Filing Details

CUSIP No. 53839L208

CUSIP No. 53839L208

CUSIP No. 53839L208

The shares of Common Stock directly beneficially owned by Trinad Capital (and indirectly beneficially owned by Mr. Ellin and Trinad Management) were purchased with working capital of Trinad Capital. The shares of Common Stock directly beneficially owned by Trinad Management (and indirectly beneficially owned by Mr. Ellin) were acquired pursuant to the Management Agreement as described in Item 6 of this Schedule 13D. The shares of Common Stock directly beneficially owned by JJAT (and indirectly beneficially owned by Mr. Ellin) were acquired as part of the Merger as described in Item 6 of this Schedule 13D. The shares of Common Stock directly beneficially owned by the Profit Sharing Plan (and indirectly beneficially owned by Mr. Ellin) were acquired from the Issuer for other consideration.

No borrowed funds were used to purchase such shares.

All of the shares of Common Stock reported herein (collectively, the “Shares”) were acquired for investment purposes.

The Reporting Persons intend to evaluate their investment in the Shares on a continual basis. Other than as expressly set forth below, the Reporting Persons have no plans or proposals as of the date of this filing that relate to, or would result in, any of the actions enumerated in Item 4(a)-(j) of Schedule 13D. The Reporting Persons may engage in communications with one or more stockholders, officers or directors of the Issuer and others, including but not limited to, discussions regarding the Issuer’s operations and strategic direction and ideas that, if effected, could result in, among other things, any of the matters identified in Item 4(a)-(j) of Schedule 13D, including but not limited to debt or equity capital raising transactions, acquisitions, mergers, combinations and other strategic transactions. The Reporting Persons reserve their right, based on all relevant factors and subject to applicable law, at any time and from time to time, to review or reconsider their position, change their purpose, take other actions, including to cause or introduce strategic or corporate transactions involving the Issuer or any of its subsidiaries, or one or more of the types of transactions or have one or more the results described in Item 4(a)-(j) of Schedule 13D) or formulate and implement plans or proposals with respect to any of the foregoing.

The Reporting Persons from time to time intend to review their investment in the Issuer on the basis of various factors, including whether various strategic transactions have occurred or may occur, the Issuer’s business, financial condition, results of operations and prospects, general economic and industry conditions, the securities markets in general and those for the Issuer’s securities in general, as well as other developments and other investment opportunities. Based upon such review, the Reporting Persons intend to take such actions in the future as they deemappropriate in light of the circumstances existing from time to time, which may include acquisitions of shares of Common Stock or other convertible securities of the Issuer or disposal of all or any portion of the Shares or shares of Common Stock or other securities of the Issuer otherwise acquired by the Reporting Persons, either in the open market or privately negotiated transactions, with or without prior notice.

(a, b) As of the date hereof, (i) Mr. Ellin may be deemed to have indirect beneficial ownership interest of 8,587,494 shares of Common Stock(representing approximately 16.7% of the number of shares of Common Stock issued and outstanding) as the Managing Director and Portfolio Manager of Trinad Capital, 1,085,591 shares of Common Stock (representing approximately 2.2% of the number of shares of Common Stock issued and outstanding) as the Managing Member of Trinad Management, 6,814,210 shares of Common Stock (representing approximately 13.7% of the number of shares of Common Stock issued and outstanding) as the principal owner of JJAT, 1,213,210 shares of Common Stock (representing approximately 2,4% of the number of shares of Common Stock issued and outstanding) as the trustee of the Profit Sharing Plan, (ii) Trinad Capital has direct beneficial ownership of 8,587,494 shares of Common Stock (representing approximately 16.7% of the number of shares of Common Stock issued and outstanding) owned by it, (iii) Trinad Management has direct beneficial ownership of 1,085,591 shares of Common Stock (representing approximately 2.2% of the number of shares of Common Stock issued and outstanding) and may be deemed to have indirect beneficial ownership interest of 8,587,494 shares of Common Stock (representing approximately 16.7% of the number of shares of Common Stock issued and outstanding) directly beneficially owned by Trinad Capital as the Managing Director of Trinad Capital, (iv) JJAT has direct beneficial ownership of 6,814,210 shares of Common Stock owned by it (representing approximately 13.7% of the number of shares of Common Stock issued and outstanding), and (v) the Profit Sharing Plan has direct beneficial ownership of 1,213,210 shares of Common Stock owned by it (representing approximately 13.7% of the number of shares of Common Stock issued and outstanding). The percentages with respect to Mr. Ellin’s and Trinad Capital’s beneficial ownership are based on (i) 36,619,759 shares of the Issuer’s common stock reported by the Issuer to be issued and outstanding as of December 13, 2017 in the Registration Statement, plus (ii) 1,726,474 shares (the “Conversion Shares”) of the Issuer’s common stock issuable upon conversion of the Issuer’s convertible notes held by Trinad Capital, which Trinad Capital shall has the right to convert at the conversion price of $3.00 per share as a result of the consummation of the Public Offering, plus (iii) 5,000,000 shares of the Issuer’s common stock sold in the Public Offering (excluding the over-allotment option) (the “Public Offering Shares”), plus (iv) 8,030,909 shares of the Issuer’s common stock issued in connection with the acquisition of Slacker, Inc. (the “Slacker Acquisition Shares”).

