privileges of holders of common stock are subject to, and may be impacted by, the rights of the holders of shares of any series of preferred stock that we have designated, or may designate and issue in the future.
Any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting if a written consent thereto is signed by the holders of the voting power of the Company that would be required at a meeting to constitute the act of the shareholders. Any action required or permitted to be taken by the holders of any class or series of shares of the Company may be taken without a meeting if a written consent thereto is signed by the holders of a majority of the outstanding shares of such class or series.
Dividend Rights. Each share of our common stock is entitled to equal dividends and distributions per share with respect to the common stock when, as and if declared by our Board of Directors, subject to any preferential or other rights of any outstanding preferred stock.
Liquidation and Dissolution Rights. Upon liquidation, dissolution or winding up, our common stock will be entitled to receive pro rata on a share-for-share basis, the assets available for distribution to the stockholders after payment of liabilities and payment of preferential and other amounts, if any, payable on any outstanding preferred stock.
Fully Paid Status. All outstanding shares of the Company’s common stock are validly issued, fully paid and non-assessable.
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Listing. Our common stock is quoted on the OTCQB Market maintained by OTC Markets under the symbol “ONAR”.
Other Matters. No holder of any shares of our common stock has a preemptive right to subscribe for any of our securities, nor are any shares of our common stock subject to redemption or convertible into other securities.
Anti-Takeover Provisions Under The Nevada Revised Statutes
Business Combinations
Sections 78.411 to 78.444 of the Nevada revised statues (the “NRS”) prohibit a Nevada corporation from engaging in a “combination” with an “interested stockholder” for three years following the date that such person becomes an interested stockholder and place certain restrictions on such combinations even after the expiration of the three-year period. With certain exceptions, an interested stockholder is a person or group that owns 10% or more of the corporation’s outstanding voting power (including stock with respect to which the person has voting rights and any rights to acquire stock pursuant to an option, warrant, agreement, arrangement, or understanding or upon the exercise of conversion or exchange rights) or is an affiliate or associate of the corporation and was the owner of 10% or more of such voting stock at any time within the previous three years.
A Nevada corporation may elect not to be governed by Sections 78.411 to 78.444 by a provision in its articles of incorporation. We have such a provision in our Articles of Incorporation, as amended, pursuant to which we have elected to opt out of Sections 78.411 to 78.444; therefore, these sections do not apply to us.
Control Shares
Nevada law also seeks to impede “unfriendly” corporate takeovers by providing in Sections 78.378 to 78.3793 of the NRS that an “acquiring person” shall only obtain voting rights in the “control shares” purchased by such person to the extent approved by the other stockholders at a meeting. With certain exceptions, an acquiring person is one who acquires or offers to acquire a “controlling interest” in the corporation, defined as one-fifth or more of the voting power. Control shares include not only shares acquired or offered to be acquired in connection with the acquisition of a controlling interest, but also all shares acquired by the acquiring person within the preceding 90 days. The statute covers not only the acquiring person but also any persons acting in association with the acquiring person. The NRS control share statutes only apply to issuers that have 200 or more stockholders of record, at least 100 of whom have had addresses in Nevada appearing on the stock ledger of the corporation at all times during the 90 days immediately preceding such date; and whom do business in Nevada directly or through an affiliated corporation. We do not currently meet these requirements and as such these provisions do not apply to us.
A Nevada corporation may elect to opt out of the provisions of Sections 78.378 to 78.3793 of the NRS. We have a provision in our Articles of Incorporation pursuant to which we have elected to opt out of Sections 78.378 to 78.3793; therefore, these sections do not apply to us.
Removal of Directors
Section 78.335 of the NRS provides that 2/3rds of the voting power of the issued and outstanding shares of the Company is required to remove a Director from office. As such, it may be more difficult for stockholders to remove Directors due to the fact the NRS requires greater than majority approval of the stockholders for such removal.
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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
(ONAR, LLC. with Patricia Kaelin)
THIS EMPLOYMENT AGREEMENT (this "Agreement"), effective as of December 1, 2024 (the "Effective Date"), is made and entered by and between ONAR, LLC., a Delaware Limited Liability Company (the "Company"), and Patricia Kaelin (the "Executive").
WITNESSETH:
WHEREAS, the Executive is expected to make major contributions to the short- and long-term financial management, profitability, growth, and strategic strength of the Company;
WHEREAS, the Company has determined that appropriate arrangements should be taken to encourage the attention and dedication of the Executive to her assigned duties without distraction; and
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the Company and the Executive agree as follows:
SECTION 1. Certain Defined Terms. In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement with initial capital letters:
“Affiliated Entity or Entities” means Parent Company and any company or business entity owned by Parent Company, directly or indirectly, in whole or in part, as of the date of this Agreement or in the future.
“Annual Base Salary” means the Executive’s annual base salary rate, exclusive of bonuses, commissions, and other incentive pay. As of the Effective Date, the Executive’s annual base salary is
$250,000.
“Board of Directors” means the group of individuals elected by the shareholders of the Parent Company to oversee the management of the Parent Company, including setting overall policies, providing strategic guidance, and making key decisions in the best interest of the Company. The Board of Directors is responsible for appointing executive officers and ensuring compliance with regulatory requirements, corporate governance standards, and fiduciary duties. The Board of Directors may delegate certain responsibilities to committees but retains ultimate authority for corporate oversight.
“Budgeted EBITDA” means the forecasted and budgeted net income for all Affiliated Entities in each given year, but adding back interest, taxes, depreciation, and amortization, as determined in the sole and reasonable discretion of the CEO and CFO of the Parent Company and approved by the Board of Directors.
“CEO” means the Chief Executive Officer of the Company.
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“Cause” means: (i) an assault and battery (excluding any unintentional tort relating to a motor vehicle) which causes substantial loss, damage or injury to the property or reputation of the Company or its subsidiaries; (ii) any act of fraud or dishonesty against the Company; (iii) the Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony; (iv) willful neglect of Executive’s reasonable duties (for a reason other than illness, incapacity or Disability); (v) the willful disregard of written, material policies of the Company or the Parent Company which causes material loss, damage or injury to the property or reputation of any Affiliated Entity; (vi) any material breach of the Executive’s ongoing obligation not to disclose confidential information and not to assign corporate property developed during employment; provided that in the case of (iv), (v), and (vi), in order for Cause to exist, (a) the Company must provide Executive with written notice of the material basis giving rise to Cause, (b) Executive must have at least thirty (30) days to cure such event/circumstance (but only to the extent such failure is curable); and (c) Executive must have failed substantially to cure such event/circumstance within such cure period; and (vii) except (a) as consented to by the Company or (b) for illness prohibiting the Executive from performing his duties, (c) for incapacity, or (d) for Disability, a breach of duty of loyalty or exclusivity to the Company, including, but not limited to, a material and repeated failure, which is not resolved after the Executive has been notified in writing and has been given the opportunity to resolve during a 30-day performance improvement plan, to devote her full time commercial activities to the Company; provided that Executive may participate in association, charitable, civic and other activities that do not interfere with her duties as Chief Financial Officer.
“Disability” means (i) the Executive is prevented from engaging in the performance of the Executive’s material duties due to physical, medical, psychologic or other injury, illness or disease, with or without reasonable accommodation (provided, however, that the Company acknowledges its obligations to provide reasonable accommodation to the extent required by applicable law); (ii) such total incapacity shall have continued for a period of six (6) consecutive months; and (iii) such incapacity will, in the opinion of a Board Certified physician acceptable to Executive, be permanent and continuous during the remainder of the Executive’s life.
“Direct Expenses” means either (i) direct payments to third-party supporting service contractors and influencers or (ii) other direct third-party costs of providing a service as such expenses pertain to the execution and production of a specific project in accordance with the Company’s past practices; and in each case as determined by the Company, upon consultation with Executive, for each Project.
“Good Reason” means: (i) a material diminution in the Executive’s Annual Base Salary below the amount as of the date of this Agreement, unless pursuant to a reduction affecting all senior management of Affiliated Entities on a comparable basis (“a Company-wide Reduction”); (ii) unless mutually agreed, a material diminution in the Executive’s title, authority, duties or responsibilities; (iii) any other action or inaction that constitutes a material breach by the Company of this Agreement; and (iv) the Company’s failure to pay Executive any amounts due and payable under this Agreement when due or under any other agreement between the Company and Executive except pursuant to a Company-wide Reduction.
“Net Income” shall be determined by calculating the net income of the Parent Company before non-cash equity compensation expense, as finally determined in accordance therewith by the CEO in accordance with GAAP.
“Parent Company” means Reliant Holdings, Inc. a Nevada C Corporation, which is the sole membership interest holder of the Company.
“Project Revenue” means the total revenue to the Company, the Parent Company or any Affiliate from any Sale.
“Termination Date” means the last day of Executive’s employment with the Company.
“Works” means works of authorship, inventions, intellectual property, materials, documents or other work product (including, without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials).
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SECTION 2. Employment and Compensation.
(a) Employment. The Company hereby offers to employ Executive and Executive accepts the Company’s offer of employment to serve in the position of Chief Financial Officer of the Company, and reporting to the CEO. The scope of Executive’s job duties and responsibilities shall include the duties commensurate with the position of the Chief Financial Officer of the Company, to which Executive will devote substantially full time commercial efforts, to include (i) overseeing, on behalf of the Parent Company, the preparation, accuracy, and timely submission of all financial statements, reports, and disclosures required by federal, state, and local regulations, including filings with the Securities and Exchange Commission (SEC) and other regulatory bodies, (ii) developing and implementing financial strategies that align with the Company’s goals, including capital structure management, budgeting, forecasting, financial planning, and risk management, (iii) working with the Parent Company to design and implement new Company financial solutions, (iv) setting and monitoring comprehensive goals for the Company’s internal financial team, (v) overseeing daily financial work of the Company across teams, (vi) working in conjunction with the Company’s executive team members to develop a strategy to meet or exceed revenue targets for the sales team, (vii) being the functional direct report for all internal finance employees of the Company, (viii) leading the overall financial vision and discipline in regards to how the Company delivers profitable work, (ix) ensuring the Parent Company’s compliance with all financial, legal, and regulatory obligations, including Sarbanes-Oxley Act compliance, internal audits, and corporate governance policies, (x) maintaining and sustaining the internal Company team and culture, (xi) providing strategic financial input to the CEO, Board of Directors, and senior leadership team on company direction, mergers, acquisitions, and other key business decisions, (xii) supporting the management of the Parent Company’s capital structure, liquidity, and financial relationships with banks, investors, and other key stakeholders, (xiii) serving as the primary point of contact for investors, analysts, and stakeholders regarding financial performance, forecasts, and strategic direction of the Parent Company, and (xiv) recruiting, developing, and leading a high-performing finance team, ensuring proper succession planning and talent management within the finance department. Executive will also be required to be dedicated to the overall support of the Parent Company initiatives and its growth, as reasonably requested of Executive by the Board of Directors on an ongoing basis. Executive shall report to and take direction from the CEO.
(b) Salary. The Executive will be paid her Annual Base Salary plus the additional bonuses and incentives below. The Executive’s Annual Base Salary will be paid in twenty-four (24) installments, on the 15th and last day of each month, or as otherwise in line with Company policy for all full-time employees.
