Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
o
No
x
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
o
No
x
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. Yes
x
No
o
Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted 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 and post such files). Yes
x
No
o
Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant’s knowledge, in definitive proxy statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.
x
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):
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.
o
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
o
No
x
The aggregate market value of the
voting and non-voting equity held by non-affiliates of the registrant as of June 30, 2017 (the last business day of the registrant’s
most recently completed second fiscal quarter) was approximately $8.7 million based on the closing bid price of the registrant’s
common stock of $6.51 per share on that date. All executive officers and directors of the registrant and all 10% or greater stockholders
have been deemed, solely for the purpose of the foregoing calculation, to be “affiliates” of the registrant.
As of April 27, 2017, there were 20,112,938 shares of the registrant’s
common stock outstanding.
This Amendment No. 1 on Form
10-K/A supplements our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which we filed with the Securities
and Exchange Commission (“SEC”) on April 2, 2018 (the “Original Form 10-K”). We are filing this amendment
to provide the information required by Items 10, 11, 12, 13 and 14 of Part III of Form 10-K.
In addition, as required by Rule 12b-15
under the Securities Exchange Act of 1934, as amended, new certifications by our principal executive officers and principal financial
officer are filed as exhibits to this amendment.
Except as stated herein, this
amendment does not reflect events occurring after the filing of the Original Form 10-K and no attempt has been
made in this Amendment to modify or update other disclosures as presented in the Original Form 10-K. Accordingly,
this amendment should be read in conjunction with the Original Form 10-K and our other filings with the SEC.
Unless indicated otherwise, throughout
this amendment, we refer to the Ameri Holdings, Inc., and its consolidated subsidiaries as “the Company,” “Ameri”,
“we,” “us” and “our”.
PART III
Item 10.
Directors, Executive Officers
and Corporate Governance
The names and ages
of our executive officers and directors, and their positions with us, are as follows:
Name
|
Age
|
Position
|
Jeffrey E. Eberwein
|
47
|
Chairman of the Board
|
Srinidhi "Dev" Devanur
|
52
|
Executive Vice Chairman of the Board and Director
|
Brent Kelton
|
47
|
Chief Executive Officer
|
Viraj Patel
|
55
|
Chief Financial Officer
|
Dimitrios J. Angelis
|
48
|
Director
|
Dr. Arthur M. Langer
|
64
|
Director
|
Robert G. Pearse
|
58
|
Director
|
Venkatraman Balakrishnan
|
53
|
Director
|
David Luci
|
51
|
Director
|
Jeffrey
E. Eberwein
became our Chairman of the Board in May 2015. Mr. Eberwein is a Lone Star Value designee on the Board. He
has 23 years of Wall Street experience and is CEO of Lone Star Value Management, LLC ("LSVM"), a U.S. registered investment
company. Prior to founding LSVM in January 2013, Mr. Eberwein was a Portfolio Manager at Soros Fund Management from January 2009
to December 2011 and Viking Global Investors from March 2005 to September 2008. Mr. Eberwein serves as Chairman of the board of
four other public companies: Digirad Corporation (NASDAQ: DRAD), a medical imaging Company; ATRM Holdings, Inc. (OTC: ATRM), a
modular building company; Hudson Global Inc. (NASDAQ: HSON), a global recruitment company; and Crossroads Systems, Inc. (NASDAQ:
CRDS), a data storage company. In addition, Mr. Eberwein serves as a director of Novation Companies, Inc. (OTC: NOVC), a specialty
finance company. Mr. Eberwein served on the Board of The Goldfield Corporation (NYSE:GV), a company in the electrical construction
industry, from May 2012 until May 2013; On Track Innovations Ltd. (NASDAQ: OTIV), a smart card company, from December 2012 until
December 2014; and NTS, Inc. (previously listed NYSE: NTS), a broadband services and telecommunications company, from December
2012 until its sale to a private equity firm in June 2014. Previously, Mr. Eberwein also served on the Board of Hope for New York,
a charitable organization dedicated to serving the poor in New York City, from 2011 until 2014, where he was the Treasurer and
on its Executive Committee. Mr. Eberwein earned an M.B.A. from The Wharton School, University of Pennsylvania, and a B.B.A. degree
with High Honors from The University of Texas at Austin. The Board believes that Mr. Eberwein's qualifications to serve on the
Board include his expertise in finance and experience in the investment community.
Srinidhi
“Dev” Devanur
became our Executive Vice Chairman and a member of our Board in May 2015. Srinidhi “Dev”
Devanur is the founder of Ameri and Partners on the representative on the Board. He is a seasoned technology entrepreneur
who has more than 20 years of experience in the IT services industry with a specialization in sales and resource management.
He has built businesses from ground up and has successfully executed acquisitions, mergers and corporate investments. He
has managed the sales function by working closely with various Fortune 500 customers in the United States and India to sell software
solutions, support and staff augmentation related services. Srinidhi “Dev” Devanur co-founded Ivega Company in 1997,
an international niche IT consulting company with special focus on financial services which merged with TCG in 2004, creating a
1,000+ person focused differentiator in the IT consulting space. Following this, he founded SaintLife Bio-pharma Pvt. Ltd.,
which was acquired by a Nasdaq listed company. Srinidhi “Dev” Devanur has a bachelor’s degree in electrical
engineering from the University of Bangalore, India and has also attended a Certificate program in Strategic Sales Management at
the University of Chicago Booth School of Business. The Board believes that Mr. Devanur’s qualifications to serve on
the Board include his background in the IT services industry and his experience in business development.
Brent
Kelton
became our Chief Executive Officer in December 2017. Mr. Kelton previously joined the Company in March 2017 through
its acquisition of Ameri100 California Inc. (formerly ATCG Technology Solutions, Inc. (ATCG)) as a wholly-owned operating subsidiary
of the Company, which Mr. Kelton led. Prior to joining Ameri, he previously led Fujitsu’s North American SAP business unit
and KPIT Technologies Limited’s SAP strategic business unit, at which he grew KPIT to over 1,600 employees globally with
annual revenues of $125 million. Mr. Kelton has also
held
leadership positions at
several technology service providers focused on implementation services and support of SAP solutions. Mr. Kelton holds a bachelor
of science degree in business analysis and management information systems from Texas A&M University and has completed executive
education courses at the Stanford Graduate School of Business.
Viraj
Patel
became our Chief Financial Officer in April 2017. He is a seasoned finance
and operations executive having served as a Chief Financial Officer of both public
and
start-up
companies. He has over 30 years of experience in the technology, life science and industrial sectors with significant experience
in domestic and international markets, fund-raising and mergers and acquisitions. From February 2016 to March 2017, Mr. Patel worked
as an independent consultant and served as Chief Financial Officer (on a pro bono basis) for Human Needs Project, a non-governmental
organization that provides funding and services to local communities in Africa. Previously, Mr. Patel served as the Chief Financial
Officer of Aqua Metrology Systems, a developer of online and offline analytical instruments for detection of water contaminants,
from August 2015 to January 2016. Prior to that he served as the Chief Financial Officer of Aspire Public Schools, a leading national
K-12 charter schools management organization, from September 2013 to March 2015. From September 2010 to March 2013, Mr. Patel served
as the Chief Financial Officer of Imergy Power Systems, a manufacturer of energy storage solutions. From November 2005 to February
2010, he served as the Chief Financial Officer of public technology companies, including as UTStarcom, a global telecom infrastructure
provider, and prior to that at Avanti Corporation, an electronic design automation company that was later acquired by Synopsys,
Inc. Mr. Patel also served as Vice President of Finance at Nektar Therapeutics and Chief Accounting Officer at Pall Corporation.