The percentages with respect to the other Reporting Persons’ beneficial ownership are based on (i) 36,619,759 shares of the Issuer’s common stock reported by the Issuer to be issued and outstanding as of December 13, 2017 in the Registration Statement, plus (ii) the Public Offering Shares, plus (iii) the Slacker Acquisition Shares.

Mr. Ellin, as the Managing Member of Trinad Management, which is the Managing Director of Trinad Capital, has sole power to vote or direct the vote of 8,587,494 shares of Common Stock directly beneficially owned by Trinad Capital; has shared power to vote or direct the vote of 0 shares of Common Stock directly beneficially owned by Trinad Capital; has sole power to dispose or direct the disposition of 8,587,494 shares of Common Stock directly beneficially owned by Trinad Capital; and has shared power to dispose or direct the disposition of 0 shares of Common Stock directly beneficially owned by Trinad Capital.

Mr. Ellin, as the Managing Member of Trinad Management, has sole power to vote or direct the vote of 1,085,591 shares of Common Stock directly beneficially owned by Trinad Management; has shared power to vote or direct the vote of 0 shares of Common Stock directly beneficially owned by Trinad Management; has sole power to dispose or direct the disposition of 1,085,591 shares of Common Stock directly beneficially owned by Trinad Management; and has shared power to dispose or direct the disposition of 0 shares of Common Stock directly beneficially owned by Trinad Management.

Mr. Ellin, as the principal owner of JJAT, has sole power to vote or direct the vote of 6,814,210 shares of Common Stock directly beneficially owned by JJAT; has shared power to vote or direct the vote of 0 shares of Common Stock directly beneficially owned by JJAT; has sole power to dispose or direct the disposition of 6,814,210 shares of Common Stock directly beneficially owned by JJAT; and has shared power to dispose or direct the disposition of 0 shares of Common Stock directly beneficially owned by JJAT.

Mr. Ellin, as the trustee of the Profit Sharing Plan, has sole power to vote or direct the vote of 1,213,210 shares of Common Stock directly beneficially owned by the Profit Sharing Plan; has shared power to vote or direct the vote of 0 shares of Common Stock directly beneficially owned by the Profit Sharing Plan; has sole power to dispose or direct the disposition of 1,213,210 shares of Common Stock directly beneficially owned by the Profit Sharing Plan; and has shared power to dispose or direct the disposition of 0 shares of Common Stock directly beneficially owned by the Profit Sharing Plan.

Mr. Ellin and Trinad Management disclaim beneficial ownership of the reported securities except for (i) Mr. Ellin’s and Trinad Management’s pecuniary interest therein, (ii) the direct beneficial ownership of Trinad Management as reported herein, (iii)the indirect interest of Trinad Management by virtue of being the Managing Director of Trinad Capital, (iv) the indirect interest of Mr. Ellin by virtue of being a member of Trinad Management, (v) the indirect interest of Mr. Ellin by virtue of being a shareholder of JJAT, and (vi) the indirect interest of Mr. Ellin by virtue of being a member of Trinad Capital.

(c) See Item 6 below.

(d) Not applicable other than as set forth herein. Certain shareholders of JJAT have the contractual right to receive dividends from, or the proceeds from the sale of, shares of Common Stock owned by JJAT.

(e) Not applicable.

Securities Purchase Agreement

On September 9, 2011, Trinad Capital entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Alex Kuznetsov, a former shareholder and former sole director and officer of the Issuer, pursuant to which Mr. Kuznetsov sold to Trinad Capital an aggregate of 1,333,333 shares of Common Stock in consideration of an aggregate payment of $311,615. As of the date of this Schedule 13D, Trinad Capital directly beneficially owns 8,587,494 shares of Common Stock.

The foregoing summary of the Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement that was filed as Exhibit 10.1 to the Issuer’s Current Report on Form 8-K filed with the SEC on September 15, 2011, which is incorporated herein by reference.

Merger with KoKo (Camden) Holdings (US), Inc.

On April 28, 2014, the Issuer entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Issuer, Loton Acquisition Sub I, Inc., a Delaware corporation (“Acquisition Sub”) and KoKo (Camden) Holdings (US), Inc. (“KoKo Parent”), a Delaware corporation and wholly-owned subsidiary of JJAT Corp. (“JJAT”), a Delaware corporation wholly-owned by Mr. Ellin and his affiliates (the “Merger”). As a result of the Merger, KoKo Parent became a wholly-owned subsidiary of the Issuer, and the Issuer’s primary business became that of KoKo Parent and its subsidiaries, KoKo (Camden) Limited, a private limited company registered in England and Wales, which owns 50% of OBAR Camden Holdings Limited, a private limited company registered in England and Wales (“OCHL”), which in turn wholly-owns its operating subsidiary OBAR Camden Limited, a private limited company registered in England and Wales. On December 1, 2016, the Company sold its 50% interest in OCHL to Mr. Bengough for approximately $2.18 million. As part of the closing of the Merger, pursuant to the terms of the Merger Agreement, KoKo Parent’s former sole shareholder, JJAT, received 19,333,333 shares of Common Stock. As of the date hereof, JJAT has direct beneficial ownership of 6,814,210 shares of Common Stock.