(c) Bonus. In addition to the Annual Base Salary and Earned Commission compensation set forth in this Section, the Executive will be eligible to receive a bonus in the amount of 100% of Executive’s Annual Base Salary for achieving Budgeted EBITDA in any fiscal year plus an additional 1% for every 1% over Budgeted EBITDA up to a total of 200% of the Executive’s Annual Base Salary, as calculated by the Company in good faith. To be eligible for the bonus, the Executive must be employed at the time the performance period ends for the applicable EBITDA measuring period.
(f) Stock Grant. Executive shall be entitled to receive shares of the common stock (“Stock”) of the Parent Company in the amount of $400,000, with the price per share of common stock of the Parent Company as of the date of this Agreement. This Stock will vest (a) 25% after 90 days, (b) 25% after 1 Year, (c) 25% after 2 Years, and (d) 25% after 3 years following the commencement of Executive’s employment. Any additional Stock grants to Executive shall be at the option of the Company. The Stock will have a price equal to the fair market value of the common stock, as determined by the trailing ten-day volume weighted average price on the date of the entry into this Agreement.
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(g) Business Expenses. The Company shall pay or reimburse Executive for all reasonable expenses incurred or paid by Executive during the Employment Period in the performance of Executive’s duties hereunder, upon presentation of expense statements or vouchers and such other information as the Company may require and in accordance with the generally applicable policies and procedures of the Parent Company; provided, however, any expenditure or series of related expenditures in excess of $1500, or any expenditures in a single month in excess of $3000 shall require the prior written approval of the CEO.
(i) Employee Benefits. The Executive shall be entitled to participate in all employee benefit plans, practices, programs, policies, and arrangements, applicable to other executive officers of the Company, and maintained by the Company, as in effect from time to time (collectively, “Employee Benefit Plans”), including 401(k)/profit sharing plans, to the extent consistent with applicable law and the terms of the applicable Employee Benefit Plans. The Company reserves the right to amend or cancel any Employee Benefit Plans at any time and in its sole discretion, subject to the terms of such Employee Benefit Plan and applicable law.
(j) Vacation. The Executive will be entitled to reasonable paid vacation of not less than four (4) weeks per year, which does not materially interfere with her duties hereunder in accordance with Company’s policies for its executive officers as such policies may exist from time to time.
SECTION 3. Termination Without Cause, Termination for Good Reason, Cessation of Employment on Expiration of Term, and Termination Resulting from Change in Control.
(a) Involuntary Termination without Cause, Voluntary Termination for Good Reason or Cessation of Employment on Expiration of Term. In the event Executive’s employment is terminated during the Term (as defined in Section 7) on account of (i) an involuntary termination by the Company for any reason other than Cause, Death or Disability, or (ii) the Executive voluntarily terminates employment with the Company on account of a resignation for Good Reason or Executive’s employment ceases as a result of the Company’s decision not to renew the Term of this Agreement at the expiration of the Initial Term or any Renewal Term, then Executive shall be entitled to his Annual Base Salary through the date of termination plus the benefits provided in subsection (b) of this Section 3. For the Executive to be able to terminate his employment with the Company on account of Good Reason he must provide notice of the occurrence of the event constituting Good Reason and his desire to terminate his employment with the Company on account of such within ninety (90) days following the initial existence of the condition constituting Good Reason, and the Company will have a period of thirty (30) days following receipt of such notice to cure the condition. If the Company does not cure the event constituting Good Reason within such thirty (30) day period, the Executive’s Termination Date shall be the day immediately following the end of such thirty (30) day period, unless the Company provides for an earlier Termination Date.
(b) Compensation Upon Involuntary Termination Without Cause or Voluntary Termination for Good Reason or Cessation of Employment on Expiration of Term and Not Due to a Change in Control that Results in Termination. In the event a termination or cessation described in subsection (a) of this Section 3 occurs and the Company elects not to enforce the non-competition and non- solicitation provisions of Section 13.2, the Company shall provide that the following be paid to the Executive after his Termination Date:
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(i) Severance Payment. If during the first twelve months of employment, 10% of the Executive’s Annual Base Salary as in effect immediately preceding Executive’s Termination Date, paid in in three (3) equal monthly installments for a period of three (3) months following Executive’s Termination Date, with the first such installment due on the first of the month following such Termination Date. If between twelve and eighteen months after the commencement of employment, 20% of the Executive’s Annual Base Salary as in effect immediately preceding Executive’s Termination Date, paid in in nine (9) equal monthly installments for a period of nine (9) months following Executive’s Termination Date, with the first such installment due on the first of the month following such Termination Date. If after eighteen months after the commencement of employment, 35% of the Executive’s Annual Base Salary as in effect immediately preceding Executive’s Termination Date, paid in in twelve (12) equal monthly installments for a period of twelve (12) months following Executive’s Termination Date, with the first such installment due on the first of the month following such Termination Date. Any payments made or owing pursuant to this Section 3(b) shall be considered Severance Payments.
(ii) Any and all Earned Commissions as of the Termination Date no later than fifteen (15) days after the Termination Date.
(iii) Any and all bonuses that are earned as of the Termination Date no later than fifteen (15) days after the Termination Date or such later date that the Company pays bonuses generally.
(c) Compensation Upon Change in Control that Results in Termination. In the event of a change in control or a sale of all or substantially all of the business of the Company resulting in the termination of Executive, the Company shall provide that the following be paid to the Executive after his Termination Date:
(i) Severance Payment. If during the first twelve months of employment, 10% of the Executive’s Annual Base Salary as in effect immediately preceding Executive’s Termination Date, paid in in twelve (12) equal monthly installments for a period of twelve (12) months following Executive’s Termination Date, with the first such installment due on the first of the month following such Termination Date. If between twelve and eighteen months after the commencement of employment, 20% of the Executive’s Annual Base Salary as in effect immediately preceding Executive’s Termination Date, paid in in twelve (12) equal monthly installments for a period of twelve (12) months following Executive’s Termination Date, with the first such installment due on the first of the month following such Termination Date. If after eighteen months after the commencement of employment, 35% of the Executive’s Annual Base Salary as in effect immediately preceding Executive’s Termination Date, paid in in twelve (12) equal monthly installments for a period of twelve (12) months following Executive’s Termination Date, with the first such installment due on the first of the month following such Termination Date. Any payments made or owing pursuant to this Section 3(b) shall be considered Severance Payments.
(ii) Any and all Earned Commissions as of the Termination Date no later than fifteen (15) days after the Termination Date.
(iii) Any and all bonuses that are earned as of the Termination Date no later than fifteen (15) days after the Termination Date or such later date that the Company pays bonuses generally.
(d) Release. It shall be a condition to Executive’s right to receive any payment to be made by the Company on account of termination of employment that Executive to execute a general release in the Company’s favor, in a form provided by the Company.
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SECTION 4. Termination of Employment on Account of Disability, Death, Cause, or Voluntarily Without Good Reason.
(a) Termination on Account of Disability. Notwithstanding anything in this Agreement to the contrary, if Executive’s employment terminates on account of Disability, resulting in the Executive’s inability to fulfill his duties for the Company with or without reasonable accommodation, Executive shall be entitled to receive his Annual Base Salary up to the date of Disability and for a period of six months minus any disability benefits under any disability program maintained by the Company that covers Executive.
(b) Termination on Account of Death. Notwithstanding anything in this Agreement to the contrary, if Executive’s employment terminates on account of death, Executive’s estate shall be entitled to receive the Annual Base Salary in effect at the time of his death up to the date of Executive’s death plus for a period of six months, minus any death benefits under any death benefit program maintained by the Company that covers Executive.
(c) Termination on Account of Cause. Notwithstanding anything in this Agreement to the contrary, if Executive’s employment is terminated by the Company on account of Cause, Executive shall be paid Annual Base Salary through the date of termination and accrued benefits and shall receive no other compensation or benefits pursuant to this Agreement, including but not limited to bonuses and commissions, whether or not earned prior to the date of termination.
(d) Termination on Account of Voluntary Resignation Without Good Reason. Notwithstanding anything in this Agreement to the contrary, if Executive’s employment terminates on account of a resignation by Executive for no reason or any reason other than on account of Good Reason, Executive shall be paid Annual Base Salary and accrued benefits through the date of termination, and shall receive no other compensation or benefits pursuant to this Agreement, including but not limited to bonuses and commissions, whether or not earned prior to the date of termination. Executive shall give no less than 60 days’ notice of any such resignation.
SECTION 5. Key Man Life & Disability Insurance. At any time during the Term of Employment, the Company shall have the right to insure the life of Executive and the potential disability of Executive for the sole benefit of the Company or any Affiliated Entity, in such amounts, and with such terms, as it may determine. All premiums payable thereon shall be the obligation of the Company. Executive shall have no interest in any such policy but agrees to reasonably cooperate with the Company in taking out such insurance by submitting to physical examinations, supplying all information reasonably required by the insurance company, and executing all necessary documents, provided that no financial obligation or liability is imposed on Executive by any such documents.
SECTION 6. Tax Matters.
(a) Withholding of Taxes. The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as the Company is required to withhold pursuant to any applicable law, regulation or ruling.
(b) Parachute Excise Tax. In the event that any amounts payable under this Agreement or otherwise to Executive would (i) constitute “parachute payments” within the meaning of section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or any comparable successor provisions and (ii) but for this Subsection (b) would be subject to the excise tax imposed by section 4999 of the Code or any comparable successor provisions (the “Excise Tax”), then such amounts payable to Executive hereunder shall be either:
(i) Provided to Executive in full; or
(ii) Provided to Executive to the maximum extent that would result in no portion of such benefits being subject to the Excise Tax;
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whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax and any other applicable taxes, results in the receipt by Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. For the avoidance of doubt, Executive shall not be entitled to any amounts that are reduced due to the application of this Section 6(b) and Company shall not be liable to Executive for any such reduced amounts.”
Unless the Company and Executive otherwise agree in writing, any determination required under this Subsection (b) shall be made in writing in good faith by a nationally recognized accounting firm (the “Accountants”). In the event of a reduction in benefits hereunder, the reduction of the total payments shall apply as follows, unless otherwise agreed in writing and provided such agreement is in compliance with section 409A of the Code: (i) any cash severance payments subject to section 409A of the Code due under this Agreement shall be reduced, with the last such payment due first forfeited and reduced, and sequentially thereafter working from the next last payment, (ii) any cash severance payments not subject to section 409A of the Code due under this Agreement shall be reduced, with the last such payment due first forfeited and reduced, and sequentially thereafter working from the next last payment; (iii) any acceleration of vesting of any equity subject to section 409A of the Code shall remain as originally scheduled to vest, with the tranche that would vest last (without any such acceleration) first remaining as originally scheduled to vest; and (iv) any acceleration of vesting of any equity not subject to section 409A of the Code shall remain as originally scheduled to vest, with the tranche that would vest last (without any such acceleration) first remaining as originally scheduled to vest. For purposes of making the calculations required by this Subsection (b), the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good-faith interpretations concerning the application of the Code and other applicable legal authority. The Company and Executive shall furnish the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Subsection (b). The Company shall bear all costs that the Accountants may reasonably incur in connection with any calculations contemplated by this Subsection (b).
