UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
| Filed by the Registrant |
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| |
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| Filed by a Party other than the Registrant |
☐ |
Check the appropriate box:
| ☒ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)) |
| ☐ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material under §240.14a-12 |
Gryphon Digital Mining, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| ☐ | Fee paid previously with preliminary materials. |
| ☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On August 29, 2024
Dear Stockholder:
The Annual Meeting of Stockholders of Gryphon
Digital Mining, Inc., (the “Company”), will be held virtually via the Internet at https://www.cstproxy.com/gryphondigitalmining/2024,
on August 29, 2024 at 10:00 a.m. Eastern time for the following purposes:
| 1. | To approve and adopt amendments to the Company’s Amended
and Restated Certificate of Incorporation to declassify the Board and make related changes. |
| 2. | To elect one Class III director to the Board for a three-year
term of office expiring at the 2027 Annual Meeting of Stockholders (if Proposal 1 is not approved), or for a one-year term of office
expiring at the 2025 Annual Meeting of Stockholders (if Proposal 1 is approved); |
| 3. | To approve, on a non-binding advisory basis, the compensation
of our named executive officers as disclosed in this Proxy Statement; |
| 4. | To approve, on a non-binding advisory basis, the frequency
of future non-binding advisory votes on named executive officer compensation; and |
| 5. | To ratify the selection of RBSM LLP as the Company’s
independent registered public accounting firm for the fiscal year ending December 31, 2024. |
These items of business are more fully described
in the Proxy Statement accompanying this Notice. All stockholders are invited to attend the meeting. The record date for the Annual Meeting
is July 16, 2024. Only stockholders of record at the close of business on that date are entitled to notice of and to vote at the meeting.
The solicitation of proxies is made by the Company.
We will pay for the entire cost of soliciting proxies. We have engaged Morrow Sodali, LLC (“Morrow”) to assist in the solicitation
of proxies for the Annual Meeting. We have agreed to pay Morrow a fee of $10,000 in connection with such services in connection with the
Annual Meeting. We will also reimburse Morrow for reasonable out-of-pocket expenses and will indemnify Morrow and its affiliates
against certain claims, liabilities, losses, damages and expenses. In addition to these mailed proxy materials, our directors and officers
may also solicit proxies in person, by telephone or by other means of communication. These parties will not be paid any additional compensation
for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial
owners.
The 2024 Annual Meeting will be a completely virtual
meeting of stockholders, which will be conducted exclusively by webcast on the internet. No physical meeting will be held.
Important Notice Regarding the Availability
of Proxy Materials
for the Stockholders’ Meeting to Be Held
on August 29, 2024
at 10:00 a.m. Eastern Time
virtually via the Internet at https://www.cstproxy.com/gryphondigitalmining/2024
The Proxy Statement and Annual Report on Form
10-K
are available at https://www.cstproxy.com/gryphondigitalmining/2024
Proxy materials will be first sent to stockholders
on or about [●], 2024.
By Order of the Board of Directors,
Rob Chang
Chief Executive Officer
Las Vegas, Nevada
, 2024
You are cordially invited to attend the virtual
annual meeting. Whether or not you expect to attend the virtual annual meeting, please complete, date, sign and return the enclosed proxy,
or vote by phone or online as instructed in these materials, as promptly as possible in order to ensure your representation at the meeting.
A return envelope (which is postage prepaid if mailed in the United States) has been provided for your convenience.
TABLE OF CONTENTS
EXPLANATORY NOTE
On February 9, 2024 (the “Closing
Date”), Gryphon Digital Mining, Inc., a Delaware corporation f/k/a Akerna Corp. (“Gryphon,” the “Company,”
“we,” “us” or “our”), consummated the previously announced business combination pursuant to that certain
Agreement and Plan of Merger by and between the Company, Akerna Merger Co., a wholly-owned subsidiary of the Company (“Merger Sub”),
and Ivy Crypto, Inc. (formerly known as Gryphon Digital Mining, Inc.) (“Legacy Gryphon”), dated January 27, 2023, as amended
(the “Merger Agreement”), following approval thereof at a special meeting of the Company’s stockholders held on January
29, 2024 (the “Special Meeting”).