Mr. Patel also served as an independent board member and audit committee chairman for Helios & Matheson (a Nasdaq listed public
company in the data and financial analytics sector), from May 2012 through April 2016 and as a board advisor until July 2016. Mr.
Patel began his professional career at PricewaterhouseCoopers in New York and holds a bachelor’s degree in business from
Pace University, New York. He is an active Certified Public Accountant in the State of New York and is a member of the New York
State Society of Certified Public Accountants and a member of the American Institute of Certified Public Accountants.
Dimitrios
J. Angelis
became a member of our Board in May 2015. Mr. Angelis currently works with the Life Sciences Law Group,
providing outside General Counsel advice to pharmaceutical, medical device and biologics companies. He is also a director of Digirad
Inc. (NASDAQ: DRAD) a leader in the field of nuclear gamma cameras for use in cardiology, women’s health, pediatric and other
imaging and neuropathy diagnostics applications. Previously, he has served as the Chief Executive Officer of OTI America Inc.,
the U.S.-based subsidiary of publicly-held On Track Innovations Ltd., a pioneer of cashless payment technology, since December
2013. His role was to oversee and monetize the extensive patent portfolio of over 100 U.S. and international patents. Mr. Angelis
has served as a director of On Track Innovations since December 2012, and served as its Chairman of the Board from April 2013 until
February 2015. From October 2012 until December 2013, Mr. Angelis served as the General Counsel of Wockhardt Pharmaceuticals Inc.,
an international biologics and pharmaceutical company. From October 2008 to October 2012, Mr. Angelis was a senior counsel at Dr.
Reddy’s Laboratories, Ltd., a publicly-traded pharmaceutical company, and during 2008 he was the Chief Legal Officer and
Corporate Secretary of Osteotech, Inc., a publicly-traded medical device company, with responsibility for managing the patent portfolio
of approximately 42 patents. Prior to that, Mr. Angelis worked in the pharmaceutical industry in various corporate, strategic and
legal roles. In addition, he worked for McKinsey & Company, Merrill Lynch and the Japanese government more than five years
ago. He began his legal career as a transactional associate with the New York office of the law firm Mayer Brown. Mr. Angelis holds
a B.A. degree in Philosophy and English from Boston College, an M.A. in Behavioral Science and Negotiation from California State
University and a J.D. from New York University School of Law. The Board believes that Mr. Angelis’ substantial experience
as an accomplished attorney, negotiator and general counsel to public and private companies in the healthcare field will enable
him to bring a wealth of strategic, legal and business acumen to the Board, well qualifying him to serve as a director.
Dr.
Arthur M. Langer
became a member of our Board in May 2015. Dr. Langer is the Director of the Center for Technology Management,
Vice Chair of Faculty and Academic Director of the Executive Master of Science in Technology Management Program at the School
of Professional Studies at Columbia University. Dr. Langer serves on the faculty of the Department of Organization and Leadership
at the Graduate School of Education (Teachers College). He is also an elected member of the Columbia University Faculty Senate.
Dr. Langer joined the faculty at Columbia University in 1984. Dr. Langer is the author of Strategic IT: Best Practices for Managers
and Executives (2013), with Lyle Yorks), Guide to Software Development: Designing & Managing the Life Cycle (2012), Information
Technology and Organizational Learning (2011), Analysis and Design of Information Systems (2007), Applied Ecommerce (2002), and
The Art of Analysis (1997), and has numerous published articles and papers relating to service learning for underserved populations,
IT organizational integration, mentoring and staff development. Dr. Langer consults with corporations and universities on information
technology, staff development, management transformation and curriculum development around the globe. Dr. Langer is also the Chairman
and Founder of Workforce Opportunity Services, a non-profit social venture that provides scholarships and careers to underserved
populations around the world. Prior to joining the faculty at Columbia University, Dr. Langer was Executive Director of Computer
Support Services at Coopers & Lybrand, General Manager and Partner of Software Plus, and President of Macco Software more
than five years ago. Dr. Langer holds a B.A. in Computer Science, an M.B.A. in Accounting/Finance, and a Doctorate of Education
from Columbia University. The Board believes Dr. Langer’s qualifications to serve on the Board include his expertise in
technology management and his vast experience within the information technology industry.
Robert
G. Pearse
became a member of our Board in May 2015. Mr. Pearse is a Lone Star Value designee on the Board. Mr. Pearse
currently serves as a Managing Partner at Yucatan Rock Ventures, where he specializes in technology investments and consulting,
and has served in that position since August 2012. Mr. Pearse serves as a director for Novation Companies, Inc. (OTC: NOVC) and
chairman of the Compensation Committee and member of the Audit Committee since January 2015. Mr. Pearse serves as a director for
Aviat Networks, Inc. (NASDAQ: AVNW) and member of the Compensation Committee and Nominating and Governance Committee since January
2015. Mr. Pearse serves as a director for Crossroads Systems, Inc. (NASDAQ: CRDS) and Chairman of the Compensation Committee and
member of the Audit Committee since July 2013. From 2005 to 2012, Mr. Pearse served as vice president of strategy and market development
at NetApp, Inc. (NASDAQ: NTAP), a publicly-traded computer storage and data management company. Mr. Pearse played an influential
role leading NetApp's growth strategy to become a Fortune 500 listed company during his tenure. From 1987 to 2004, Mr. Pearse held
leadership positions at Hewlett-Packard (NYSE: HPQ), most recently as its vice president of strategy and corporate development
from 2001 to 2004, focusing on business strategy, business development and acquisitions. Mr. Pearse's professional experience also
includes positions at PricewaterhouseCoopers LLP, Eastman Chemical Company (NYSE: EMN) and General Motors Company (NYSE: GM) more
than five years ago. Mr. Pearse earned an M.B.A. degree from the Stanford Graduate School of Business and a B.S. degree in Mechanical
Engineering from the Georgia Institute of Technology. The Board believes Mr. Pearse's qualifications to serve on the Board include
his extensive business development and financial expertise and his extensive background in the technology sector.
Venkatraman
Balakrishnan
became a member of our Board in June 2016. He is the Founder and Chairman of Exfinity Venture Partners, a
venture capital fund focused on investing in emerging technologies, which was founded in 2013. Mr. Balakrishnan served on the board
of directors of Infosys Limited, an IT services and consulting company, from June 2011 to December 2013. He also served as the
head of the BPO, Finacle and India business unit at Infosys Limited, and served as the Chief Financial Officer of Infosys Limited
from May 2006 to October 2012. Mr. Balakrishnan is currently the Chairman of the Board of Tejas Networks Limited (formerly Tejas
Networks India Limited), an Indian computer networking and telecommunications products company, and as the Chairman of Micrograam,
a peer-to-peer lending platform that empowers rural entrepreneurs with access to loans from socially minded investors, Mr. Balakrishnan
is also a trustee of Akshaya Patra Foundation, a non-governmental organization that provides mid-day meals to millions of children
across India. Mr. Balakrishnan received a Bachelor of Science degree from the University of Madras and is an Associate Member of
the Institute of Chartered Accountants of India, the Institute of Company Secretaries of India and the Institute of Cost and Works
Accountants of India. The Company believes that Mr. Balakrishnan’s significant experience in leadership positions with technology
services and consulting companies, as well as his expertise with corporate finance domain, qualifies him to serve on the Board.