SECTION 7. Term of Agreement; Termination.
(a) This Agreement shall continue in full force and effect until the second year anniversary of the date hereof (the “Initial Term”), and shall automatically renew for additional one (1) year renewal periods (a “Renewal Term”, and collectively with the Initial Term, the “Term”) if Executive is employed by the Company on the last day of the Initial Term and on each Renewal Term; provided, however, that within the ninety (90) to one hundred twenty (120) day period prior to the expiration of the Initial Term or any Renewal Term, at its discretion, the Company may propose amendments to the Agreement as it deems appropriate, though any such amendments are, and will be, ineffective without Executive’s written agreement to them, and any such negotiation between the Company and Executive regarding such amendments shall be conducted bilaterally and in good faith; and provided further, that during the period within sixty (60) to ninety (90) days prior to the expiration of the Initial Term or any Renewal Term, either party can notify the other that it elects to not have the Agreement automatically renew, in which case the Agreement shall expire at the end of the Initial Term, or the Renewal Term, as the case may be, and such expiration shall not be deemed a termination of employment under Section 3 or Section 4 of this Agreement.
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(b) The Executive may terminate this Agreement for “Good Reason”, as provided for in Section 3(a)(ii), subject to the rights of the Company set forth therein. The notice of termination shall set forth the last day of the Executive’s employment with the Company, the date of the termination of this Agreement, and the underlying facts and circumstances regarding such termination. The Executive may terminate this Agreement for any other reason or no reason, on sixty days written notice to the Company.
(c) During the Term, the Company may terminate this agreement (i) for Cause at any time by providing notice to the Executive setting forth the last day of the Executive's employment with the Company, the date of the termination of this Agreement and the underlying facts and circumstances regarding the termination for Cause (the "For Cause Termination Notice"), subject to any cure period provided for in the definition of Cause in Section 1 hereof (ii) for any other reason or no reason, upon 30 days written notice to the Executive, subject to the Severance Payments required under Section 3.
SECTION 8. Successors and Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in at least the same manner and at least to the same extent the Company would be required to perform if no such succession had taken place. This Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor will thereafter be deemed the “Company” for the purposes of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees. This Agreement, the stock option contract and associated Plan referred to in Section 2(f), and any Company handbook and policies delivered to Executive constitute the entire agreement between the parties and supersede any prior oral or written understandings. In the event that any term of this Agreement conflicts with any provision of any Company handbook or policy, this Agreement shall govern.
(c) This Agreement is personal in nature and neither of the parties hereto will, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 8(a) and 8(b). Without limiting the generality or effect of the foregoing, the Executive’s right to receive payments hereunder will not be assignable, transferable or delegable, whether by pledge, creation of a security interest, or otherwise, other than by a transfer by the Executive’s will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this Section 8(c), the Company will have no liability to pay any amount so attempted to be assigned, transferred or delegated.
SECTION 9. Notices. For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder will be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or five (5) business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or three business days after having been sent by a nationally recognized overnight courier service such as FedEx or UPS, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive office and to the Executive at his principal residence, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt.
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SECTION 10. Section 409A of the Code.
(a) Interpretation. Notwithstanding the other provisions hereof, this Agreement is intended to comply with the requirements of section 409A of the Code, to the extent applicable, and this Agreement shall be interpreted to avoid any penalty sanctions under section 409A of the Code. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to comply with section 409A of the Code and, if necessary, any such provision shall be deemed amended to comply with section 409A of the Code and regulations thereunder. If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. Any amount payable under this Agreement that constitutes deferred compensation subject to section 409A of the Code shall be paid at the time provided under this Agreement or such other time as permitted under section 409A of the Code. No interest will be payable with respect to any amount paid within a time period permitted by, or delayed because of, section 409A of the Code. All payments to be made upon a termination of employment under this Agreement that are deferred compensation may only be made upon a “separation from service” under section 409A of the Code. For purposes of section 409A of the Code, each payment made under this Agreement shall be treated as a separate payment. In no event may Executive, directly or indirectly, designate the calendar year of payment.
(b) Payment Delay. To the maximum extent permitted under section 409A of the Code, the severance benefits payable under this Agreement are intended to comply with the “short-term deferral exception” under Treas. Reg. §1.409A-1(b)(4), and any remaining amount is intended to comply with the “separation pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii); provided, however, any amount payable to Executive during the six (6) month period following Executive’s Termination Date that does not qualify within either of the foregoing exceptions and constitutes deferred compensation subject to the requirements of section 409A of the Code, then such amount shall hereinafter be referred to as the “Excess Amount.” If at the time of Executive’s separation from service, the Company’s (or any entity required to be aggregated with the Company under section 409A of the Code) stock is publicly-traded on an established securities market or otherwise and Executive is a “specified employee” (as defined in section 409A of the Code and determined in the sole discretion of the Company (or any successor thereto) in accordance with the Company’s (or any successor thereto) “specified employee” determination policy), then the Company shall postpone the commencement of the payment of the portion of the Excess Amount that is payable within the six (6) month period following Executive’s Termination Date with the Company (or any successor thereto) for six (6) months following Executive’s Termination Date with the Company (or any successor thereto). The delayed Excess Amount shall be paid in a lump sum to Executive within ten (10) days following the date that is six (6) months following Executive’s Termination Date with the Company (or any successor thereto). If Executive dies during such six (6) month period and prior to the payment of the portion of the Excess Amount that is required to be delayed on account of section 409A of the Code, such Excess Amount shall be paid to the personal representative of Executive’s estate within sixty (60) days after Executive’s death.
(c) Reimbursements. All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during Executive’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit. Any tax gross up payments to be made hereunder shall be made not later than the end of Executive’s taxable year next following Executive’s taxable year in which the related taxes are remitted to the taxing authority.
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SECTION 11. Governing Law. The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Florida, without giving effect to the principles of conflict of laws of such State. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in Los Angeles, CA before a single arbitrator. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. Judgment on the Award may be entered in any court having jurisdiction. This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction.
SECTION 12. Validity. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it enforceable, valid or legal.
SECTION 13. Restrictive Covenants.
13.1 Confidential Information. Executive recognizes and acknowledges that:
(a) The Company and the Affiliated Entities are engaged in advertising & marketing across all verticals and areas of service, including influencer marketing, experiential marketing, digital marketing and advertising, branding and design, video & content production, and public relations (the “Company Services”);
(b) Company Services have involved, and continue to involve, the use of skilled experts and the expenditure of substantial amounts of time and money. As a result of such investments of money, skill, and time, the Company and Affiliated Entities have developed certain confidential information that is applicable to the Company’s and/or Affiliated Entities’ business and give the Company and Affiliated Entities significant advantages over its competitors.
(c) As an Executive of the Company, Executive will have frequent, direct and indirect, contact with customers and will be presented with and have access to, and participate in the development of, Confidential Information. “Confidential Information” shall mean any and all technical and non-technical information including, without limitation, patent, copyright, trade secret and proprietary information, techniques, designs, sketches, drawings, models, methods, systems, prototypes, inventions, know-how, processes, formulae, apparatus, equipment, and other materials related to the current, future, and proposed products, services of the Company and/or Affiliated Entities and includes, without limitation, information concerning research, experimental work, development, design details and specifications, operational data, engineering, financial information, procurement requirements, contracts, costs, expenses, purchasing, manufacturing, customer lists, business forecasts, projects, proposals, and sales and marketing plans. “Confidential Information” also includes proprietary or confidential information of any third-party who may disclose such information to the Company or any Affiliated Entity in the course of such third-party’s business and pursuant to agreements with the Company or Affiliated Entity to maintain the confidentiality of that information.
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(d) Confidential Information does not, however, include information to the extent that Executive can establish that it:
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| (i) | was publicly known and made generally available in the public domain prior to the time of disclosure to Executive by the Company or Affiliated Entity; |
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| (ii) | becomes publicly known and made generally available in the public domain after disclosure to Executive by the Company or Affiliated Entity through no action or inaction of Executive; |
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| (iii) | is already in the possession of Executive, without confidentiality restrictions, at the time of disclosure by the Company or Affiliated Entity as shown by Executive’s files and records immediately prior to the time of disclosure; |
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| (iv) | is obtained by Executive from a third party without a breach of a party’s obligations of confidentiality to the Company or Affiliated Entity; or |
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| (v) | is required by law to be disclosed by Executive, provided that Executive gives the Company prompt written notice of such requirement prior to such disclosure so that the Company or Affiliated Entity may reasonably have time to seek a protective order or other appropriate relief. |
Notwithstanding the exceptions set forth in this Section 13.1(d), abstracts and any other professional documents under consideration or review for publication in trade or other journals or publications or at conferences (“Preprints”) which contain Confidential Information shall not be deemed to be in the public domain until actual publication.
13.2 Nondisclosure, Noncompetition and Nonsolicitation. For the reasons recited above, Executive covenants and agrees that:
(a) Executive will not, except as otherwise expressly directed by the Company:
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| (i) | during the Term, use or disclose, or permit any unauthorized person access to, any Confidential Information of the Company or Affiliated Entity; or |
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| (ii) | after the termination of this Agreement or Executive’s employment, use or disclose, or permit any unauthorized person access to, any Confidential Information belonging to the Company or Affiliated Entity, of which Executive acquired knowledge during and on account of Executive’s relationship with the Company or Affiliated Entity. |
(b) Upon request of the Company upon the termination of employment with the Company, Executive will deliver to the Company all data, memoranda, notes, records, drawings, manuals, computer disks, or other documents, and all copies thereof, including copies on tapes, computerized or digitized copies or copies on computer hard drives, that contains or embodies Confidential Information that is in the possession of Executive, whether made or compiled by Executive or furnished to Executive by the Company or any Affiliated Entity.
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(c) Executive acknowledges that he performs services of a unique nature for the Company that are irreplaceable, and that his performance of such services to a competing business will result in irreparable harm to the Company and Affiliated Entities. Accordingly, during the Term, and at the Company’s option, for the two (2) year period after termination or expiration of employment, for such period the Company may elect up to the 2 year maximum, the Executive shall not, directly or indirectly, own, manage, operate, control, be employed by (whether as an employee, consultant, independent contractor or otherwise, and whether or not for compensation) or render services to any person, firm, corporation or other entity, in whatever form, competitive to the Company Services in any locale of any country in which the Company or any Affiliated Entity conducts business (the “Non-Compete Covenant”). As part of this Non-Compete Covenant, Executive may not solicit any customers of the Company or any Affiliated Entity to do business with Executive or any concern he is employed by or associated with to the extent of providing services similar to or competitive with the Company Services, or to reduce the amount of business they do with the Company or Affiliated Entity. The Company agrees that for any period after the Term during which it chooses to enforce the Non-Compete Covenant, it shall (i) pay Executive monthly an amount equal to (A) the total Annual Base Salary Executive was paid in the twelve (12) months prior to the termination or expiration of this Agreement, divided by (B) twelve (12), and then multiplied by the number of months the Company elects to enforce this Non-Compete Covenant after the Term and (ii) continue to provide Executive with health benefits. This Section shall not prevent Executive from (i) owning not more than one percent (1%) of the total shares of all classes of stock outstanding of any publicly held entity engaged in such business, (ii) rendering services to charitable organizations, as such term is defined in Section 501(c) of the Internal Revenue Code of 1986, as amended; or (iii) performing such other industry-related activities that do not interfere with Executive’s ability to perform his duties hereunder. Nothing contained herein shall prevent Executive from engaging in any activity that is not competitive with the Company Services during or after the Term hereof. Furthermore, in the event that Executive materially breaches any of his obligations under Section 13.2 (c), Executive shall not be entitled to any payment under this Section 13.2(c) or any Severance Payment from and after such non-compliance. For avoidance of doubt, under no circumstance shall the Executive be entitled to both Severance Payments and payments under this Section 13.2(c) for the same time period.