Pursuant to the terms of the
Merger Agreement, a business combination between the Company and Legacy Gryphon was effected through the merger of Merger Sub with and
into Legacy Gryphon, with Legacy Gryphon as the surviving company in the Merger, and after giving effect to such merger, continuing as
a wholly owned subsidiary of the Company (the “Merger” and, together with the other transactions contemplated by the Merger
Agreement, the “Business Combination”). On the date of the closing (the “Closing”) of the Business Combination
(the “Closing Date”), the registrant changed its name from Akerna Corp. to Gryphon Digital Mining, Inc. Additionally, on the
Closing Date, immediately following the Closing, the Company sold its legacy business to MJ Acquisition Corp. pursuant to that certain
securities purchase agreement dated April 28, 2023, as amended (the “SPA”) by and among the Company, Akerna Canada Ample Exchange
Inc. and MJ Acquisition Corp.
Unless the context requires
otherwise, references to “Akerna” are to the Company prior to the Business Combination.
The Company’s common
stock, par value $0.0001 per share (the “Common Stock”), is listed on the Nasdaq Capital Market (“Nasdaq”) under
the symbol “GRYP”.
Forward-Looking Statements
This Proxy Statement contains various forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, which represent the Company’s expectations or beliefs concerning future events. All statements other than statements
of historical facts contained in this Proxy Statement, including statements regarding our future results of operations and financial position,
strategy and plans, and our expectations for future operations, are forward-looking statements. Forward-looking statements include those
containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,”
“forecasts,” “goal,” “intends,” “may,” “outlook,” “plans,” “projects,”
“seeks,” “sees,” “should,” “targets,” “will,” “would,” or other
words of similar meaning. These forward-looking statements rely on assumptions and involve risks and uncertainties, many of which are
beyond the Company’s control, including, but not limited to, factors detailed in this Proxy Statement and under Part I, “Item
1A. Risk Factors” and in other sections of our most recent Annual Report on Form 10-K for the year ended December 31, 2023 (the
“Annual Report on Form 10-K), and in our other subsequent filings with the Securities and Exchange Commission (the “SEC”).
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may
vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue
reliance on our forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and,
except as required by law, the Company undertakes no duty to update or revise any forward-looking statement.
1180 N. Town Center Drive, Suite 100
Las Vegas, NV 89144
PROXY STATEMENT
FOR THE 2024 Annual Meeting OF STOCKHOLDERS
To Be Held on August 29, 2024
QUESTIONS
AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Why am I receiving these materials?
Gryphon Digital Mining, Inc. (“Gryphon”
or the “Company”) is sending you these proxy materials because the Board of Directors (the “Board”) of Gryphon
is soliciting your proxy to vote at the 2024 Annual Meeting of Stockholders (the “Annual Meeting”), including at any adjournments
or postponements of the Annual Meeting. You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy
Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may simply complete, sign and return
the related proxy card, or follow the instructions below to submit your proxy by phone or online.
The Annual Meeting will be a completely virtual
meeting of stockholders, which will be conducted exclusively online via the virtual meeting website at www.cstproxy.com/gryphondigitalmining/2024.
Hosting a virtual meeting enables increased stockholder attendance since stockholders can participate from any location around the world.
Stockholders can vote via the internet in advance or during the virtual Annual Meeting.
How do I attend the virtual Annual Meeting?
This year the annual meeting will be a completely
virtual meeting. There will be no physical meeting. The meeting will only be conducted via live webcast.
To participate in the virtual meeting, visit www.cstproxy.com/gryphondigitalmining/2024
and enter the 16-digit control number included with your proxy materials or on your proxy card. You may begin to log into the meeting
platform beginning at 9:45 a.m. Eastern Time on August 29, 2024. The meeting will begin promptly at 10:00 a.m., Eastern Time on August
29, 2024.
The virtual meeting platform is fully supported
across browsers (Microsoft Edge, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most
updated version of applicable software and plugins. Participants should ensure that they have a strong internet connection wherever they
intend to participate in the meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear
streaming audio prior to the start of the meeting.
Technical assistance will be available for stockholders
who experience technical issues accessing the meeting. Contact information for technical support will appear on the virtual meeting website
prior to the start of the meeting.
However, even if you plan to attend the virtual
Annual Meeting, the Company recommends that you vote your shares in advance, so that your vote will be counted if you later decide not
to attend the Annual Meeting.