David
Luci
became a member of our Board in February 2018. Mr. Luci currently serves as Co-Founder, Managing Partner and a director
of Acurx Pharmaceuticals, LLC, an early-stage, private pharmaceutical company focused on developing antibiotics for difficult
to treat resistant bacteria. From January 2010 to April 2017, Mr. Luci served as President and Chief Executive Officer and as
a director of Dipexium Pharmaceuticals, Inc. (“Dipexium”) a Nasdaq-listed biopharmaceutical company focused. Dipexium
was sold in April 2017 to PLX Pharma (Nasdaq: PLXP) in a merger valued at $69 million. From December 2007 to January 2010, Mr.
Luci served as President and Chief Business Officer of MacroChem Corporation (OTCBB: MACM), a development-stage, public biopharmaceutical
company, and from July 2002 to August 2007 he served as Executive Vice President, Chief Financial Officer, General Counsel &
Corporate Secretary of Bioenvision, Inc. (Nasdaq: BIVN), an international biopharmaceutical company. From January 2007 to January
2010, Mr. Luci served as a member of the board of directors of Abeona Therapeutics, Inc. (Nasdaq: ABEO), where he also served
as Chairman of the Audit Committee and Chairman of the Compensation Committee, as well as serving in a consulting capacity for
several equity financings. Mr. Luci began his career with Ernst & Young LLP as a certified public accountant (from August
1988 to May 1991), before transitioning to practicing corporate law (from September 1994 to July 2002) at Battle Fowler LLP, which
later merged into Paul Hastings. Mr. Luci received a bachelor of science in business administration degree from Bucknell University
and a juris doctorate degree from Albany Law School of Union University. Mr. Luci is admitted to the New York bar and is an inactive
Certified Public Accountant, registered in Pennsylvania. The Board believes Mr. Luci’s qualifications to serve on the Board
include his extensive business development and managerial expertise and his extensive background in international licensing and
co-development transactions and merger transactions.
Our
previous President and Chief Executive Officer, Giri Devanur, departed from our company on December 26, 2017 to pursue new opportunities.
Our current Chief Executive Officer, Brent Kelton, was appointed effective as of the same date.
Our
previous Chief Financial Officer, Edward O’Donnell, departed from our company on December 2, 2016 to pursue new opportunities.
At that time, Carlos Fernandez, our Executive Vice President of Corporate Development, was appointed as our interim Chief Financial
Officer while we conducted a search for a permanent Chief Financial Officer. Our current Chief Financial Officer, Viraj Patel,
was appointed effective April 24, 2017.
All
directors hold office until the expiration of their term at each year's annual meeting of stockholders and the election and qualification
of their successors. Officers are elected annually by the Board and serve at the discretion of the Board.
Code of Business Conduct and Ethics
We
have established a Code of Ethics and Business Conduct and a Code of Ethics for our Chief Executive Officer and Senior Financial
Officers (the “Ethics Codes”) that apply to our officers, directors, employees and contractors. The Ethics Codes contain
general guidelines for conducting our business consistent with the highest standards of business ethics and compliance with applicable
law, and is intended to qualify as “codes of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act
of 2002 and Item 406 of Regulation S-K. Day-to-day compliance with the Ethics Codes is overseen by the Company compliance
officer appointed by our Board of Directors. If we make any amendments to the Ethics Codes or grant any waiver from a provision
of the Ethics Codes to any director or executive officer, we will promptly disclose the nature of the amendment or waiver on the
“Investors” section of the Company’s website (www.ameri100.com) under the tab “Corporate Governance”.
Corporate
Governance Documents Available Online
Our
corporate governance documents, including the Audit Committee charter, Compensation Committee charter, Nominations and Corporate
Governance Committee charter and Ethics Codes, are available free of charge on the “Investors” section of our website
(www.ameri100.com) under the tab “Corporate Governance”. Information contained on our website is not incorporated by
reference in, or considered part of, this Proxy Statement. Stockholders may also request paper copies of these documents free of
charge upon written request to Investor Relations, Ameri Holdings, Inc., 100 Canal Pointe Boulevard, Suite 108, Princeton, New
Jersey 08540.
Corporate Governance
Our
Board of Directors currently has three standing committees. The current members of our committees are identified below:
|
|
Committees
|
|
|
|
|
|
|
|
|
Director
|
|
Audit
|
|
Compensation
|
|
Nominations and Corporate Governance
|
Dimitrios J. Angelis
|
|
X
|
|
|
|
|
|
X
|
(Chair)
|
Jeffrey E. Eberwein
|
|
|
|
|
X
|
|
|
X
|
|
Dr. Arthur M. Langer
|
|
|
|
|
X
|
|
|
|
|
Robert Pearse
|
|
X
|
|
|
X
|
(Chair)
|
|
|
|
Venkatraman Balakrishnan
|
|
X
|
(Chair)
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
Srinidhi
Devanur, our Executive Vice Chairman, does not serve on any of our standing committees.
Audit
Committee
.
The Audit Committee consists of Messrs. Angelis, Pearse and Balakrishnan, with Mr. Balakrishnan serving as chairman.
The Audit Committee held five meetings during the year ended December 31, 2017. All members of the Audit Committee (i) are independent
directors (as currently defined in Rule 5605(a)(2) of the NASDAQ listing rules); (ii) meet the criteria for independence set
forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”); (iii) have not
participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time
during the past three years; and (iv) are able to read and understand fundamental financial statements. Mr. Angelis qualifies as
an “Audit Committee financial expert” as defined in the rules and regulations established by the SEC. The Audit Committee
is governed by a written charter approved by our Board of Directors. The functions of the Audit Committee include, among other
things:
|
•
|
Meeting with our management periodically to consider the adequacy of our internal controls and
the objectivity of our financial reporting;
|
|
•
|
Meeting with our independent registered public accounting firm and with internal financial personnel
regarding the adequacy of our internal controls and the objectivity of our financial reporting;
|
|
•
|
Recommending to our Board of Directors the engagement of our independent registered public accounting
firm;
|
|
•
|
Reviewing our quarterly and audited consolidated financial statements and reports and discussing
the statements and reports with our management, including any significant adjustments, management judgments and estimates, new
accounting policies and disagreements with management; and
|
|
•
|
Reviewing our financial plans and reporting recommendations to our full Board of Directors for
approval and to authorize action.
|
Both
our independent registered public accounting firm and internal financial personnel regularly meet privately with our Audit Committee
and have unrestricted access to the Audit Committee.