(d) During the Term and for a period of two (2) years after termination or expiration of this Agreement, Executive will not recruit or hire, or attempt to recruit or hire, directly or by assisting others, any then employed employee of the Company or any Affiliated Entity.
(e) During the Term after the termination or expiration of this Agreement, whether such termination or expiration is at the instance of the Company or Executive, Executive will not directly or indirectly, orally or in writing, disparage the Company or any Affiliated Entity, its products or executives in any way.
13.3 Intellectual Property.
(a) If Executive, on his own or in collaboration with others, creates, invents, designs, develops, contributes to or improves any Works at any time during Executive’s employment by the Company, during the Initial Term, or any Renewal Term, and that are within Executive’s express duties under this Agreement, or relate to Company Services, or for the Company’s or any Affiliated Entity’s conduct of its business or with the use of any of the Company’s or any Affiliated Entity’s resources (“Company Works”), then Executive shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to the Company or its designated Affiliated Entity to the extent ownership of any such rights does not vest originally in the Company or Affiliated Entity.
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(b) Executive acknowledges that documents or materials which are made, conceived or modified jointly or solely by Executive and which result from his duties hereunder or with the use of Company or Affiliated Entity property, shall be considered “Works for Hire” under the copyright laws of the United States; and moreover, that all right, title and interest therein, including all rights of copyright, patent or otherwise, and any droit moral or similar rights, in the United States and in all foreign countries, in any form or medium and in all fields of use now known or hereafter existing, shall belong exclusively to the Company or Affiliated Entity and are hereby irrevocably assigned by Executive to the Company or Affiliated entity it designates. All such Company Works and/or Works for Hire shall be the exclusive property of Company or designated Affiliated Entity or its or their respective assignee.
(c) Executive agrees to keep and maintain adequate and current written records of all Company Works. The records will be available to and remain the sole property and intellectual property of the Company or its designated Affiliated Entity at all times.
(d) Executive shall take all requested actions and execute all requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company or Affiliated Entity in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s or Affiliated Entity’s rights in the Company Works. If the Company is unable for any reason to secure Executive’s signature on any document for this purpose, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney in fact, to act for and on Executive’s behalf and stead to execute any documents and to do all other lawfully permitted acts in connection with the foregoing.
(e) Notwithstanding any other provision herein, the Company shall not be entitled to any interest in any intellectual property that Executive develops outside of Executive’s express duties hereunder without the use of the Company’s resources or as part of any consulting jobs Executive performs for third parties that do not relate to the Company’s or any Affiliated Entity’s business or Company Services and do not violate the Executive’s commitment to devote substantially full time commercial efforts to the Company.
(f) The provisions of this Section 13.3 shall survive the termination or expiration of Executive’s employment for any reason.
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| · | Notice Concerning Immunity from Liability for Confidential Disclosure of a Trade Secret to the Government or in a Court Filing. |
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| · | The Defend Trade Secrets Act of 2016 provides that: (1) An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret under the Act that: (A) is made – (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. (2) An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual: (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order. |
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SECTION 14. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. References to Sections are to references to Sections of this Agreement. Any reference in this Agreement to a provision of a statute, rule or regulation will also include any successor provision thereto.
SECTION 15. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same agreement.
SECTION 16. Survival. Upon the expiration or other termination of this Agreement, the respective rights and obligations of the parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the parties under this Agreement.
SECTION 17. No Duplication of Benefits. The benefits provided to Executive in this Agreement shall offset, to avoid duplication, substantially similar benefits (if any) provided to Executive pursuant to another Company policy, plan or agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date first above written.
| ONAR, LLC | |||
| By: | /s/ Claude Zdanow | ||
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| Name: | Claude Zdanow | |
| Title: | CEO | ||
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| PATRICIA KAELIN |
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| By: | /s/ Patricia Kaelin |
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| 11 / 15 / 2024 |
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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of September 27, 2024, is entered into by and between ONAR, LLC. (the “Company”), and Claude Zdanow (“Executive”) (collectively referred to as the “Parties” or individually referred to as a “Party”).
RECITALS
WHEREAS, the Executive has been serving as an operating member of the Company with compensation in the form of monthly cash payments prior to July 25, 2024 (the “Prior Compensation”);
WHEREAS, the Prior Compensation payments were equal to $30,000 per month which the Executive agreed to defer from the date of inception June 1, 2021 until December 31, 2023, at which point the Executive opted to stop deferring and begin receiving the Prior Compensation;
WHEREAS, as of July 25, 2024, due to the change in ownership of the Company, the Executive transitioned from the role of operating partner to a formal employment relationship under this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive agree to memorialize the terms of the Executive’s employment effective from July 25, 2024, under the following terms and conditions.
1. Term. The term of Executive’s employment with the Company under this Agreement shall commence on August 1, 2024 (the “Effective Date”) and shall continue until terminated in accordance with the provisions hereof (such period of employment, the “Term”).
2. Position and Duties; Exclusivity. During the Term, Executive shall serve as of the Chief Executive Officer of the Company and shall serve in such other or additional positions as the Company may reasonably request from time to time. Executive shall report to the Board of Directors of the Company (the “Board”) and shall perform such duties as may be prescribed by the Board and otherwise as are usual and customary for Executive’s position. For clarity, (i) all determinations, interpretations and actions taken under or with respect to this Agreement and/or Executive’s employment with the Company shall be taken solely by the Board, and (ii) no action purported to be taken hereunder on behalf of the Company or the Board by Executive (or any other executive(s) of the Company) without the consent of the Board shall be binding on the Company or the Board, as applicable. During the Term, Executive shall devote most of the Executive’s business time and attention to the performance of Executive’s duties hereunder and the business and affairs of the Company and its subsidiaries (the “Company Group”), as directed by the Board, on a basis consistent with the level of services that are usual and customary for Executive’s position. Executive agrees to observe and comply with the rules and policies of the Company, as in effect from time to time, including without limitation any rules and policies relating to Executive’s obligations to the Company and its members upon a termination of employment.
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3. Compensation and Benefits; Expenses; Perquisites.
(a) Base Salary. During the Term from the Effective Date until December 31, 2024, the Company shall pay to Executive an annualized base salary (the “Base Salary”) of Three Hundred Sixty Thousand Dollars ($360,000), pro-rated for any partial year of employment. During the Term from January 1, 2025, until December 31, 2025, the Company shall pay to Executive a Base Salary of Four Hundred Eighty Thousand Dollars ($480,000), pro-rated for any partial year of employment. Additionally, for every million dollars ($1,000,000) in EBITDA that the Company earns in a given year above two million dollars ($2,000,000), the Base Salary in the following year will be increased by one hundred twenty thousand dollars ($120,000) and shall continue to increase accordingly for every additional one million dollars in EBITDA. For example, if the EBITDA of the Company in 2025 is four million dollars ($4,000,000), the Executives Base Salary would be equal to four hundred eighty thousand dollars ($480,000) plus two hundred forty thousand dollars ($240,000) for a total Base Salary of seven hundred twenty thousand dollars ($720,000). The Base Salary shall be paid in accordance with the Company’s customary payroll practices, as in effect from time to time, but no less often than monthly.
(b) Annual Cash Bonus. For each fiscal year of the Company ending during the Term, commencing with fiscal year 2024, Executive shall be eligible to earn a cash performance bonus (the “Annual Cash Bonus”), which the Executive can elect to take in stock of Onar Holding Corporation (the “Parent Company”) based on the attainment of Company, individual and/or other performance objectives (the “Bonus Objectives”) as determined by the Board in its sole discretion. Bonus Objectives shall be confirmed by the Board in writing prior to the commencement of each fiscal year. Executive’s target Annual Cash Bonus shall equal one hundred percent (100%) of Executive’s Base Salary during the Term for each fiscal year (the “Target Cash Bonus”). The actual amount of any Annual Cash Bonus payable to Executive shall be determined by reference to the attainment of the Bonus Objectives, as determined by the Board in its sole discretion, and may be less than, or greater than the Target Cash Bonus (and may equal zero). Any Annual Cash Bonus shall be paid to Executive on the date on which annual bonuses are paid generally by the Company to its senior executives with respect to the year in which the Annual Cash Bonus was earned, subject to and conditioned upon Executive’s continued employment with the Company through the applicable payment date.
(c) Initial Acquisition Bonus. The Executive will be entitled to earn a one-time one- million-dollar ($1,000,000) bonus (the “Initial Acquisition Bonus”) payable in cash or stock at the Executives election, or deferred if the Company does not have sufficient cash to make the bonus payment, upon the Company’s successful acquisition or acquisitions of a company or companies that increase the overall Company’s EBITDA by at least one million dollars ($1,000,000). The Initial Acquisition Bonus shall be considered earned and payable upon the signing of definitive documents to acquire the majority of stock or assets of a company or companies whose trailing twelve-month EBITDA is equal to at least one million dollars ($1,000,000) or more.
(d) Stock Option Grant. Executive shall be entitled to receive stock options to purchase 300% of Executive’s Base Salary in the Parent Company as of the date of this Agreement under the Company Equity Incentive Plan (the “Plan”), which is currently being established by the Parent Company. These stock options will vest (a) 12.5% after 6 months, (b) 37.5% after 1 Year, (c) 25% after 2 Years, and (d) 25% after 3 years following the commencement of Executive’s employment. Any additional option grants to Executive shall be at the option of the Company. The options will have an exercise price equal to the fair market value of a share of common stock, as determined by the trailing 5-day volume weighted average price (“VWAP”) as of the date of grant, which shall be the date the board grants the options. Executive will be required to sign a stock option agreement in order to receive this grant, which will contain various terms and conditions and incorporate and be subject to the Plan.
(e) Benefits. During the Term, Executive will be eligible to participate in the health, welfare and retirement benefit plans, policies and programs (including, as applicable, medical, dental, disability, life and accidental death insurance plans and programs) maintained by the Company for the benefit of its senior US-based executive officers as may be in effect from time to time. Nothing contained in this Section 3 (e) shall create or be deemed to create any obligation on the part of the Company to adopt or maintain any health, welfare, retirement, fringe or other benefit plan(s) or program(s) at any time.
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(f) Vacation. During the Term, Executive shall be entitled to vacation and other paid- time-off (pro-rated for any partial year of service) in accordance with applicable law and to the extent provided under the policies, practices and procedures generally applicable to senior US-based executives of the Company, as in effect from time to time.
(g) Expenses. During the Term, Executive shall be entitled to receive prompt reimbursement for all reasonable and necessary business expenses incurred by Executive in the performance of Executive’s services hereunder, to the extent incurred and substantiated, in each case, in accordance with the policies, practices and procedures generally applicable to senior executives of the Company, as in effect from time to time.
