UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): August 6, 2020
FACEBANK
GROUP, INC.
(Exact
name of registrant as specified in its charter)
| Florida |
|
000-55353 |
|
26-4330545 |
(State
or other jurisdiction of
incorporation
or organization) |
|
(Commission
File
Number) |
|
(I.R.S.
Employer
Identification
Number) |
| 1330
Avenue of the Americas, New York, NY |
|
10019 |
| (Address
of principal executive offices) |
|
(Zip
Code) |
| |
|
|
| Registrant’s
telephone number, including area code: |
|
(212)
672-0055 |
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
| [ ] |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
| [ ] |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
| [ ] |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
|
| [ ] |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
| Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
| N/A |
|
N/A
|
|
N/A |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 pursuant to Section 13(a) of the Exchange Act. [ ]
| Item
4.02 |
Non-Reliance
on Previously Issued Financial Statements. |
On August 10, 2020, the Board of
Directors (the “Board”) of FaceBank Group, Inc. (the “Company”) concluded, upon the
recommendation of the Company’s Audit Committee and in consultation with management and L J Soldinger Associates, LLC, the
Company’s independent registered public accounting firm (“Soldinger”), that the Company will restate
its financial statements as of and for the year ended December 31, 2019 and the quarter ended March 31, 2020 (the “Affected
Periods”), as contained in the Company’s 2019 Annual Report on Form 10-K and the Company’s Quarterly Report
on Form 10-Q for the period ended March 31, 2020. In light of the restatement, investors should no longer rely upon the financial
statements for the Affected Periods.
Description
of Error
In
connection with the preparation of the Company’s condensed consolidated interim financial statements as of and for the quarter
ended June 30, 2020, the Company identified an inadvertent error in the accounting for goodwill relating to the Company’s
acquisitions of Nexway AG and Facebank AG. In connection with these acquisitions, goodwill was inadvertently impaired.
Upon
further evaluation, the Company determined that goodwill amounting to $79.7 million should not have been impaired. Accordingly,
the Company should have allocated $51.2 million towards the loss on deconsolidation of Nexway AG during the three months ended
March 31, 2020, which would have resulted in a loss on deconsolidation of Nexway AG of $11.9 million. The financial statement
misstatements reflected herein did not impact cash flows from operations, investing, or financing activities in the Company’s
consolidated statements of cash flows for any period previously presented.
Internal
Control Over Financial Reporting
The
Company is in the process of finalizing its evaluation of the matter described above with respect to internal control over financial
reporting and disclosure controls and procedures and will reiterate a previously disclosed material weakness in internal control
over financial reporting related. The Company has concluded that its disclosure controls and procedures and internal control over
financial reporting for the Affected Periods were not effective as of the end of each of the Affected Periods, as well as in subsequent
periods until such material weakness as well as other previously-identified material weaknesses are remediated.
Timing
of Restatement
The
Company intends to restate the previously filed financial statements to correct for this accounting error in advance of filing
the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2020, which the Company expects to file on
a timely basis. Determination of the impact of the error described above is subject to continued analysis by management and Soldinger,
the Company’s independent registered public accounting firm, and could change based on further review and analysis of the
Affected Periods. The Company, when restating the previously filed financial statements, may also correct other previously identified
errors that were determined to be immaterial.
The
Board and members of the Company’s management have discussed the matters disclosed in this Item 4.02 with Soldinger, the
Company’s independent registered public accounting firm.
| Item
5.02 |
Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers. |
(d)
On
August 6, 2020, Ignacio Figueras was elected to the Board by unanimous written consent of the then-current members of the Board.
Subsequently, the Ignacio was appointed to serve as a member of the Company’s newly-formed Compensation Committee. The Company
issued a press release announcing the appointment of Mr. Figueras on August 10, 2020, a copy of which is attached hereto
as Exhibit 99.1.
Ignacio
“Nacho” Figueras is an award-winning Argentinian polo player, an entrepreneur, television personality, spokesperson,
investor and philanthropist. Mr. Figueras is currently the captain and co-owner of the Black Watch polo team and is the owner
of Cria Yata, a successful global horse breeding operation based in Argentina. In addition to his polo career, in collaboration
with Flavors & Fragrances, Mr. Figueras has developed a luxury fragrance line, The Ignacio Figueras Collection, which is expanding
to stores internationally in 2020; a portion of the proceeds from the collection’s sales support Sentebale, a charity of
which Mr. Figueras has been an ambassador since 2006. Further, in 2013, Mr. Figueras and Estudio Ramos co-founded the Figueras
Design Group (FDG), a global design consultancy headquartered in Buenos Aires with offices in New York and Chicago. Mr. Figueras
is also an investor and a member of the board of directors and advisors at Flow Water, a fast-growing premium wellness water brand
in North America as well as an advisory board member for Saudi Arabia’s Giga Project Amaala. Mr. Figueras is recognized
around the globe for his nearly two-decade association as a spokesperson with Ralph Lauren and Ralph Lauren fragrances. The Company
believes that Mr. Figueras’s background as an international athlete, entrepreneur, investor and philanthropist will bring
a unique perspective to the Board.