Compensation
Committee
. The Compensation Committee consists of Messrs. Eberwein, Langer and Pearse, with Mr. Pearse serving as
chairman. The Compensation Committee held two meetings during the year ended December 31, 2017. Messrs. Eberwein, Langer and Pearse
are independent, as determined under the various NASDAQ Stock Market, SEC and Internal Revenue Service qualification requirements.
The Compensation Committee is governed by a written charter approved by our Board of Directors. The charter of the Compensation
Committee permits the Compensation Committee to engage outside consultants and to consult with our human resources department when
appropriate to assist in carrying out its responsibilities. Compensation consultants have not been engaged by the Company to recommend
or assist in determining the amount or form of compensation for any current executive officers or directors of the Company. The
Committee may also obtain advice and assistance from internal or external legal, accounting, or other advisers selected by the
Committee. The functions of the Compensation Committee include, among other things:
|
•
|
Reviewing and, as it deems appropriate, recommending to our Board of Directors, policies, practices,
and procedures relating to the compensation of our directors, officers and other managerial employees and the establishment and
administration of our employee benefit plans;
|
|
•
|
Establishing appropriate incentives for officers, including the Chief Executive Officer, to encourage
high performance, promote accountability and adherence to company values and further our long-term strategic plan and long-term
value; and
|
|
•
|
Exercising authority under our employee benefit plans.
|
Corporate
Governance Committee
. The Nominations and Corporate Governance Committee consists of Messrs. Angelis, Eberwein and Balakrishnan,
with Mr. Angelis serving as chairman. The Nominations and Corporate Governance Committee held two meetings during the year ended
December 31, 2017. Messrs. Angelis, Eberwein and Balakrishnan are independent directors (as currently defined in Rule 5605(a)(2)
of the NASDAQ listing rules). The Nominations and Corporate Governance Committee is governed by a written charter approved by our
Board of Directors. The functions of the Nominations and Corporate Governance Committee include, among other things:
|
•
|
Reviewing and recommending nominees for election as directors;
|
|
•
|
Assessing the performance of our board of directors;
|
|
•
|
Developing guidelines for the composition of our board of directors;
|
|
•
|
Reviewing and administering our corporate governance guidelines and considering other issues relating
to corporate governance; and
|
|
•
|
Oversight of the Company compliance officer and compliance with the Company’s Code of Ethics
and Business Conduct and Code of Ethics for our Chief Executive Officer and Senior Financial Officers.
|
The Board of Directors’ Role in Risk Oversight
Our
Board of Directors, as a whole and also at the committee level, has an active role in managing enterprise risk. The members of
our Board of Directors participate in our risk oversight assessment by receiving regular reports from members of senior management
and the Company compliance officer appointed by our Board of Directors on areas of material risk to us, including operational,
financial, legal and regulatory, and strategic and reputational risks. The Compensation Committee is responsible for overseeing
the management of risks relating to our executive compensation plans and arrangements. The Audit Committee oversees management
of financial risks, as well as our policies with respect to risk assessment and risk management. The Nominations and Corporate
Governance Committee manages risks associated with the independence of our Board of Directors and potential conflicts of interest.
Members of the management team report directly to our Board of Directors or the appropriate committee. The directors then use this
information to understand, identify, manage, and mitigate risk. Once a committee has considered the reports from management, the
chairperson will report on the matter to our full Board of Directors at the next meeting of the Board of Directors, or sooner if
deemed necessary. This enables our Board of Directors and its committees to effectively carry out its risk oversight role.
Communications with our Board of Directors
Any
stockholder may send correspondence to our Board of Directors c/o Corporate Secretary, Ameri Holdings, Inc., 100 Canal Pointe Boulevard,
Suite 108, Princeton, New Jersey 08540. Our Corporate Secretary will review all correspondence addressed to our Board of Directors,
or any individual director, and forward all such communications to our Board of Directors or the appropriate director prior to
the next regularly scheduled meeting of our Board of Directors following the receipt of the communication, unless the corporate
secretary decides the communication is more suitably directed to Company management and forwards the communication to Company management.
Our Corporate Secretary will summarize all stockholder correspondence directed to our Board of Directors that is not forwarded
to our Board of Directors and will make such correspondence available to our Board of Directors for its review at the request of
any member of our Board of Directors.
Indebtedness of Directors and Executive Officers
None
of our directors or executive officers or their respective associates or affiliates is currently indebted to us.
Certain Legal Proceedings
Lone
Star Value Management LLC, Mr. Eberwein and a third-party unrelated to the Company are each subject to a SEC administrative order,
dated
February
14, 2017 (Securities Exchange Act Release No. 80038), relating to
alleged violations of Section 13(d) of the Exchange Act and the rules promulgated thereunder, including failing to disclose the
members of a stockholder group, and further allegations that Messrs. Eberwein violated Section 16(a) of the Exchange Act and the
rules promulgated thereunder, including failing to timely file initial statements of beneficial ownership on Form 3 and changes
thereto on Form 4. Without admitting or denying any violations, (i) Lone Star Value Management agreed to cease and desist from
committing or causing any violations of Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 promulgated thereunder, and
paid a civil penalty of $120,000 to the SEC and (ii) Mr. Eberwein and the unrelated third-party agreed to cease and desist from
committing or causing any violations of (x) Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 promulgated thereunder
and (y) Section 16(a) of the Exchange Act and Rules 16a-2 and 16a-3 promulgated thereunder, and each paid a civil penalty to the
SEC in the respective amounts of $90,000 and $30,000.
Compliance with Section 16(a) of the
Exchange
Act
Section
16(a) of the Exchange Act requires our executive officers, directors and holders of more than 10% of our equity securities to file
reports of ownership and changes in ownership of our securities (Forms 3, 4 and 5) with the SEC. To the best of our knowledge,
based solely on a review of the
Section
16(a) reports and written statements from
executive officers and directors, for the year ended December 31, 2017, all required reports of executive officers, directors and
holders of more than 10% of our equity securities were filed on time.
Family Relationships
There
are no family relationships among our directors and executive officers.
Item 11.
Executive Compensation
Role and Authority of Compensation
Committee
The
Compensation Committee currently consists of Messrs. Eberwein, Langer and Pearse. Messrs. Eberwein, Langer and Pearse are each
a “non-employee director” within the meaning of Rule 16b-3 under the Securities and Exchange Act of 1934 and an “outside
director” within the meaning of Section 162(m) of the Internal Revenue Code. Messrs. Eberwein, Langer and Pearse and
satisfy the independence requirements imposed by the NASDAQ Stock Market.
The
Compensation Committee is responsible for discharging the responsibilities of the Board of Directors with respect to the compensation
of our executive officers. The Compensation Committee recommends overall compensation of our executive officers to the Board of
Directors. The Board of Directors approves all compensation of our executive officers. The Compensation Committee also periodically
reviews director compensation.
The
charter of the Compensation Committee permits the Compensation Committee to engage outside consultants and to consult with our
human resources department when appropriate to assist in carrying out its responsibilities. Compensation consultants have not been
engaged by the Company to recommend or assist in determining the amount or form of compensation for any current executive officers
or directors of the Company.
The
Committee may also obtain advice and assistance from internal or external legal, accounting, or other advisers selected by the
Committee.