(h) Indemnification. The Company agrees to indemnify Executive for all costs, damages, losses and expenses reasonably and actually incurred by Executive in connection with any and all third-party claims or proceedings arising from, as a result of, or in connection with Executive’s employment by the Company hereunder to the greatest extent permitted under the Company’s organizational documents and applicable law. This right to indemnification shall not apply to, and the Company will have no obligation to indemnify Executive with respect to, any action, suit or proceeding brought by or on behalf of Executive against the Company, or by the Company against Executive.
4. Termination of Employment. Capitalized terms used in this Section 4 and not previously defined herein shall have the meanings set forth in Section 4(h) below.
(a) At-Will Employment. Executive’s employment under this agreement is “at-will” and is not for any specified period of time. The at-will nature of this employment relationship cannot be changed except in a writing signed by Executive and an authorized officer of the Company (with the approval of the Board). Subject to the terms and conditions herein, Executive’s employment may be terminated by the Company for any reason other than Cause, or by Executive for any reason, by giving three (3) months written notice to the other Party. If the Executive gives such notice, the Company in its sole discretion may waive all or a portion of the notice period. In such a circumstance, the Company will place the Executive on a paid terminal leave for the entirety of the accelerated notice period. If the Company gives such notice, the Company may in its sole discretion place Executive on a paid terminal leave for all or a portion of such notice period. The Company may terminate Executive’s employment for Cause without prior notice to Executive.
(b) Accrued Obligations. If Executive’s employment with the Company terminates for any reason, the Company shall pay to Executive (or Executive’s estate, as applicable) in a single lump sum payment, within thirty (30) days after the Date of Termination, or such earlier date as may be required by applicable law, the aggregate amount of: (i) any earned but unpaid Base Salary; (ii) any earned but unused vacation; and (iii) any unreimbursed business expenses incurred prior to the Date of Termination that are reimbursable in accordance with Section 3(f) above (together, the “Accrued Obligations”). Vested employee benefits under any employee benefit plans (if any) or otherwise shall be governed by the terms and conditions of the applicable plan and applicable law.
(c) Severance. If, during the Term, Executive is terminated by the Company without Cause and not due to Executive’s Disability, then, upon Executive’s Separation from Service, subject to Executive’s compliance with Section 4(d) and Section 4(g) below and Executive’s continued compliance with all applicable requirements of Section 5 below (the “Restrictions”), in addition to the Accrued Obligations, the Company shall pay to Executive an amount in cash equal to twelve (12) months of Executive’s Base Salary, payable in substantially equal installments during the period commencing on such Date of Termination and ending on the twelfth (12th)-month anniversary thereof in accordance with the Company’s customary payroll practices (the “Severance”). In addition, the Company will continue to provide medical insurance to Executive (at the same standard as prior to termination) for the period Executive is eligible for Severance payments. This insurance provision will cease early, should Executive begin to receive medical insurance cover by a third-party employer. In the event the Company is unable to provide the medical insurance directly, then the Company will reimburse the Executive, on a monthly basis, up to an amount equivalent to the regular insurance premium paid before termination.
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(d) Release. Notwithstanding the foregoing, (i) it shall be a condition to Executive’s right to receive any portion of the Severance described in Section 4(c) above that Executive execute and deliver to the Company an effective release of claims in a form prescribed by the Company (the “Release”) within thirty (30) days (or, to the extent required by applicable law or regulation, sixty (60) days) following the Date of Termination and that Executive not revoke such Release during any applicable revocation period; (ii) if the aggregate period during which Executive is entitled to consider and/or revoke the Release spans two (2) calendar years, no Severance shall be paid or provided prior to the beginning of the second (2nd) such calendar year (and any payments otherwise payable prior thereto (if any) shall instead be paid on the first regularly scheduled Company payroll date occurring in the latter such calendar year); and (iii) upon any breach by Executive of any applicable Restrictions on or following the Date of Termination, any unpaid portion of the Severance (as applicable) shall cease to be payable and shall be forfeited by Executive upon such breach. In the case of such breach of Restriction, the Company shall provide notice indicating in reasonable detail the events or circumstances that it believes constitute a breach and, if such breach or failure is susceptible to cure, as determined by the Company in good faith, provide a period of thirty (30) days to cure such breach or failure; provided that, Executive shall only be entitled to one potential cure period for similar violations.
(e) Other Terminations. If Executive’s employment is terminated for any reason other than by the Company without Cause including, without limitation, due to a termination by the Company for Cause or due to Executive’s Disability, a resignation by Executive for any reason, or due to Executive’s death), the Company will pay Executive only the Accrued Obligations in accordance with Section 4(b) above.
(f) Termination of Offices and Directorships; Full Settlement. Upon termination of Executive’s employment for any reason, unless otherwise specified in a written agreement between Executive and the Company, Executive shall be deemed to have resigned from all offices, directorships and other employment positions then held with the Company or other member of the Company Group and shall take all actions reasonably requested by the Company to effectuate the foregoing. Except as expressly provided in this Agreement, the Company shall have no further obligations, and Executive shall have no further rights or entitlements, in connection with or following Executive’s termination of employment.
(g) Return of Property. Upon termination of Executive’s employment with the Company for any reason (or upon any earlier request by the Board), Executive shall return to the Company (i) all keys, files, records (and copies thereof), equipment (including, but not limited to, computer hardware, software and printers, wireless handheld devices, cellular phones and laptops), access or credit cards, Company identification, and any other Company-owned property in Executive’s possession or control; and (ii) all documents and copies, including hard and electronic copies, of documents in Executive’s possession relating to any Confidential Information (as defined below) including without limitation, internal and external business forms, manuals, correspondence, notes and computer programs, and Executive shall not make or retain any copy or extract of any of the foregoing. For clarity, Executive shall be entitled to keep a record of contact information for Executive’s business contacts.
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(h) Certain Definitions.
(i) “Cause” shall mean Executive’s: (A) willful failure to substantially perform his lawful job duties (other than by reason of incapacity) or comply with the lawful directives of the Company; (B) dishonesty, illegal conduct, or gross misconduct that in any case could reasonably be expected to be harmful to the business or reputation of the Company; (C) indictment of any felony or any crime involving dishonesty, fraud, theft or moral turpitude; (D) material violation of any of the Company’s employment policies, including Executive’s unauthorized disclosure of any confidential or proprietary information, or other material violation; or (E) material breach of the employment agreement with the Company or any other agreement Executive enters into with the Company or its affiliates. In the case of clauses (A), (D) or (E) above, the Company shall provide notice indicating in reasonable detail the events or circumstances that it believes constitute Cause and, if such breach or failure is susceptible to cure, as determined by the Company in good faith, provide a period of thirty (30) days to cure such breach or failure; provided that, Executive shall only be entitled to one potential cure period for similar violations.
(ii) “Disability” shall mean that Executive is: (A) unable to engage in the essential duties of his or her position by reason of any medically determinable physical or mental impairment, as determined by a physician selected by the Company or its insurer, for a continuous period of not less than one-hundred twenty (120) consecutive days or one-hundred eighty (180) days, whether or not consecutive, during any three hundred sixty five (365) day period; (B) is receiving benefits under the Company’s long-term disability insurance plan, or (C) has been determined to be disabled by the Social Security Administration.
(iii) “Date of Termination” shall mean the date of Executive’s Separation from Service from the Company.
(iv) “EBITDA” means the net income for Onar Holding Corporation in each given year, but adding back interest, taxes, depreciation, and amortization, as determined by the Company and its accountants.
(v) “Parent Company” means Onar Holding Corporation a Nevada C Corporation, which is the sole shareholder of the Company.
(vi) “Separation from Service” shall mean Executive’s “separation from service” from the Company within the meaning of Section 409A of the Code.
5. Executive Covenants. To protect the trade secrets and Confidential Information of the Company Group and its customers and clients that have been and will be entrusted to Executive, the business goodwill of the Company Group that will be developed in and through Executive and the business opportunities that will be disclosed or entrusted to Executive by the Company Group, and as an additional incentive for the Company to enter into this Agreement, pay the compensation hereunder and issue (or cause the issuance of) the Award, Executive agrees as follows:
(a) Nondisclosure of Confidential Information.
(i) Executive acknowledges that it is the policy of the Company to maintain as secret and confidential (A) all valuable and unique information; (B) other information heretofore or hereafter acquired by the Company Group and deemed by it to be confidential; and (C) information developed or used by the Company Group relating to the Business, operations, employees and/or customers of the Company Group including, but not limited to, any employee information. All such information described in the foregoing clauses (A), (B) and (C) (other than information which (i) is known or readily ascertainable to the public or becomes known to the public through no fault of Executive, (ii) arises from Executive’s general training, knowledge, skill or experience, or (iii) Executive otherwise has a right to disclose as legally protectable conduct) is hereinafter referred to as “Confidential Information”). The Parties recognize that the services to be performed by Executive pursuant to this Agreement are special and unique and that by reason of Executive’s employment by the Company, Executive may acquire Confidential Information. Executive recognizes that all such Confidential Information is the property of the Company Group. Accordingly, Executive shall not at any time during or after the Term, except in the proper performance of Executive’s duties under this Agreement or as otherwise permitted by applicable law, directly or indirectly, without the prior written consent of the Board, disclose to any Person other than the Company, whether or not such Person is a competitor of the Company, and shall use Executive’s best efforts to prevent the publication or disclosure of, any Confidential Information obtained by, or which has come to the knowledge of, Executive prior or subsequent to the date hereof.
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(ii) Notwithstanding the foregoing or anything herein to the contrary, nothing contained herein shall prohibit Executive from (A) filing a charge with, reporting possible violations of federal law or regulation to, participating in any investigation by, or cooperating with any governmental agency or entity or making other disclosures that are protected under the whistleblower provisions of applicable law or regulation; and/or (B) communicating directly with, cooperating with, or providing information (including trade secrets) in confidence to, any federal, state or local government regulator (including, but not limited to, the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission or the U.S. Department of Justice) for the purpose of reporting or investigating a suspected violation of law, or from providing such information to Executive’s attorney or in a sealed complaint or other document filed in a lawsuit or other governmental proceeding. Pursuant to 18 USC Section 1833(b), Executive will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (B) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(b) Non-Solicitation of Employees. During the Term and for one (1) year thereafter, Executive shall not, in any manner, (whether on Executive’s own account, or as an employee, director, consultant, contractor, agent, partner, manager, joint venturer, owner, operator or officer of any other Person, or in any other capacity) either directly or indirectly:
(i) solicit the employment of any Person who (A) at any time during the period the six (6) months prior to and including the Date of Termination or (B) at the time of such solicitation, in any case, is or was employed by the Company Group; or
(ii) solicit, canvass, induce or encourage any employee or consultant of the Company Group to leave the employment or service of, or cease providing services to, the Company Group.
Nothing contained in this Section 5(c) shall restrict Executive from conducting any general advertisement or solicitation (or any hiring pursuant to such advertisement or solicitation) for employees that is not targeted at any employee of the Company Group, including, without limitation, through the use of employment agencies.