How do I gain admission to the virtual Annual
Meeting?
You are entitled to attend the virtual Annual
Meeting only if you were a stockholder of record as of the record date for the Annual Meeting, which was July 16, 2024, or you hold a
valid proxy for the Annual Meeting. You may attend the Annual Meeting, and may vote and submit a question during the Annual Meeting, by
visiting www.cstproxy.com/gryphondigitalmining/2024 and using your 16-digit control number to enter the Annual Meeting.
Who can vote at the Annual Meeting?
Only stockholders of record at the close of business
on July 16, 2024 will be entitled to vote at the Annual Meeting. As of July 16, 2024, there were [●] shares of common stock outstanding
and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If on July 16, 2024 your shares were registered
directly in your name with Gryphon’s transfer agent, Continental Stock Transfer & Trust Company (“Continental”),
then you are a stockholder of record. As a stockholder of record, you may vote at the Annual Meeting by going to the virtual meeting website
or vote by proxy. Whether or not you plan to attend the Annual Meeting, the Company urges you to fill out and return the related proxy
card or vote by proxy by phone or online as instructed below to ensure your vote is counted.
Beneficial Owner: Shares Registered in the
Name of a Broker or Bank
If on July 16, 2024 your shares were not held
in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner
of shares held in “street name” and proxy materials should be forwarded to you by that organization, which notice will contain
instructions on how you may direct the voting of your shares and how to access and participate in the Annual Meeting. The organization
holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner,
you have the right to direct your broker or other agent regarding how to vote the shares in your account.
How do I ask questions?
If you would like to submit a question during
the meeting, log into the virtual meeting platform at www.cstproxy.com/gryphondigitalmining/2024, which provides functionality for you
to submit a question during the meeting. Please note that questions that are pertinent to meeting matters will be answered during the
meeting, subject to time constraints, and questions regarding personal matters or others that are not pertinent to meeting matters will
not be answered.
On what matters am I voting?
There are five matters scheduled for a vote:
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Proposal 1. To approve and adopt amendments to the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to declassify the Board and make related changes; |
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Proposal 2. To approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement; |
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Proposal 3. To approve, on a non-binding advisory basis, the frequency of future non-binding advisory votes on named executive officer compensation; |
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Proposal 4. To elect one Class III director to the Board for a three-year term of office expiring at the 2027 Annual Meeting of Stockholders (if Proposal 1 is not approved), or for a one-year term of office expiring at the 2025 Annual Meeting of Stockholders (if Proposal 1 is approved); and |
| ● | Proposal 5. To ratify the selection of RBSM LLP as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2024. |
The Board recommends that stockholders vote “For”
Proposal 1, “For” Proposal 2, “Three Years” for Proposal 3, “For” with respect to the individual director
nominee under Proposal 4 and “For” Proposal 5.
What if another matter is properly brought before the Annual Meeting?
The Board knows of no other matters that will
be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, it is the intention
of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
How do I vote?
With respect to Proposal 1, you may vote for “For”
or “Against” or you may “Abstain” from voting.
With respect to Proposal 2, you may vote for “For”
or “Against” or you may “Abstain” from voting.
With respect to Proposal 3, you may vote for “One
Year,” “Two Years” or “Three Years” or you may “Abstain” from voting.
With respect to Proposal 4, you may vote for “For”
or “Against” or “Abstain” with respect to the nominee.
With respect to Proposal 5, you may vote for “For”
or “Against” or you may “Abstain” from voting.
The procedures for voting are:
Stockholder of Record: Shares Registered in
Your Name
Stockholders of record may vote their shares (i)
electronically at the virtual Annual Meeting, or (ii) by proxy by mail, telephone or Internet. Whether or not you plan to attend the virtual
Annual Meeting, the Company urges you to vote by proxy to ensure your vote is counted. You may choose one of the following voting methods
to cast your vote.
| 1. | To vote electronically at the virtual Annual Meeting, see
above in “How do I attend the virtual Annual Meeting?” |
| 2. | If you have received a printed copy of these proxy materials,
you may vote by mail by simply marking your proxy, dating and signing it, and return it to the Company in the postage-paid envelope provided. |
| 3. | To vote by telephone or Internet, follow the instructions
on the proxy card. |
The method by which you vote now will in no way
limit your right to vote electronically at the virtual Annual Meeting if you later decide to attend.