Elements of Executive Compensation
Our
executive compensation consists of the following elements:
|
•
|
Annual Incentive Bonus;
|
|
•
|
Long-Term Incentives; and
|
|
•
|
Retirement benefits under a 401(k) plan and generally available benefit programs.
|
Base
Salary
.
The base salary for each executive is initially established through negotiation at the time the executive
is hired, taking into account his or her scope of responsibilities, qualifications, experience, prior salary, and competitive salary
information within our industry. Year-to-year adjustments to each executive officer’s base salary are determined by an assessment
of his or her sustained performance against individual goals, including leadership skills and the achievement of high ethical standards,
the individual’s impact on our business and financial results, current salary in relation to the salary range designated
for the job, experience, demonstrated potential for advancement, and an assessment against base salaries paid to executives for
comparable jobs in the marketplace.
Based
on the factors discussed above, base salaries of our Chief Executive Officer and our two other most highly compensated executive
officers (“Named Executive Officers”) as of December 31, 2017 (on an annualized basis) were as follows:
Giri
Devanur’s 2017 base salary was set at $220,000, which represented no change from Mr. Devanur’s annual base salary as
it was raised to $220,000 from $120,000 effective as of November 14, 2016.
Viraj
Patel’s 2017 base salary was set at $200,000. Mr. Patel was not employed by the Company in 2016.
Annual
Bonus
. Annual bonus payments under our executive employment agreements are based on the discretion of our Board of Directors.
We believe that such bonuses provide our executives with an incentive to achieve goals that are aligned with our stockholders’
interests, with the achievement of such goals being measurable in terms of revenue and income or other financial objectives. An
executive officer’s failure to achieve measurable performance goals can affect his or her bonus amount. We believe that offering
significant potential income in the form of bonuses allows us to attract and retain executives and to align their interests with
those of our stockholders.
Long-Term
Incentives
. The Compensation Committee has the ability to grant equity instruments to our executives under our 2015 Equity
Incentive Award Plan. The Compensation Committee has the ability to issue a variety of instruments, but equity grants will typically
be in the form of stock options and restricted stock units. We believe that our executive compensation program must include long-term
incentives such as stock options and restricted stock units if we wish to hire and retain high-level executive talent. We also
believe that stock options and restricted stock units help to provide a balance to the overall executive compensation program as
base salary and bonus awards focus only on short-term compensation. In addition, the vesting period of stock options and restricted
stock units encourages executive retention and the preservation of stockholder value. Finally, we believe that aligning at least
a portion of restricted stock units vesting provisions to financial performance measures further aligns executive compensation
to stockholder value; if performance targets are not achieved, then the awards do not vest. We base the number of equity units
granted on the type and responsibility level of the executive’s position, the executive’s performance in the prior
year and the executive’s potential for continued sustained contributions to our long-term success and the long-term interests
of our stockholders.
401(k)
and Other Benefits
. During 2017, our executive officers were eligible to receive certain benefits generally available to
all our employees on the same terms, including medical, dental and vision insurance, long-term and short-term disability insurance,
life and accidental death and dismemberment insurance, health and dependent care flexible spending accounts, educational and employee
assistance, paid-time-off, and certain other benefits. During 2015, we also maintained a tax-qualified 401(k) Plan, which provides
for broad-based employee participation. During 2017, under the 401(k) Plan, all employees were eligible to receive matching contributions
from Ameri of (i) 100% of their first 3% of employee contributions and (ii) 50% of the next 2% of employee contributions up to
an aggregate maximum of $10,600 per employee, per year, subject to vesting provisions.
Compensation
Risk Assessment.
In establishing and reviewing our overall compensation program, the Compensation Committee considers
whether the program and its various elements encourage or motivate our executives or other employees to take excessive risks.
We believe that our compensation program and its elements are designed to encourage our employees to act in the long-term best
interests of the Company and are not reasonably likely to have a material adverse effect on our business.
The Impact of Tax and Accounting
Treatments on Elements of Compensation
We
have elected to award non-qualified stock options instead of incentive stock options to all our employees, directors and consultants
to allow the corporation to take advantage of the more favorable tax advantages associated with non-qualified stock options.
Internal
Revenue Code Section 162(m) precludes us from deducting compensation in excess of $1.0 million for certain employees. To
date, we have not exceeded the $1.0 million limit for those employees, and the Compensation Committee has not defined a policy
that all compensation must be deductible. However, since stock-based awards comprise a significant portion of total compensation,
the Compensation Committee has taken appropriate steps to preserve deductibility for such awards in the future, when appropriate.
Summary Compensation Table
The
following table provides information regarding the compensation earned during the years ended December 31, 2017 and December 31,
2016 by our Chief Executive Officer and our two other most highly compensated executive officers who were employed by us during
such years.
Name & Principal Position
|
Transition Period or Fiscal Year Ended
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock Awards
($)
|
|
Option Awards
($)
|
|
Non-Equity Incentive Plan Compensation
($)
|
|
Non-Qualified Deferred Compensation Earnings
($)
|
|
All Other Compensation
($)
|
|
Total
($)
|
Brent Kelton
(1)
Chief Executive Officer
|
12/31/2017
12/31/2016
|
|
121,500
—
|
|
50,000
—
|
|
—
—
|
|
—
—
|
|
—
—
|
|
—
—
|
|
—
—
|
|
171,500
—
|
Viraj Patel
(2)
Chief Financial Officer
|
12/31/2017
12/31/2016
|
|
137,222
—
|
|
—
—
|
|
—
—
|
|
—
—
|
|
—
—
|
|
—
—
|
|
—
—
|
|
137,222
—
|
Giri Devanur
(3)
Former President and Chief Executive Officer
|
12/31/2017
12/31/2016
|
|
220,000
175,000
|
|
25,000
57,500
|
|
—
—
|
|
—
—
|
|
—
—
|
|
—
—
|
|
—
—
|
|
245,000
232,500
|
Srinidhi (Dev) Devanur
Executive Vice Chairman
|
12/31/2017
12/31/2016
|
|
100,000
100,000
|
|
—
—
|
|
—
—
|
|
—
—
|
|
—
—
|
|
—
—
|
|
—
—
|
|
100,000
100,000
|
_________
(1)
|
Brent Kelton was appointed as our Chief Executive Officer effective December 26, 2017.
|
|
|
(2)
|
Viraj Patel was appointed as our Chief Financial Officer effective April 24, 2017.
|
|
|
(3)
|
Giri Devanur was appointed to his position with our company on May 26, 2015 and served as Chief Executive Officer of Ameri and Partners through December 26, 2017.
|
Grants of Plan-Based Awards
On May 4, 2017,
we granted our current Chief Financial Officer, Viraj, options to purchase 75,000 shares of our common stock. None of Mr. Patel’s
options were vested as of December 31, 2017.
Outstanding Equity Awards at Fiscal Year-End
As of December 31, 2017, there were no
outstanding equity incentive awards held by any of our named executive officers pursuant to our equity incentive plan.
Pension Benefits
None of our
named executive officers participates in or has account balances in qualified or non-qualified defined benefit plans sponsored
by us.
Nonqualified Deferred Compensation
None of our
named executive officers participates in or has account balances in non-qualified defined contribution plans or other deferred
compensation plans maintained by us.