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(c) Intellectual Property Rights. Executive acknowledges and agrees that all inventions, technology, processes, innovations, ideas, improvements, developments, methods, designs, analyses, trademarks, service marks, and other indicia of origin, writings, audiovisual works, concepts, drawings, reports and all similar, related, or derivative information or works (whether or not patentable or subject to copyright), including but not limited to all patents, copyrights, copyright registrations, trademarks, and trademark registrations in and to any of the foregoing, along with the right to practice, employ, exploit, use, develop, reproduce, copy, distribute copies, publish, license, or create works derivative of any of the foregoing, and the right to choose not to do or permit any of the aforementioned actions (collectively, the “Inventions”), which relate at the time of conception or reduction to practice to the Business, research and development or existing or future products or services and which are conceived, developed or made by Executive while employed by the Company (collectively, the “Work Product”) belong to the Company. All Work Product created by Executive while employed by the Company will be considered “work made for hire,” and as such, the Company is the sole owner of all rights, title, and interests therein. Executive hereby agrees that all rights to any new Work Product and all rights to any existing Work Product, including but not limited to all of Executive’s rights to any copyrights or copyright registrations related thereto, are hereby conveyed, assigned and transferred to the Company pursuant to this Agreement. Executive will promptly disclose and deliver such Work Product to the Company and, at the Company’s expense, perform all actions reasonably requested by the Company (whether during or after the Term) to establish, confirm and protect such ownership (including, without limitation, the execution of assignments, copyright registrations, consents, licenses, powers of attorney and other instruments). Work Product will not include Inventions developed entirely on Executive’s own time without using any equipment, supplies, facilities, or trade secret information of the Company Group; provided, however, Work Product will include, without exception, any Invention that either (i) relates, at the time of conception or reduction to practice of such Invention, to the Business, or actual or demonstrably anticipated research or development of the Company Group or (ii) results from any service or work performed by Executive to or for the benefit of the Company Group. Executive further acknowledges and agrees that if Executive uses any other Inventions in which Executive has an interest and that are not Work Product (collectively, the “Excluded Inventions”) in the course of Executive’s employment for the Company or incorporates any Excluded Inventions in any Work Product, technology, product, or service of the Company, Executive hereby grants the Company a non-exclusive, royalty-free, perpetual and irrevocable, worldwide right to use and sublicense the use of Excluded Technology for the purpose of developing, marketing, selling and supporting the Work Product and any other Company technology, products and services, either directly or through multiple tiers of distribution, but not for the purpose of selling or marketing Excluded Technology separately from the Work Product or other Company technology, products or services.
(d) Continuing Operation; Survival. If the Restrictions set forth in this Section 5 are determined by any court of competent jurisdiction to be unenforceable by reason of extending for too great of a period of time or over too great a Geographic Area, or by reason of being too extensive in any other respect, the applicable covenant shall be interpreted to provide for the longest period of time, over the greatest Geographic Area and/or the broadest scope of activities and to otherwise have the broadest application, as shall be enforceable by applicable law. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, which shall continue in full force and effect. Without limiting the foregoing, the Restrictions contained herein shall be construed as separate covenants, covering their respective subject matters, with respect to each of the separate cities, counties and states of the United States, and each other country, and political subdivision thereof, in which the Business is being conducted. Neither the termination of Executive’s employment nor the termination of the Term or this Agreement, in any case, will have any effect on the continuing operation of this Section 5, and this Section 5 shall continue to apply in accordance with its terms during and after Executive’s employment with the Company, whether or not any other provisions of this Agreement remain in effect at such time.
(e) Remedies. Executive acknowledges and understands that this Section 5 and the other provisions of this Agreement are of a special and unique nature. In the event of a breach or threatened breach by Executive of the provisions of this Agreement, the Company shall be entitled to an injunction restraining Executive from such breach without the need to post bond therefor. Nothing contained in this Section 5 shall be construed as prohibiting the Company from pursuing, or limiting the Company’s ability to pursue, any other remedies available for any breach or threatened breach of this Agreement by Executive. The provisions of Section 6 below relating to arbitration of disputes shall not be applicable to the Company to the extent it seeks a temporary or permanent injunction or other equitable relief in any court to restrain Executive from violating the covenants set forth in this Section 5.
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(f) Third-Party Beneficiaries. The Parties acknowledge and agree that the Company and each other member of the Company Group that is not a signatory hereto is an intended third-party beneficiary of this Agreement and the Restrictions contained herein and shall be entitled to enforce the Company’s rights hereunder as if such party was a signatory hereto.
6. Arbitration.
(a) Any controversy or dispute that establishes a legal or equitable cause of action (“Arbitration Claim”), between any two or more Persons Subject to Arbitration (as defined below), including without limitation, any controversy or dispute, whether based on contract, common law, or federal, state or local statute or regulation, arising out of, or relating to Executive’s employment or the termination thereof, shall be submitted to final and binding arbitration as the sole and exclusive remedy for such controversy or dispute. Notwithstanding the foregoing, this Agreement shall not require any Person Subject to Arbitration to arbitrate pursuant to this Agreement any claims: (i) under a Company benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended; (ii) any Arbitration Claim as to which applicable law not preempted by the Federal Arbitration Act prohibits resolution by binding arbitration hereof; or (iii) any controversy or dispute brought by the Company pursuant to Section 6 hereof. Either Party may seek provisional non-monetary remedies in a court of competent jurisdiction to the extent that such remedies are not available or not available in a timely fashion through arbitration. It is the Parties’ intent that issues of arbitrability of any dispute shall be decided by the arbitrator.
(b) “Persons Subject to Arbitration” shall mean, individually and collectively, (i) Executive; (ii) any person in privity with or claiming through, on behalf of or in the right of Executive; (iii) the Company; (iv) any past, present or future affiliate, employee, officer, director, manager or agent of the Company; and/or (v) any person or entity alleged to be acting in concert with or to be jointly liable with any of the foregoing.
(c) The arbitration shall take place before a single neutral arbitrator at the American Arbitration Association (“AAA”) office in Los Angeles, California. Such arbitrator shall be provided through AAA by mutual agreement of the parties to the arbitration; provided that, absent such agreement, the arbitrator shall be selected in accordance with the rules of AAA then in effect. The arbitrator shall permit reasonable discovery. The arbitration shall be conducted in accordance with the AAA rules applicable to employment disputes in effect at the time of the arbitration. The award or decision of the arbitrator shall be rendered in writing; shall be final and binding on the parties; and may be enforced by judgment or order of a court of competent jurisdiction.
(d) WAIVER OF TRIAL BY JURY OR COURT. EXECUTIVE AND THE COMPANY UNDERSTAND THAT BY AGREEING TO ARBITRATE ANY ARBITRATION CLAIM, THEY WILL NOT HAVE THE RIGHT TO HAVE ANY ARBITRATION CLAIM DECIDED BY A JURY OR A COURT, BUT SHALL INSTEAD HAVE ANY ARBITRATION CLAIM DECIDED THROUGH ARBITRATION.
(e) WAIVER OF OTHER RIGHTS. EXECUTIVE AND THE COMPANY WAIVE ANY CONSTITUTIONAL OR OTHER RIGHT TO BRING CLAIMS COVERED BY THIS AGREEMENT OTHER THAN IN THEIR INDIVIDUAL CAPACITIES. EXCEPT AS MAY BE PROHIBITED BY LAW, THIS WAIVER INCLUDES THE ABILITY TO ASSERT CLAIMS AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING.
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(f) Severability; Conformance to Applicable Law. This Section 6 shall be interpreted to conform to any applicable law concerning the terms and enforcement of agreements to arbitrate employment disputes. To the extent any terms or conditions of this Section 6 would preclude its enforcement, such terms shall be severed or interpreted in a manner to allow for the enforcement of this Section 6. To the extent applicable law imposes additional requirements to allow enforcement of this Section 6, this Agreement shall be interpreted to include such terms or conditions.
7. Successors. This Agreement is personal to Executive and, without the prior written consent of the Company, shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.
8. Notice. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered either (a) personally, with receipt of delivery; (b) by reputable overnight courier, with receipt of delivery; or (c) by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows:
If to Executive:
Claude Zdanow
[REDACTED]
[REDACTED]
If to the Company:
ONAR, LLC.
8605 Santa Monica Blvd, PMB 36522
Los Angeles, CA 90067
Or to other such addresses as and Party may have furnished to the other in writing in accordance with this Agreement, except that notices of change of address shall be effective only upon receipt.
9. Tax Matters.
(a) Withholding of Taxes. The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as the Company is required to withhold pursuant to any applicable law, regulation or ruling.
(b) Parachute Excise Tax. In the event that any amounts payable under this Agreement or otherwise to Executive would (i) constitute “parachute payments” within the meaning of section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or any comparable successor provisions and (ii) but for this Subsection (b) would be subject to the excise tax imposed by section 4999 of the Code or any comparable successor provisions (the “Excise Tax”), then such amounts payable to Executive hereunder shall be either:
(i) Provided to Executive in full; or
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(ii) Provided to Executive to the maximum extent that would result in no portion of such benefits being subject to the Excise Tax;
whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax and any other applicable taxes, results in the receipt by Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. For the avoidance of doubt, Executive shall not be entitled to any amounts that are reduced due to the application of this Section 6(b) and Company shall not be liable to Executive for any such reduced amounts.”
Unless the Company and Executive otherwise agree in writing, any determination required under this Subsection (b) shall be made in writing in good faith by a nationally recognized accounting firm (the “Accountants”). In the event of a reduction in benefits hereunder, the reduction of the total payments shall apply as follows, unless otherwise agreed in writing and provided such agreement is in compliance with section 409A of the Code: (i) any cash severance payments subject to section 409A of the Code due under this Agreement shall be reduced, with the last such payment due first forfeited and reduced, and sequentially thereafter working from the next last payment, (ii) any cash severance payments not subject to section 409A of the Code due under this Agreement shall be reduced, with the last such payment due first forfeited and reduced, and sequentially thereafter working from the next last payment; (iii) any acceleration of vesting of any equity subject to section 409A of the Code shall remain as originally scheduled to vest, with the tranche that would vest last (without any such acceleration) first remaining as originally scheduled to vest; and (iv) any acceleration of vesting of any equity not subject to section 409A of the Code shall remain as originally scheduled to vest, with the tranche that would vest last (without any such acceleration) first remaining as originally scheduled to vest. For purposes of making the calculations required by this Subsection (b), the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good-faith interpretations concerning the application of the Code and other applicable legal authority. The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Subsection (b). The Company shall bear all costs that the Accountants may reasonably incur in connection with any calculations contemplated by this Subsection (b).
10. Section 409A of the Code.
(a) Interpretation. Notwithstanding the other provisions hereof, this Agreement is intended to comply with the requirements of section 409A of the Code, to the extent applicable, and this Agreement shall be interpreted to avoid any penalty sanctions under section 409A of the Code. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to comply with section 409A of the Code and, if necessary, any such provision shall be deemed amended to comply with section 409A of the Code and regulations thereunder. If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. Any amount payable under this Agreement that constitutes deferred compensation subject to section 409A of the Code shall be paid at the time provided under this Agreement or such other time as permitted under section 409A of the Code. No interest will be payable with respect to any amount paid within a time period permitted by, or delayed because of, section 409A of the Code. All payments to be made upon a termination of employment under this Agreement that are deferred compensation may only be made upon a “separation from service” under section 409A of the Code. For purposes of section 409A of the Code, each payment made under this Agreement shall be treated as a separate payment. In no event may Executive, directly or indirectly, designate the calendar year of payment.