Beneficial Owner: Shares Registered in the
Name of Broker or Bank
Beneficial holders will need to contact Continental
to receive a control number. If you plan to vote at the virtual Annual Meeting you will need to have a legal proxy from your bank, broker
or nominee or, if you would like to join and not vote, Continental will issue a guest control number with proof of ownership. Stockholders
must contact Continental for specific instructions on how to receive the control number. Continental can be contacted at (917) 262-2373,
or via email at proxy@continentalstock.com. Please allow up to 72 hours prior to the Annual Meeting for processing your control number.
Internet proxy voting is provided to allow
you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However,
please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers
and telephone companies.
How many votes do I have?
On each matter to be voted upon, you have one
vote for each share of common stock you own as of July 16, 2024.
What happens if I do not vote?
Stockholder of Record: Shares Registered in
Your Name
If you are a stockholder of record and do not
vote by completing your proxy card by mail, by phone, online or virtually at the Annual Meeting, your shares will not be voted.
Beneficial Owner: Shares Registered in the
Name of Broker or Bank
If you are a beneficial owner and do not instruct
your broker, bank, or other agent how to vote your shares, they will not have the authority to vote your shares on matters other than
Proposal 5 for the ratification of RBSM LLP as the Company’s independent registered public accounting firm. In the case of Proposal
5, the rules of Nasdaq allow brokers to vote their customers’ shares on certain “routine” matters in the Proxy Statement
at the brokers’ discretion when they have not received timely voting instructions from their customers. We believe that under Nasdaq
rules, Proposal 5 is considered a “routine” matter as to which brokers may exercise voting discretion.
The Nasdaq rules on broker discretionary voting
prohibit banks, brokers, and other intermediaries from voting uninstructed shares on certain matters, including the election of directors.
Notwithstanding the Nasdaq rule, banks, brokers, and other intermediaries may choose not to exercise any permitted discretion, in which
case, if you hold your stock in street name and do not instruct your bank, broker, or other intermediary how to vote in the election of
directors, it is possible that no votes will be cast on your behalf with respect to either Proposals 1, 2, 3 or 4. It is important that
you cast your vote on all matters.
Are abstentions and broker non-votes counted
as votes cast?
No. Under the laws of the State of Delaware, the
Company’s state of incorporation, “votes cast” at a meeting of stockholders by the holders of shares entitled to vote
are determinative of the outcome of the matter subject to vote. Abstentions and broker non-votes will not be considered “votes cast”
based on current Delaware law requirements and the Company’s Certificate of Incorporation and by-laws.
What if I return a proxy card or otherwise
vote but do not make specific choices?
If you return a signed and dated proxy card or
otherwise vote without marking voting selections, your shares will be voted, as applicable, “For” Proposal 1, “For”
Proposal 2, “Three Years” for Proposal 3, “For” with respect to the individual director nominee under Proposal
4 and “For” Proposal 5. If any other matter is properly presented at the Annual Meeting, your proxyholder (one of the individuals
named on your proxy card) will vote your shares using his best judgment.
Who is paying for this proxy solicitation?
The Company will pay for the entire cost of soliciting
proxies. We have engaged Morrow to assist in the solicitation of proxies for the Annual Meeting. We have agreed to pay Morrow a fee of
$10,000 in connection with such services in connection with the Annual Meeting. We will also reimburse Morrow for reasonable out-of-pocket expenses
and will indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages and expenses. In addition to these mailed
proxy materials, our directors and officers may also solicit proxies in person, by telephone or by other means of communication. These
parties will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents
for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one
set of proxy materials?
If you receive more than one set of proxy materials,
your shares may be registered in more than one name or in different accounts. Please follow the voting instructions in the proxy materials
to ensure that all of your shares are voted.
Can I change my vote after submitting my proxy?
Stockholder of Record: Shares Registered in
Your Name
Yes. You can revoke your proxy at any time before
the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following
ways:
| ● | You may submit another properly completed proxy card with
a later date. |
| ● | You may grant a subsequent proxy by phone or online. |
| ● | You may send a timely written notice that you are revoking
your proxy to Gryphon’s Corporate Secretary at 1180 N. Town Center Drive, Suite 100, Las Vegas, NV 89144. |
| ● | You may attend the Annual Meeting and vote virtually. Simply
attending the Annual Meeting without voting virtually will not, by itself, revoke your proxy. |
Your most current proxy card or proxy submitted
by phone or online is the one that is counted.