There
is no arrangement or understanding between Mr. Figueras and any other person, other than as described below, pursuant to which
Mr. Figueras was elected as a director of the Company. There are no family relationships between Mr. Figueras and any director
or executive officer of the Company, and, other than as described herein, no transactions involving Mr. Figueras that would require
disclosure under Item 404(a) of Regulation S-K.
In
connection with his appointment to the Board, Mr. Figueras was granted an option to purchase 66,132 shares of the Company’s
common stock (the “Initial Award”) in accordance with the Company’s Outside Director Compensation Policy
(the “Compensation Policy”) and subject to the Company’s 2020 Equity Incentive Plan (the “Plan”)
and standard option award agreements thereunder. The Initial Award will vest in 36 equal, monthly installments beginning on the
grant date, provided that Mr. Figueras continues to serve as a Service Provider (as defined in the Plan) through the applicable
vesting date. In addition, any unvested potion of the Initial Award that remains outstanding as of the date of a change of control
of the Company will immediately vest in full and become exercisable. In addition to the Initial Awards in accordance with the
Compensation Policy, Mr. Figueras will receive an annual cash retainer of $45,000 for his Board service, subject to increase for
service on Board committees. In addition to the Initial Award, Mr. Figueras will be eligible to receive an annual equity award
in accordance with the Compensation Policy.
The
Company entered into its standard form of indemnification agreement with Mr. Figueras, which is included as Exhibit 10.1. The
form of indemnification agreement was previously filed as Exhibit 10.2 to the Company’s current report on Form 8-K filed
April 7, 2020 and is incorporated herein by reference.
Cautionary
Note Regarding Forward-Looking Statements
This
Current Report on Form 8-K, the Press Release and the Shareholder Letter contains forward-looking statements within the meaning
of applicable U.S. securities laws, including statements regarding our expectations, beliefs, plans, operations and strategies
relating to our business. Forward-looking statements may be identified by words such as “seek”, “believe”,
“plan”, “estimate”, “anticipate”, expect”, “intend”, and statements that
an event or result “may”, “will”, “should”, “could”, or “might” occur
or be achieved and any other similar expressions. Forward-looking statements involve risks and uncertainties, as well as assumptions
which, if they do not fully materialize or prove incorrect, could cause the Company’s results to differ materially from
those expressed or implied by such forward-looking statements, and include the impact of the restatement on investor perception
of the Company and its ability to remediate its material weaknesses, risks related to the Company’s access to capital and
fundraising prospects to fund its ongoing operations and its ability to continue as a “going concern”, risks related
to the Company’s ability to uplist to a national securities exchange, risks related to diverting management’s attention
from the Company’s ongoing business operations to address integration and fundraising efforts, and other business effects,
including the effects of industry, market, economic, political or regulatory conditions, future exchange and interest rates, and
changes in tax and other laws, regulations, rates and policies, including the impact of COVID-19 on the broader market. Further
risks that could cause actual results to differ materially from those matters expressed in or implied by such forward-looking
statements are discussed in the Company’s periodic filings with the Securities and Exchange Commission and we encourage
you to read such risks in detail. The forward-looking statements in this Current Report on Form 8-K, the Press Release and the
Shareholder Letter represent our views as of the date of this Current Report on Form 8-K. The Company anticipates that subsequent
events and developments will cause its views to change. However, while it may elect to update these forward-looking statements
at some point in the future, it specifically disclaims any obligation to do so. You should, therefore, not rely on these forward-looking
statements as representing the Company’s views as of any date subsequent to the dates of this Current Report on Form 8-K,
the Press Release and the Shareholder Letter, respectively.
| Item
9.01 |
Financial
Statements and Exhibits. |
SIGNATURES
Pursuant
to the requirements 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.
| |
FACEBANK
GROUP, INC. |
| |
|
| Date:
August 10, 2020 |
By |
/s/
David Gandler |
| |
Name: |
David
Gandler |
| |
Title: |
Chief
Executive Officer |