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(b) Payment Delay. To the maximum extent permitted under section 409A of the Code, the severance benefits payable under this Agreement are intended to comply with the “short-term deferral exception” under Treas. Reg. §1.409A-1(b)(4), and any remaining amount is intended to comply with the “separation pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii); provided, however, any amount payable to Executive during the six (6) month period following Executive’s Termination Date that does not qualify within either of the foregoing exceptions and constitutes deferred compensation subject to the requirements of section 409A of the Code, then such amount shall hereinafter be referred to as the “Excess Amount.” If at the time of Executive’s separation from service, the Company’s (or any entity required to be aggregated with the Company under section 409A of the Code) stock is publicly-traded on an established securities market or otherwise and Executive is a “specified employee” (as defined in section 409A of the Code and determined in the sole discretion of the Company (or any successor thereto) in accordance with the Company’s (or any successor thereto) “specified employee” determination policy), then the Company shall postpone the commencement of the payment of the portion of the Excess Amount that is payable within the six (6) month period following Executive’s Termination Date with the Company (or any successor thereto) for six (6) months following Executive’s Termination Date with the Company (or any successor thereto). The delayed Excess Amount shall be paid in a lump sum to Executive within ten (10) days following the date that is six (6) months following Executive’s Termination Date with the Company (or any successor thereto). If Executive dies during such six (6) month period and prior to the payment of the portion of the Excess Amount that is required to be delayed on account of section 409A of the Code, such Excess Amount shall be paid to the personal representative of Executive’s estate within sixty (60) days after Executive’s death.
(c) Reimbursements. All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during Executive’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit. Any tax gross up payments to be made hereunder shall be made not later than the end of Executive’s taxable year next following Executive’s taxable year in which the related taxes are remitted to the taxing authority.
11. Withholding. All payments hereunder may be subject to any required withholding of federal, state and local taxes pursuant to any applicable law or regulation and the Company shall be entitled to withhold any and all such taxes and other authorized deductions from amounts payable hereunder.
12. Amendment; Waiver; Survival. No provisions of this Agreement may be amended, modified or waived unless agreed in writing and signed by Executive and by a duly authorized non- executive representative of the Board. No waiver by either Party of any breach by the other party or any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. The respective rights and obligations of the Parties shall survive Executive’s termination of employment and the termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations.
13. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California without regard to its conflicts of law principles.
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14. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, which will remain in full force and effect.
15. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
16. Section Headings. The section headings of this Agreement are for the convenience of reference only, and they form no part of this Agreement and will not affect its interpretation.
17. Entire Agreement. This Agreement sets forth the final and entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written by the Company and Executive, or any representative of the Company or Executive, with respect to the subject matter hereof.
18. Further Assurances. The Parties hereby agree, without further consideration, to execute and deliver such other instruments and to take such other action as may reasonably be required to effectuate the terms and provisions of this Agreement.
19. Executive Acknowledgement. Executive hereby represents and warrants to the Company that (a) Executive is entering into this Agreement voluntarily and that Executive’s acceptance of employment with the Company and the performance of Executive’s duties and responsibilities hereunder will not, in any case, violate any agreement between Executive and any other person, firm, organization or other entity; and (b) Executive is not bound by the terms of any agreement with any previous employer or other party to refrain from competing, directly or indirectly, with the business of such previous employer or other party, in any case, that would be violated by Executive’s entering into this Agreement and/or providing services to the Company pursuant to the terms of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.
| ONAR LLC | |||
| By: | /s/ Claude Zdanow | ||
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| Name: | Claude Zdanow | |
| Title: | President of Reliant Holdings, Inc. as the Sole Member of ONAR, LLC. | ||
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| By: | /s/ Claude Zdanow |
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| Name: | Claude Zdanow |
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[Signature Page to Employment Agreement]
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EXHIBIT 19.1
ONAR HOLDING CORPORATION
POLICY REGARDING INSIDER TRADING AND
DISSEMINATION OF INSIDE INFORMATION
Effective March 25, 2025
I. INTRODUCTION
This Policy Regarding Insider Trading and Dissemination of Inside Information (this “Policy”) describes the policy of ONAR Holding Corporation (the “Company”) regarding:
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| · | the trading of securities while you are in possession of Inside Information (as defined below) (“insider trading”) about the Company or any other company; and |
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| · | other misuse of material non-public information (“Inside Information”) of the Company or any other company. |
Your obligations and potential liability under securities laws dealing with insider trading abuses are also outlined below.
This Policy provides an overview of the most significant aspects involved in insider trading. Every director, officer and employee of the Company must read and retain this Policy.
II. STATEMENT OF THE POLICY
No director, officer, employee or other Insider (as defined below) shall:
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| · | trade in securities of the Company or any other company while in possession of Inside Information concerning the Company or such other company; |
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| · | disseminate Inside Information of the Company or any other company to others (except for legitimate Company purposes in accordance with Company communications policies; provided that the disclosing person reasonably does not expect the recipient to trade in securities, or disseminate the information to others who may trade in securities, while in possession of such Inside Information); or |
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| · | engage in any other action or conduct to take advantage of Inside Information. |
The prohibited dissemination of Inside Information includes the disclosure through written, oral or electronic means to all persons or entities, including friends, family members, business contacts or others.
Even the appearance of improper conduct must be avoided to preserve the Company’s reputation for adhering to high ethical standards of conduct. Accordingly, conduct which merely suggests the possibility of insider trading may be deemed by the Company, in its sole discretion, to be a violation of this Policy.
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III. FEDERAL LAW PROHIBITING INSIDER TRADING
Rule 10b-5 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), has been determined by the courts to prohibit trading by an Insider (as defined below) of any securities (debt or equity) of a company on the basis of Inside Information about such company. Liability under Rule 10b-5 can apply to trading in the Company’s securities or the securities of any other company if one is in possession of Inside Information about the company whose securities are traded. The prohibition against insider trading applies to the Company’s officers, directors, employees and other Insiders at all times regardless of whether or not the Company is observing a scheduled or special “blackout” period.
Liability under Rule 10b-5 may attach not only to Insiders who trade while in possession of Inside Information, but also, under certain circumstances, to (i) Insiders who disclose or tip Inside Information (tippers) to third parties without trading themselves, and (ii) third parties (such as relatives, business associates or friends) who have received Inside Information from Insiders (tippees) and trade while in possession of that Inside Information.
IV. THE CONSEQUENCES OF INSIDER TRADING
Individuals who trade on material non-public information (or tip information to others) can be subject to an array of civil and criminal penalties. Violations are taken very seriously by the U.S. Securities and Exchange Commission, the federal agency responsible for enforcing the law in this area. Potential sanctions include:
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| · | disgorgement of profits gained or losses avoided and interest thereon; |
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| · | a civil penalty of up to three times the profit gained or loss avoided; |
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| · | a bar from acting as an officer or director of a publicly traded company; |
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| · | a criminal fine (no matter how small the profit or the lack thereof) of up to $1 million; and |
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These penalties can apply even if the individual is not a director, officer or senior manager. In addition to the potentially severe civil and criminal penalties for violation of the insider trading laws, violation of this Policy may result in the imposition of Company sanctions, including dismissal. A conviction or finding of liability for insider trading can also result in individuals being banned generally from employment in the securities or financial industries or other employment, and even a mere allegation of insider trading can result in severe harm to one’s professional and personal reputation.
A transaction that may be necessary or seem justifiable for independent reasons (including a need to raise money for a personal financial emergency) is neither an exception to this Policy nor a safeguard against prosecution for violation of insider trading laws.
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For a company (as well as possibly any supervisory person) that fails to take appropriate steps to prevent illegal trading, a civil penalty of the greater of $1 million or three times the profit gained or loss avoided as a result of an employee’s violation and a criminal fine of up to $2.5 million may be imposed. There are also likely to be stockholder lawsuits and adverse publicity arising from such illegal conduct.
V. WHO IS AN “INSIDER” FOR PURPOSES OF THE INSIDER TRADING PROHIBITIONS?
An “Insider” for purposes of insider trading law is any person who possesses Inside Information; the status results from such possession and not simply a person’s position, if any, with the Company. Accordingly, Insiders subject to liability for insider trading are not solely those executive officers and directors who are required to report their securities transactions of Company common stock under Section 16 of the Exchange Act and who are also often referred to as “insiders” for purposes of that law. The category of potential Insiders for purposes of insider trading law includes not only the Company’s directors, officers and employees, but also outside professional advisors and business consultants who have access to Inside Information prior to its public release and absorption by the securities markets.
VI. PERSONS COVERED BY THE POLICY
This Policy covers the directors, officers and employees of the Company, and outside professional advisors and business consultants of the Company who have access to Inside Information of the Company, as well as their Family Members and Controlled Entities.
“Family Members” include a person’s spouse, partner, financially dependent children, relative, or other members of such person’s immediate household to whose support such person contributes or whose investments such person controls.
“Controlled Entities” include any legal entities controlled by a person, such as any corporations, partnerships, or trusts.
VII. INDIVIDUAL RESPONSIBILITY
Persons subject to this Policy have ethical and legal obligations to maintain the confidentiality of Inside Information and to not trade while in possession of Inside Information. Each individual is responsible for making sure that he or she complies with this Policy, and that any Family Member or Controlled Entity also complies with this policy. In all cases, the responsibility for determining whether an individual is in possession of Inside Information rests with that individual, and any action on the part of the Company, the Administrator (as defined under the caption “Administration of the Policy”) or any other employee or director pursuant to this Policy (or otherwise) does not in any way constitute legal advice or insulate an individual from liability under applicable securities laws. You could be subject to severe legal penalties and disciplinary action by the Company for any conduct prohibited by this Policy or applicable securities laws, as described above in more detail under the heading “The Consequences of Insider Trading.”
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VIII. TRANSACTIONS COVERED BY THIS POLICY
The trading covered by this Policy includes all types of transactions and securities, including common stock, options or warrants to purchase common stock, or any other type of securities, including (but not limited to) preferred stock, convertible debentures, as well as derivative securities that are issued by third parties, such as exchange-traded put or call options or swaps relating to securities of the Company or another company with respect to which an Insider possesses Inside Information.
IX. WHAT IS MATERIAL NON-PUBLIC INFORMATION?
Material information is any information that a reasonable investor would consider important in arriving at a decision to buy, sell or hold the securities of a company and/or would view its disclosure as significantly altering the total mix of information otherwise made available.
Non-Public information is information that is not generally known to the public.
Examples. Examples of non-public information that generally would be regarded as material and thus Inside Information include:
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| · | financial information, such as revenues, expenses, earnings, new sales or investment returns; |
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| · | information about a transaction that will affect the financial condition or performance of the company in a significant manner, such as a pending or proposed merger, acquisition, tender offer, sale of assets, or disposition of a subsidiary, or entering into or terminating a significant contract; |
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| · | earnings estimates; |
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| · | a stock split or the offering of additional securities; |
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| · | major litigation; |
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| · | changes in senior management; |
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| · | major new products; and |
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| · | the gain or loss of a substantial customer. |
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Either positive or negative information may be material. The foregoing list is not exhaustive; other types of information may be material at any particular time, depending upon all the circumstances.
