(Address of principal executive offices) (Zip Code)
(412)
621-0902
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last
report)
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
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☐ 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
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Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
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Exchange Act of 1934 (§240.12b-2 of this
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Emerging Growth
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Item 1.01 Entry into a Material Definitive Agreement.
On June 8, 2021, Liberated Syndication, Inc., a Nevada corporation
(the “Company”)
entered into a Settlement Agreement and Release (the
“Settlement
Agreement”) with John
Busshaus, the Company’s former Chief Financial
Officer.
As previously disclosed, on April 24, 2020, Mr. Busshaus filed a
complaint against the Company with the American Arbitration
Association asserting claims arising from his employment
relationship with the Company, including severance claims for
wages, compensation and benefits, and claims of unlawful discharge
and wrongful termination. Mr. Busshaus claimed he resigned for
“Good Reason” as defined in his employment agreement.
The Company asserted counterclaims for breach of fiduciary duty,
professional negligence, fraud, unjust enrichment, and
conversion.
Under the Settlement Agreement, the Company and Mr. Busshaus agreed
to release each other from all claims arising from Mr.
Busshaus’ employment. Furthermore, among other things, the
Company agreed to pay (i) $990,000 to Mr. Busshaus, and (ii)
$660,000 in attorneys’ fees on behalf of Mr. Busshaus.
Additionally, Mr. Busshaus, among other things, agreed to (i) take
certain actions to assist the Company in receiving credits for any
withholding taxes paid by the Company on behalf of Mr. Busshaus,
including providing documentation that he has made the appropriate
income tax filings and payments, and (ii) forfeit 1,062,500
unvested shares.
The 1,062,500 unvested shares were previously included in the
Company’s share count and the forfeit will reduce the
Company’s shares outstanding.
Item 8.01 Other Events.
Other Tax Matters
As disclosed in the Company’s Quarterly Report on Form 10-Q
for the three months ended September 30, 2020, the Company
determined that it had underreported the personal income of some
employees, failed to report the income in a timely
fashion, and failed to withhold Federal withholding taxes at
an appropriate level in connection with restricted stock vesting
events in 2017, 2018, and 2019. The total amount of underreported
employee personal income across the three years is $3,373,250 and
the Company failed to properly withhold taxes on $1,775,000 of
reported employee personal income. As disclosed in the Company's
8-K filed May 10, 2021, the Company completed its estimate of
taxes, penalties and interest and estimated the net combined
liability related to this error as of December 31, 2020 at
approximately $2.1 million in taxes and $650 thousand in penalties
and interest, of which $493 thousand was remitted in
connection with its quarterly payroll tax filing
amendments.
The
Company also received documentation that Christopher Spencer, the
Company’s former Chief Executive Officer, has made his appropriate income tax filings and
payments.
With Mr. Spencer’s documentation, and the commitment from Mr.
Bushause to deliver the same, the Company anticipates the future
IRS assessments will be offset by approximately $1.4M, which will
be shown as a contingent gain in Q2 2021.
Settlement Agreement and Release, dated June 8,2021, by and between Liberated Syndication, Inc. and
John Busshaus.
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 hereunto duly authorized.