The foregoing summary of certain terms of the Merger Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement that was filed as Exhibit 2.1 to the Issuer’s Current Report on Form 8-K filed with the SEC on April 30, 2014, which is incorporated herein by reference.

Management Agreement

On September 23, 2011, the Issuer entered into a Management Agreement (“Management Agreement”) with Trinad Management. Pursuant to the Management Agreement, Trinad Management agreed to provide certain management services to the Issuer through September 22, 2014, including, without limitation, the sourcing, structuring and negotiation of potential business acquisitions and customer contracts for the Issuer. Under the Management Agreement, the Issuer compensated Trinad Management for its services by (i) paying a fee equal to $2,080,000, with $90,000 payable in advance of each consecutive 3-month calendar period during the term of the Management Agreement and with $1,000,000 due at the end of the 3-year term, and (ii) issuing a warrant to purchase 750,000 shares of Common Stock at an exercise price of $0.225 per share (the “Warrant”). On August 25, 2016, the Warrant was fully exercised on a cashless basis at an exercise price of $0.225 per share, resulting in the issuance 716,216 shares of Common Stock. Trinad LLC continues to provide services to the Issuer at a fee of $30,000 per month on a month-to-month basis.

The foregoing summary of certain terms of the Management Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Management Agreement that was filed as Exhibit 10.2 to the Issuer’s Current Report on Form 8-K filed with the SEC on September 28, 2011, which is incorporated herein by reference.

Issuance of Promissory Note to JJAT

On August 19, 2016, the Issuer issued a 6% unsecured note payable to JJAT for a total principal amount of $55,000. Under the terms of the note, if the Issuer raised a minimum of $5,000,000 (excluding the amount converting pursuant to the note) of aggregate gross proceeds from an equity financing led by a reputable institutional investor in one or more closings prior to the maturity date, JJAT had the right to convert all outstanding note principal and interest into the same equity securities issued in such equity financing at 75% of the issuance price of the securities issued in such financing. On December 21, 2016, this note was repaid in full.

Issuance of Promissory Note to Trinad Capital Master Fund

On December 31, 2014, the Issuer issued a senior convertible promissory note (the “First Senior Note”) to Trinad Capital allowing for advances up to a maximum loan amount of $1,000,000. At the time the First Senior Note was issued, Trinad Capital advanced $700,000 to the Issuer. On April 21, 2016, the First Senior Note was amended to extend the maturity date to June 30, 2017, or such later date as Trinad Capital may agree to in writing. For extending the maturity date of the note, the Issuer issued to Trinad Capital 4-year warrants to purchase 381,662 shares of Common Stock, with an exercise price of $0.015 per share. These warrants were subsequently fully exercised at an exercise price of $0.015 per share, resulting in the issuance 381,662 shares of Common Stock to Trinad Capital. As of September 30, 2017, $0 was outstanding under the First Senior Note.

On April 8, 2015, the Issuer issued a second senior promissory note (the “Second Senior Note”) to Trinad Capital allowing for advances up to a maximum loan amount of $195,500. On April 26, 2016, the Second Senior Note was amended to increase the Maximum Advance Amount to $3,000,000 and to extend its maturity date to June 30, 2017, or such later date as Trinad Capital may agree to in writing. For extending the maturity date of the note, the Issuer issued to Trinad Capital 4-year warrants to purchase 735,923 shares of Common Stock, with an exercise price of $0.015 per share. These warrants were subsequently fully exercised at an exercise price of $0.015 per share, resulting in the issuance 735,923 shares of Common Stock to Trinad Capital. As of September 30, 2017, $0 was outstanding under the Second Senior Note.

On February 21, 2017, the Issuer issued a 6% unsecured note payable to Trinad Capital to convert aggregate principal and interest of $3,581,077 under the First and Second Senior Notes with Trinad Capital. This note is due March 31, 2018. As a result of the consummation of the Public Offering, Trinad Capital has the right to convert all outstanding note principal and interest into shares of the Issuer’s common stock at a price of $3.00 per share. In addition, Trinad Capital received an aggregate of 596,846 warrants to purchase shares of the Company’s common stock at an exercise price of $0.03 per share. At September 30, 2017, the balance due of $3,711,173 includes $130,096 of accrued interest outstanding under the note.

On October 27, 2017, the Issuer issued 6% unsecured convertible notes payable to Trinad Capital for a total principal amount of $625,000. These notes will be due September 30, 2018. Before their maturity, Trinad Capital in its sole discretion has the option to convert all outstanding principal and interest into our common stock at a conversion price per share based upon our current valuation, as determined by the board of directors. As a result of the consummation of the Public Offering, Trinad Capital has the right to convert all outstanding note principal and interest into shares of Common Stock at a price of $3.00 per share. In addition, Trinad Capital received 325,000 warrants to purchase shares of the Common Stock at an exercise price of $0.01 per share. The warrants were exercised as of November 16, 2017.