Potential Payments Upon Termination or Change of
Control Under Employment Agreements
We entered into
an employment agreement with Srinidhi “Dev” Devanur in May 2015. The employment agreement appointed Mr. Devanur
as our executive Vice Chairman of the Board for three years. The employment agreement of Mr. Devanur provides that if, during
the term of his employment, he is terminated by us other than for “Cause” or he resigns for “Good Reason,”
then he will continue to receive for a period of one year following such termination his then current salary payable on the same
basis as he was then being paid. Termination for “Cause” means: (i) deliberate refusal or deliberate failure to carry
out any reasonable order, consistent with his position, of our Board of Directors after reasonable written notice; (ii) a material
and willful breach of the employment agreement, his confidentiality and non-competition agreement or similar agreements with us;
(iii) gross negligence or willful misconduct in the execution of his assigned duties; (iv) engaging in repeated intemperate use
of alcohol or drugs; or (v) conviction of a felony or other serious crime. “Good Reason” means (i) he shall have been
assigned duties materially inconsistent with his position; (ii) his salary is reduced more than 15% below its then current level;
or (iii) material benefits and compensation plans then currently in existence are not continued in effect for his benefit.
In addition, we
entered into an employment agreement with Viraj Patel, effective April 24, 2017, pursuant to which Mr. Patel became our Chief Financial
Officer. Mr. Patel’s employment agreement is terminable at will for any reason.
If Srinidhi Devanur
would have been terminated without Cause at December 31, 2017 or if he would have resigned for Good Reason, then he would have
been entitled to receive severance payments of $120,000.
Upon the termination
of Giri Devanur’s employment with the Company, on December 26, 2017, the Company agreed to pay Mr. Devanur severance of $220,000,
his annual salary at the time of departure in accordance with the terms of his employment agreement, over a period of one year
and a lump sum of $25,000 in exchange for his release of the Company from all claims he or his heirs, executors and assigns ever
had or may have against the Company, its officers, directors, employees, stockholders or any of one of them by reason of any actual
or alleged act, omission, transaction, practice, conduct, occurrence, or other matter.
Securities Authorized for Issuance Under Equity Compensation
Plans
On April 20, 2015, our Board and
the holder of a majority of our outstanding shares of common stock approved the adoption of our 2015 Equity Incentive Award Plan
(the “Plan”) and a grant of discretionary authority to the executive officers to implement and administer the Plan.
The Plan allows for the issuance of up to 2,000,000 shares of our common stock for award grants (all of which can be incentive
stock options). The Plan provides equity-based compensation through the grant of cash-based awards, nonqualified stock options,
incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units
and other stock-based awards. As of December 31, 2016, restricted stock units for the issuance of 590,869 shares of common stock
and options to purchase 972,700 shares of our common stock had been granted and were outstanding. The Board of Directors adopted
the Plan to provide a means by which our employees, directors, officers and consultants may be granted an opportunity to purchase
our common stock, to assist in retaining the services of such persons, to secure and retain the services of persons capable of
filling such positions and to provide incentives for such persons to exert maximum efforts for our success.
Under Plan,
our board of directors determines the exercise price to be paid for the shares, the period within which each option may be exercised,
and the terms and conditions of each option. The exercise price of the incentive and non-qualified stock options may not be less
than 100% of the fair market value per share of our common stock on the grant date. If an individual owns stock representing more
than 10% of the outstanding shares, the price of each share of an incentive stock option must be equal to or exceed 110% of fair
market value.
The following table
sets forth information regarding our equity compensation plans as of December 31, 2017:
Plan Category
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
|
|
(a)
|
|
|
|
(b)
|
|
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
1,835,063
|
|
|
$
|
5.63
|
|
|
|
164,397
|
|
Warrants issued outside of our equity compensation plan
|
|
|
1,000,000
|
|
|
|
1.80
|
|
|
|
—
|
|
Total
|
|
|
2,835,063
|
|
|
$
|
4.28
|
|
|
|
164,397
|
|
DIRECTOR COMPENSATION AND BENEFITS
Directors are expected to timely
and fully participate in all regular and special board meetings, and all meetings of committees that they serve on. We
compensate non-management directors through an annual grant of stock options pursuant to the 2015 Equity Incentive Award Plan. Such
option awards have an exercise price not less than 100% of the fair market value of our common stock, based on the value of such
shares of common stock on the date the option is granted, and become vested and exercisable as determined by the compensation committee
or the entire Board of Directors. Other terms and conditions of the option grants are on the terms and conditions as
determined by the Compensation Committee or the entire Board of Directors when the options are granted.
The following table sets forth
the cash compensation, as well as certain other compensation earned by each person who served as a director of our company, during
the year ended December 31, 2017:
Name
|
|
Fees Earned or Paid in Cash
|
|
|
Stock Awards
|
|
|
RSU & Option Awards
|
|
|
All Other
Compensation
|
|
|
Total
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Jeffrey E. Eberwein
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
20,507
|
|
|
|
-
|
|
|
|
20,507
|
|
Srinidhi “Dev” Devanur
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Giri Devanur
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Dimitrios J. Angelis
(2)
|
|
|
-
|
|
|
|
-
|
|
|
|
17,742
|
|
|
|
-
|
|
|
|
17,742
|
|
Dr. Arthur M. Langer
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
15,360
|
|
|
|
-
|
|
|
|
15,360
|
|
Robert G. Pearse
(4)
|
|
|
-
|
|
|
|
-
|
|
|
|
18,126
|
|
|
|
-
|
|
|
|
18,126
|
|
Venkatraman Balakrishnan
(5)
|
|
|
|
|
|
|
-
|
|
|
|
14,132
|
|
|
|
-
|
|
|
|
14,132
|
|
Dhruwa N. Rai
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
12,801
|
|
|
|
-
|
|
|
|
12,801
|
|
TOTAL
|
|
|
-
|
|
|
|
-
|
|
|
|
98,668
|
|
|
|
-
|
|
|
|
98,668
|
|
|
(1)
|
Includes 20,507 restricted stock units (“RSUs”) granted on April 11, 2017, valued at
$6.51 per share for a total value of $133,500.
|
|
(2)
|
Includes 17,742 RSUs granted on April 11, 2017, valued at $6.51 per share for a total value of
$115,500.
|
|
(3)
|
Includes 15,360 RSUs granted on April 11, 2017, valued at $6.51 per share for a total value of
$100,000.
|
|
(4)
|
Includes 18,126 RSUs granted on April 11, 2017, valued at $6.51 per share for a total value of
$118,000.
|
|
(5)
|
Includes 14,132 RSUs granted on April 11, 2017, valued at $6.51 per share for a total value of
$92,000.
|
|
(6)
|
Includes 12,801 RSUs granted on April 11, 2017, valued at $6.51 per share for a total value of
$83,335.
|
Item 12.
Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters
Security Ownership of Certain Beneficial Owners and
Management
The following table
sets forth information as of April 30, 2018 regarding the beneficial ownership of our common stock by (i) each person we know
to be the beneficial owner of 5% or more of our common stock, (ii) each of our current executive officers, (iii) each
of our directors, and (iv) all of our current executive officers and directors as a group. Information with respect to beneficial
ownership has been furnished by each director, executive officer or 5% or more stockholder, as the case may be. The address for
all executive officers and directors is c/o Ameri Holdings, Inc., 100 Canal Pointe Boulevard, Suite 108, Princeton, New Jersey
08540.
Percentage
of beneficial ownership in the table below is calculated based on 20,112,938 shares of common stock outstanding as of April 30,
2018. Beneficial ownership is determined in accordance with the rules of the SEC, which generally attribute beneficial ownership
of securities to persons who possess sole or shared voting power or investment power with respect to those securities and includes
shares of our common stock issuable pursuant to the exercise of stock options, warrants or other securities that are immediately
exercisable or convertible or exercisable or convertible within 60 days of April 30, 2018. Unless otherwise indicated, the persons
or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned
by them.
Name
(1)
|
|
Number of Shares Beneficially Owned
|
|
Percentage of Shares Beneficially Owned
|
|
|
|
|
|
Executive Officers, Present Directors and Proposed Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey E. Eberwein
(2)(3)
|
|
|
4,216,974
|
|
|
19.9%
|
Srinidhi “Dev” Devanur
|
|
|
6,276,375
|
|
|
31.2%
|
Giri Devanur
(10)
|
|
|
2,123,582
|
|
|
10.6%
|
Dimitrios J. Angelis
(4)
|
|
|
65,990
|
|
|
*
|
Dr. Arthur M. Langer
(5)
|
|
|
109,923
|
|
|
*
|
Robert G. Pearse
(6)
|
|
|
65,473
|
|
|
*
|
Venkatraman Balakrishnan
(7)
|
|
|
41,948
|
|
|
*
|
Viraj Patel
(11)
|
|
|
25,000
|
|
|
*
|
Brent Kelton
(9)
|
|
|
93,276
|
|
|
*
|
All executive officers and directors as a group (9 persons)
(12)
|
|
|
13,018,541
|
|
|
60.5%
|
|
|
|
|
|
|
|
5% Stockholders:
|
|
|
|
|
|
|
Lone Star Value Management, LLC
(2)(3)
|
|
|
4,216,974
|
|
|
19.9%
|
Dhruwa N. Rai
(8)
|
|
|
1,331,380
|
|
|
7.0%
|
_______________
|
*
|
Less than one percent of outstanding shares.
|
|
(1)
|
Unless otherwise indicated, the address of each person or entity is c/o AMERI Holdings, Inc., 100
Canal Pointe Boulevard, Suite 108, Princeton, New Jersey 08540.
|
|
(2)
|
Includes (A) (i) 2,972,592 shares of common stock and (ii) 1,100,000 shares of common stock reserved
for issuance upon the exercise of warrants, in each case held of record by LSVI, (B) 13,910 shares of common stock held of record
by Lone Star Value Co-Invest I, LP (“Co-Invest”) and (C) 47,164 shares of common stock held of record by Jeffrey E.
Eberwein, our Chairman. Lone Star Value Investors GP, LLC (“Lone Star Value GP”), the general partner of LSVI, Co-Invest
and Lone Star Value Management, the investment manager of LSVI, may be deemed to beneficially own the 4,133,666 shares held by
LSVI and Co-Invest. Jeffrey E. Eberwein as the managing member of Lone Star Value GP may be deemed to beneficially own the 3,882,696
shares held by LSVI and Co-Invest. Mr. Eberwein disclaims beneficial ownership of such shares except to the extent of his pecuniary
interest therein. The address of Mr. Eberwein, LSVI, Co-Invest, Lone Star Value GP and Lone Star Value Management is 53 Forest
Avenue, 1st Floor, Old Greenwich, CT 06870.
|
|
(3)
|
Includes 83,308 shares held in an account separately managed by Lone Star Value Management. Lone
Star Value Management, as the investment manager of the separately managed account, may be deemed to beneficially own the 83,308
shares held in the separately managed account; and Jeffrey Eberwein, our Chairman, as the sole member of Lone Star Value Management
may be deemed to beneficially own the shares held in the separately managed account. Mr. Eberwein disclaims beneficial ownership
of such shares except to the extent of his pecuniary interest therein.
|
|
(4)
|
Consists of 40,990 shares of common stock and 25,000 shares of common stock issuable upon exercise
of options exercisable within 60 days.
|
|
(5)
|
Consists of 84,923 shares of common stock and 25,000 shares of common stock issuable upon exercise
of options exercisable within 60 days.
|
|
(6)
|
Consists of 40,473 shares of common stock and 25,000 shares of common stock issuable upon exercise
of options exercisable within 60 days.
|
|
(7)
|
Consists of 16,948 shares of common stock and 25,000 shares of common stock issuable upon exercise
of options exercisable within 60 days.
|
|
(8)
|
Consists of 1,164,713 shares of common stock and 166,667 shares of common stock issuable upon exercise
of options exercisable within 60 days.
|
|
(9)
|
Consists of 93,276 shares of common stock.
|
|
(10)
|
Giri Devanur served as our Chief Executive Officer from May 26, 2015 through December 26, 2018.
Consists of 2,191,346 shares of common stock and 12,121 shared of common stock issuable upon the exercise of warrants that are
currently exercisable.
|
|
(11)
|
Consists of 25,000 shares of common stock issuable upon exercise of options exercisable within
60 days.
|
|
(12)
|
Consists of 11,614,753 shares of common stock, 1,112,121 shares of common stock reserved for issuance
upon the exercise of the warrants held of record by LSVI and Giri Devanur and 291,667 shares of common stock issuable upon exercise
of options exercisable within 60 days.
|
In addition,
as of April 30, 2018, we had 405,395 shares of Series A Preferred Stock issued and outstanding. As of such date, LSVI held 405,395
shares of our Series A Preferred Stock, representing 100% of the issued and outstanding shares of the Series A Preferred Stock.
Jeffrey E. Eberwein as the managing member of Lone Star Value GP may be deemed to beneficially own the 405,395 shares of Series
A Preferred Stock held by LSVI. Mr. Eberwein disclaims beneficial ownership of such shares except to the extent of his pecuniary
interest therein. The address of Mr. Eberwein, LSVI and Lone Star Value GP is 53 Forest Avenue, 1st Floor, Old Greenwich, CT 06870.
Item 13.
Certain Relationships and Related
Transactions, and Director Independence
Lone Star Value
On May 26, 2015,
we issued a 5% Unsecured Convertible Note due May 26, 2017, in the principal amount of $5,000,000 (the “Convertible Note”)
bearing interest at 5% per annum, maturing on May 26, 2017 and at a conversion price of $1.80 per share, or an aggregate of 2,777,778
shares of common stock, together with a warrant to purchase shares of our common stock (the “Original Warrant”) to
purchase up to 2,777,777 shares of our common stock, at an exercise price equal to $1.80 per share, in a private placement (the
“Private Placement”) to Lone Star Value Investors, LP (“LSVI”), one of our significant stockholders and
an entity controlled by our Chairman, Jeffrey Eberwein, pursuant to the terms of a Securities Purchase Agreement, dated as of May
26, 2015. In connection with the Private Placement, LSVI was granted the right to designate three of our directors.