Beneficial Owner: Shares Registered in the
Name of Broker or Bank
If your shares are held by your broker or bank
as a nominee or agent, you should follow the instructions provided by your broker or bank.
How are votes counted?
Votes will be counted by the inspector of election
appointed for the Annual Meeting, who will separately count votes and any broker non-votes and abstentions for each of the proposals.
For each of Proposals 1, 2, 3 and 4, broker non-votes will have no effect and will not be counted toward the vote total. For Proposal
5, brokers will have voting discretion if the beneficial owner does not give instructions as to how to vote.
What are “broker non-votes”?
Broker non-votes occur when a beneficial owner
of shares held in “street name” does not give instructions to the broker, bank or other nominee holding the shares as to how
to vote on matters deemed “non-routine.” Generally, if shares are held in street name, the beneficial owner of the shares
is entitled to give voting instructions to the broker, bank or other nominee holding the shares. If the beneficial owner does not provide
voting instructions, the broker, bank or other nominee can still vote the shares with respect to matters that are considered to be “routine,”
but cannot vote the shares with respect to “non-routine” matters. Under the rules and interpretations of the Nasdaq, “non-routine”
matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, reverse stock splits, stockholder
proposals, elections of directors (even if not contested) and, executive compensation, including advisory stockholder votes on executive
compensation and on the frequency of stockholder votes on executive compensation. The ratification of the selection of a company’s
independent registered public accounting firm is generally considered to be “routine” and brokers, banks or other nominees
generally have discretionary voting power with respect to such proposals although not all brokers and nominees may choose to exercise
that discretion. Broker non-votes will be counted for the purpose of determining whether a quorum is present at the Annual Meeting.
How many votes are needed to approve each proposal?
Regarding Proposal 1, the Declassification Amendments
must receive the affirmative vote of at least a majority of the voting power of all of the then-outstanding shares of capital stock of
the Company entitled to vote generally in the election of directors, voting together as a single class. Therefore, this proposal will
be approved if the number of votes cast “For” approval of such proposal constitutes at least a majority of the outstanding
shares of common stock. This means that if you abstain from voting on this proposal, your vote will have the same effect as a vote against
this proposal. Broker non-votes will also have the same effect as votes against the proposal.
To be approved, each of Proposals 2 and 3 must
receive the holders of a majority of shares present in person or represented by proxy and entitled to vote on the matter, and which did
not abstain.
Regarding Proposal 4, the election of a director,
the Board’s nominee will be elected by a plurality of the votes of the shares present in person or represented by proxy and entitled
to vote on the election of a director, and which did not abstain.
To be approved, Proposal 5, the ratification of
RBSM LLP as the Company’s independent registered public accounting firm, must receive “For” votes from the holders of
a majority of shares present in person or represented by proxy and entitled to vote on the matter, and which did not abstain.
Assuming a quorum is present, abstentions will have no effect on Proposals 2 through 5.
What is the quorum requirement?
A quorum of stockholders is necessary to hold
a valid Annual Meeting. A quorum is present if stockholders holding a majority of the outstanding shares of common stock entitled to vote
are present at the Annual Meeting in person or represented by proxy. As of July 16, 2024, there were [●] shares outstanding and entitled
to vote. Thus, the holders of [●] shares must be present in person or represented by proxy at the Annual Meeting to have a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank
or other nominee) by mail, by phone or online or if you vote in person at the Annual Meeting. Abstentions and broker non-votes will be
counted towards the quorum requirement. If there is no quorum, either the chairman of the Annual Meeting or the holders of a majority
of shares present at the Annual Meeting in person or represented by proxy may adjourn the Annual Meeting to another date.
How can I find out the results of the voting
at the Annual Meeting?
Preliminary voting results will be announced at
the Annual Meeting. In addition, final voting results will be published in a current report on Form 8-K that the Company expects to file
within four business days after the Annual Meeting. If final voting results are not available to the Company in time to file a Form 8-K
within four business days after the Annual Meeting, it intends to file a Form 8-K to publish preliminary results and, within four business
days after the final results are known, file an additional Form 8-K to publish the final results.