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X. TRADING
This Policy permits an Insider to trade securities beginning at the close of regular trading on the second full Trading Day after all Inside Information has been disclosed to the public through general release to the national news media, which will provide the securities markets a sufficient opportunity to absorb and evaluate the information.
“Trading Day” means a day on which the principal U.S. stock exchange on which shares of the Company’s common stock are then listed is open for trading.
For example, if Inside Information (including quarterly or annual earnings) is disclosed at (a) 8:00 a.m., Eastern Time, on a Monday, then trading may commence after 4:00 p.m., Eastern Time, on Tuesday, (b) 10:00 a.m., Eastern Time, on Monday, then trading may commence after 4:00 p.m., Eastern Time, on Wednesday or (c) 5:00 p.m., Eastern Time, on Monday, then trading may commence after 4:00 p.m., Eastern Time, on Wednesday.
Please refer to the paragraph below captioned “Additional Procedures” for additional restrictions on trading.
XI. TRANSACTIONS NOT SUBJECT TO THIS POLICY
A. Bona Fide Gifts
Bona fide gifts are not transactions subject to this Policy, unless the person making the gift has reason to believe that the recipient intends to sell the Company securities while the person making the gift is aware of Inside Information or during a blackout period to which the person making the gift is subject; provided that bona fide gifts of Company securities by directors, officers who have been designated by the Company’s Board of Directors (the “Board”) as “officers” for purposes of Section 16 of the Exchange Act (collectively with the directors, “Section 16 Reporting Persons”) and certain other employees who may be designated by the Administrator from time to time (“Designated Individuals”) are subject to the pre-clearance procedures set forth below under the caption “Additional Procedures.”
B. Option Exercises
This Policy does not apply to the exercise of an employee option acquired pursuant to the Company’s plans, or to the exercise of a tax withholding right pursuant to which a person has elected to have the Company withhold stock subject to an option to satisfy tax withholding requirements; provided that such exercises by Section 16 Reporting Persons and Designated Individuals are subject to the pre-clearance procedures set forth below under the caption “Additional Procedures.” This Policy does apply, however, to any sale of stock as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.
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C. Restricted Stock Awards
This Policy does not apply to the exercise of a tax withholding right pursuant to which you elect to have the Company withhold stock to satisfy tax withholding requirements upon the vesting of any restricted stock; provided that such exercise by Section 16 Reporting Persons and Designated Individuals is subject to the pre-clearance procedures set forth below under the caption “Additional Procedures.” This Policy does apply, however, to any market sale of restricted stock.
D. Mutual Funds
Transactions in mutual funds that are invested in securities of the Company or another company with respect to which an Insider possesses Inside Information are not transactions subject to this Policy.
E. Other Similar Transactions
Any other purchase of Company securities from the Company or sales of Company securities to the Company are not subject to this Policy.
F. Rule 10b5-1 Plans
Securities trading pursuant to contracts, plans or instructions complying with the requirements of Rule 10b5-1(c)(1) under the Exchange Act (“Rule 10b5-1 Plans”) and entered into in good faith while the person entering into the Rule 10b5-1 Plan is not in possession of Inside Information is not subject to this Policy, provided that the adoption and maintenance of any such Rule 10b5-1 Plan by such person must be approved by the Administrator and must comply with the requirements of Rule 10b5-1(c)(1).
XII. SPECIAL AND PROHIBITED TRANSACTIONS
The Company has determined that there is a heightened legal risk and/or the appearance of improper or inappropriate conduct if the persons subject to this Policy engage in certain types of transactions. Therefore any persons covered by this Policy must comply with the following:
A. Hedging Transactions
Hedging or monetization transactions can be accomplished through a number of possible mechanisms, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. Such hedging transactions may permit a director, officer or employee to continue to own Company securities obtained through employee benefit plans or otherwise, but without the full risks and rewards of ownership. When that occurs, the director, officer or employee may no longer have the same objectives as the Company’s other stockholders. Therefore, directors, officers and employees, as well as their Family Members and Controlled Entities, are prohibited from engaging in any such transactions.
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B. Margin Accounts and Pledged Securities
In order to avoid a margin sale or foreclosure sale at a time when a pledgor, who is a Company director, officer or employee, or their Family Members or Controlled Entities, is aware of Inside Information or otherwise is not permitted to trade Company securities due to a blackout period, no Company director, officer or employee, or their Family Members or Controlled Entities, may hold Company securities in a margin account or otherwise pledge (or hypothecate) Company securities as collateral for a loan without first obtaining prior approval from the Administrator. Pre-clearance is required for such transactions because Company securities held in a margin account may be sold by the broker without the customer’s consent if the customer fails to meet a margin call and Company securities pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. Any Company director, officer or employee, or their Family Members or Controlled Entities, preparing to pledge Company securities or hold such securities in a margin account must submit a request for approval to the Administrator at least two weeks prior to the proposed execution of documents evidencing the proposed pledge or margin account. In its request, such Company director, officer or employee, or their Family Members or Controlled Entities, shall:
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| · | enclose copies of the governing documents evidencing the proposed pledge or margin account, which governing documents must provide such person with the opportunity to substitute or provide additional collateral or to repay the loan before the pledged Company securities may be sold; and |
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| · | undertake to the Company (in form and manner satisfactory to the Administrator and the Company) (i) to maintain adequate financial capacity to repay the loan or cover the margin call, as applicable, without resort to the pledged Company securities and (ii) to substitute or provide additional collateral or repay the loan in the event of a borrower default or margin call, as applicable, at a time when such person is aware of Inside Information or otherwise is not permitted to trade Company securities due to a blackout period. |
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The above is not meant to restrict the rehypothecation or lending of securities held in a brokerage account; provided that the securities are permitted to be held in such account in accordance with this Policy.
XIII. ADDITIONAL PROCEDURES
The Company has established additional procedures in order to assist the Company in the administration of this Policy, to facilitate compliance with laws prohibiting insider trading while in possession of Inside Information, and to avoid the appearance of any impropriety. These additional procedures are applicable only to those individuals described below.
A. Pre-Clearance Procedures
Section 16 Reporting Persons and Designated Individuals, as well as their Family Members and Controlled Entities, may not engage in any transaction in Company securities without first obtaining pre-clearance of the transaction from the Administrator in order to determine compliance with this Policy, insider trading laws, Section 16 of the Exchange Act and Rule 144 promulgated under the Securities Act of 1933, as amended (“Rule 144”). A person requesting pre-clearance should submit the request to the Administrator (and, in the case of a request by the Chief Executive Officer, also notify the Chairman of the Audit Committee) at least two business days in advance of the proposed transaction. The Administrator may determine not to permit the transaction if it is not in compliance this Policy, insider trading laws, Section 16 of the Exchange Act or Rule 144. If a person seeks pre-clearance and permission to engage in the transaction is denied, then he or she should refrain from initiating any transaction in Company securities, and should not inform any other person of the restriction.
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When a request for pre-clearance is made, the requestor should carefully consider whether he or she may be aware of any Inside Information about the Company, and should describe fully those circumstances to the Administrator. If the requestor is a Section 16 insider, the requestor should also indicate whether he or she has effected any non-exempt “opposite-way” transactions within the past six months, and should be prepared to report the proposed transaction on an appropriate Form 4 or Form 5. The requestor should also be prepared to comply with Rule 144 and file Form 144, if necessary, at the time of any sale.
B. Special Blackout Periods
From time to time, an event may occur that is material to the Company and is known by only a few directors, officers and/or employees. So long as the event remains material and nonpublic, the persons with knowledge of the event who are designated by the Administrator may not trade Company securities. In that situation, the Administrator may notify these persons that they should not trade in the Company’s securities, without disclosing the reason for the restriction. The existence of an event-specific blackout period or extension of a blackout period may not be announced to the Company as a whole, and should not be communicated to any other person. Even if the Administrator has not designated you as a person who should not trade due to an event-specific restriction, you should not trade while aware of Inside Information.
XIV. POST-TERMINATION TRANSACTIONS
If an individual is in possession of Inside Information or subject to any blackout period or other Company-imposed trading restrictions when his or her service terminates, that individual may not trade in Company securities until that information has become public, is no longer material or such blackout period or Company-imposed trading restriction has expired.
XV. ADMINISTRATION OF THIS POLICY
The Company’s principal executive officer, or in his or her absence the Chairman of the Audit Committee, or with respect to matters involving the Company’s principal financial officer, the Chairman of the Audit Committee (the “Administrator”), shall be responsible for administration of this Policy, including the matters for which the Administrator is specifically designated herein as administering or deciding and all other matters. All determinations and interpretations by the Administrator shall be subject to review by the Audit Committee, whose determinations shall be final.
XVI. COMPANY ASSISTANCE / REPORTING OF VIOLATIONS
Any person who has any questions about this Policy or about specific transactions may obtain additional guidance from the Administrator. You should contact the Administrator immediately if you know or have reason to believe that this Policy has been or is about to be violated.
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EXHIBIT 21.1
Subsidiaries
Chalk Experiences, LLC, a Delaware limited liability company, wholly-owned.
ONAR, LLC, a Delaware limited liability company, wholly-owned.
Reliant Pools, Inc., a Texas corporation, wholly-owned.
Reliant Custom Homes, Inc., a Texas corporation, wholly-owned.
Storia Agency, LLC, a Delaware limited liability company, wholly-owned.
VMED Services LLC, a Delaware limited liability company, wholly-owned.
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTING FIRM
We hereby consent to the inclusion, in this Form 10-K, of our report, dated January 31, 2025, with respect to our audit on the consolidated financial statements of Integrum Group LLC, for the year ended December 31, 2023.
/s/ Farber Hass Hurley LLP
Camarillo, California
April 15, 2025
EXHIBIT 31.1
CERTIFICATION
I, Claude Zdanow, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of ONAR Holding Corporation (the "registrant"); |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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| 4. | The registrant's other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant's other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: April 15, 2025 | By: | /s/ Claude Zdanow |
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| Claude Zdanow |
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| Chief Executive Officer |
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| (Principal Executive Officer) |
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EXHIBIT 31.2
CERTIFICATION
I, Patricia Kaelin, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of ONAR Holding Corporation (the "registrant"); |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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| 4. | The registrant's other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant's other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: April 15, 2025 | By: | /s/ Patricia Kaelin |
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| Patricia Kaelin |
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| Chief Financial Officer |
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| (Principal Financial/Accounting Officer) |
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EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. §1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the annual report of ONAR Holding Corporation (the “Company”) on Form 10-K for the period ended December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Claude Zdanow, the Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| April 15, 2025 | /s/ Claude Zdanow |
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| Name: | Claude Zdanow |
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| Title: | Chief Executive Officer |
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| (Principal Executive Officer) |
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EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. §1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the annual report of ONAR Holding Corporation (the “Company”) on Form 10-K for the period ended December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Patricia Kaelin, the Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| April 15, 2025 | /s/ Patricia Kaelin |
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| Name: | Patricia Kaelin |
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| Title: | Chief Financial Officer |
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| (Principal Financial Officer and Principal Accounting Officer) |
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