On May 13, 2016,
LSVI completed an early partial exercise of the Original Warrant for 1,111,111 shares of our common stock for total consideration
to us of $2,000,000, and LSVI was issued a replacement warrant for the remaining 1,666,666 shares under the Original Warrant on
the same terms as the Original Warrant (the “Replacement Warrant”). LSVI also agreed to amend the Convertible Note
to extend its maturity for two years in exchange for (i) the right to request that we expand the size of the Board to nine directors
from the then-current eight, with LSVI having the right to designate up to four of the nine directors, and (ii) the issuance of
an additional warrant (the “Additional Warrant”) for the purchase of 1,000,000 shares of the Company’s common
stock at a price of $6.00 per share, on substantively the same terms as the Original Warrant. LSVI’s Registration Rights
Agreement, dated May 26, 2015, with us was also amended and restated to include the shares of common stock issuable under the Additional
Warrant.
On December 30,
2016, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with LSVI, pursuant to which the Convertible
Note was returned to the Company and cancelled in exchange for 363,611 shares of the Company’s Series A Preferred Stock,
which is non-convertible and perpetual preferred stock of the Company. As a result of the exchange transaction, no principal or
interest remained outstanding or payable under the Convertible Note and the Convertible Note was no longer convertible into shares
of common stock of the Company. The Company issued 10,097 and 10,277 shares of Series A Preferred Stock to LSVI in May 2017 and
September 2017, respectively, as payments of a dividend on the shares of Series A Preferred Stock held by LSVI as of March 31,
2017 and June 30, 2017, respectively.
On September 26,
2017, LSVI completed a cashless exercise of the full Replacement Warrant, of which there was a total of 1,666,666 shares of common
stock underlying, in exchange for the issuance of 1,205,837 shares of our common stock.
Purchase Agreement
On April 20, 2016,
we entered into a Stock Purchase Agreement with Dhruwa N. Rai, one of our former directors, pursuant to which Mr. Rai purchased
from us 500,000 shares of our common stock, par value $0.01 per share, at a price per share of $6.00 for an aggregate purchase
price of $3,000,000 and we issued 500,000 unregistered shares of common stock to Mr. Rai.
Ameri India
On
September 1, 2016, we issued 299,250 shares of common stock to Srinidhi “Dev” Devanur, our Executive Chairman, in connection
with the completion of our acquisition of Ameri Consulting Service Private Ltd. on July 1, 2016, pursuant to the terms of a Stock
Purchase Agreement dated May 26, 2015.
2017 Notes Transaction
On March 7, 2017, we completed the sale
and issuance of $1,250,000 in 8% Convertible Unsecured Promissory Notes (the “2017 Notes”), which were issued to four
accredited investors, including one of the Company’s then-directors, Dhruwa N. Rai, and David Luci, who became a director
of the Company in February 2018. The 2017 Notes bear interest at 8% per annum until maturity in March 2020, with interest being
paid annually on the first, second and third anniversaries of the issuance of the 2017 Notes beginning in March 2018. From and
after an event of default and for so long as the event of default is continuing, the 2017 Notes will bear default interest at the
rate of 10% per annum. The 2017 Notes can be prepaid by us at any time without penalty. As of April 30, 2018, we are not current
in the payment of interest on all of the 2017 Notes and are in discussion with holders of the 2017 notes for which we are not current
in the payment of interest to negotiate longer payment terms until we are able to raise more capital.
The 2017 Notes are convertible into shares
of our common stock at a conversion price equal to $2.80. The holders of the 2017 Notes have the right, at their option, at any
time and from time to time to convert, in part or in whole, the outstanding principal amount and all accrued and unpaid interest
under the 2017 Notes into shares of the Company’s common stock at the then applicable conversion price.
The 2017 Notes rank junior to our secured
credit facility with Sterling National Bank. The 2017 Notes also include certain negative covenants including, without the investors’
approval, restrictions on dividends and other restricted payments and reclassification of its stock.
Director Independence
Our Board of Directors
has determined that all director nominees, except for Srinidhi Devanur, our Executive Vice Chairman, are independent directors
(as currently defined in Rule 5605(a)(2) of the NASDAQ listing rules). In determining the independence of our directors, the Board
of Directors considered all transactions in which the Company and any director had any interest, including those discussed under
“Related Transactions and Section 16(a) Beneficial Ownership Reporting Compliance” below. The independent directors
meet as often as necessary to fulfill their responsibilities, including meeting at least twice annually in executive session without
the presence of non-independent directors and management.
Item 14.
Principal Accountant Fees and
Services
In May 2015,
the Board selected Ram Associates as its independent accountant to audit the registrant’s financial statements. Since
they were retained, there have been (1) no disagreements between us and Ram Associates on any matters of accounting principle or
practices, financial statement disclosure, or auditing scope or procedures and (2) no reportable events within the meaning set
forth in Item 304(a)(1)(v) of Regulation S-K. Ram Associates has not issued any reports on our financial statements during the
previous two fiscal years that contained any adverse opinion or a disclaimer of opinion or were qualified or modified as to uncertainty,
audit scope or accounting principle. In connection with the audit of the 2015 financial statements, we entered into an engagement
agreement with Ram Associates which sets forth the terms by which Ram Associates has performed audit and related professional services
for us.
The following
table sets forth the aggregate accounting fees paid by us for the year ended December 31, 2017 and the year ended December 31,
2016. The below fees were paid to the firm Ram Associates. All non-audit related services in the table were pre-approved and/or
ratified by the Audit Committee of our Board of Directors.
|
|
Year Ended December 31,
|
|
|
Year Ended December 31,
|
|
Type of Fees
|
|
2017
|
|
|
2016
|
|
Audit Fees
|
|
$
|
75,000
|
|
|
$
|
59,000
|
|
Audit Related Fees
|
|
|
—
|
|
|
|
—
|
|
Tax Fees
|
|
|
—
|
|
|
|
—
|
|
All Other Fees
|
|
|
29,500
|
|
|
|
—
|
|
Total
|
|
$
|
104,500
|
|
|
$
|
59,000
|
|
Types of Fees Explanation
Audit
Fees
. Audit fees were incurred for accounting services rendered for the audit of our consolidated financial statements
for the year ended December 31, 2017 and reviews of quarterly consolidated financial statements.
Audit Committee Pre-Approval
of Services by Independent Registered Public Accounting Firm
Section
10A(i)(1) of the Exchange Act and related SEC rules require that all auditing and permissible non-audit services to be performed
by our principal accountants be approved in advance by the Audit Committee of the Board. Pursuant to Section 10A(i)(3) of the Exchange
Act and related SEC rules, the Audit Committee has established procedures by which the Chairman of the Audit Committee may pre-approve
such services provided that the pre-approval is detailed as to the particular service or category of services to be rendered and
the Chairman reports the details of the services to the full Audit Committee at its next regularly scheduled meeting.
The audit committee has considered
the services provided by RAM Associates as disclosed above in the captions "audit fees" and "tax fees" and
has concluded that such services are compatible with the independence of RAM Associates as our principal accountant.
Our Board has considered the nature
and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the
audit is compatible with maintaining our independent auditors' independence.