What proxy materials are available on the internet?
The Proxy Statement and Form 10-K are available
at https://www.cstproxy.com/gryphondigitalmining/2024.
Who can help answer my questions?
If you have questions about the proposals or if you need additional
copies of the proxy materials or the enclosed proxy card you should contact our proxy solicitor, Morrow, at (800) 662-5200 (toll free)
or by email at GRYP.info@investor.morrowsodali.com.
You may also obtain additional information about
the Company from documents filed with the SEC by following the instructions in the section entitled “Additional Information.”
PROPOSAL 1 - APPROVAL AND ADOPTION OF AMENDMENTS
TO THE
COMPANY’S CERTIFICATE OF INCORPORATION
TO DECLASSIFY THE BOARD
Since the Company’s initial public offering,
the Board has been divided into three classes, each elected for a three-year term. The classification of the Board results in staggered
elections, with a different class of directors standing for election every third year. Currently, any director elected to fill a newly
created Board seat or vacancy holds office for a term that coincides with the remaining term of the class of directors in which the new
directorship was created or the vacancy occurred. The Board has believed that this classified structure promotes continuity and stability
of strategy, oversight and policies, provides negotiating leverage to the Board in a potential takeover situation and facilitates the
ability of the Board to focus on creating long-term stockholder value. As part of the Company’s regular discussions on corporate
governance issues, in consultation with members of the Board and incorporating feedback from the Company’s stockholders, the Board
evaluated the classified board structure and took into account arguments both for and against the continuation of a classified board.
The Board considered the growing sentiment, particularly
in the institutional investor community, in favor of annual elections and the Board’s ability to continue to be effective in protecting
stockholder interests under an annual election system. In this regard, the Board recognizes that many investors and commentators believe
that the election of directors is the primary means for stockholders to influence corporate policies and hold management accountable for
implementing those policies. The Board is also cognizant that many other companies who recently went public have eliminated their classified
board structures in recent years.
In order to implement declassification of the
Board, the Company’s Certificate of Incorporation will need to be amended. After careful deliberation, the Board has approved proposed
amendments to the Company’s Certificate of Incorporation that would eliminate the classified structure and provide for the annual
election of all directors beginning at the 2025 Annual Meeting of Stockholders. The general description of the declassification amendments
set forth below is a summary only and is qualified in its entirety by and subject to the full text of the form of proposed amendments
(the “Declassification Amendments”), which is attached as Annex A hereto.
In making its decision to recommend stockholders
approve and adopt the declassification of the Board, the Board considered the benefits of a classified board versus a declassified board
and important feedback received from stockholders as part of the Company’s ongoing stockholder outreach efforts. While a classified
board can promote continuity, enhance the stability of the Board and encourage a long-term perspective, the Board considered the possibility
that a classified board structure may reduce the accountability of directors to stockholders. After careful deliberation on these and
other considerations, the Board determined that moving to annual elections of directors is in the best interests of the Company and its
stockholders. The Board unanimously adopted resolutions setting forth the Declassification Amendments, declared the Declassification Amendments
advisable and unanimously resolved to submit the Declassification Amendments to stockholders for consideration.
The proposed Declassification Amendments provide
for the annual election of all directors for one-year terms, beginning at the 2025 Annual Meeting of Stockholders. The Declassification
Amendments also provide that directors elected by the Board to fill vacancies would be appointed for a term expiring at the next annual
meeting of stockholders following their appointment, even if their predecessors were serving for a longer term. In addition, Delaware
law provides that directors serving on boards that are not classified may be removed with or without cause, whereas currently directors
can be removed only for cause. Consistent with Delaware law, the Declassification Amendments would permit stockholders to remove directors
elected after the Board is declassified with or without cause. Directors elected while the Board was still classified, that is through
the 2025 Annual Meeting, would continue to be removable only for cause.
The form of the Declassification Amendments is
attached as Annex A hereto. If the Company’s stockholders approve the amendments to the Certificate of Incorporation,
the amendments will become legally effective upon the filing of a Certificate of Amendment with the Delaware Secretary of State. The Company
intends to make that filing as soon as practicable after this Proposal 1 has been duly approved by stockholders at the Annual Meeting.
Following such time, the Board will make conforming changes to the Company’s bylaws. If the Company’s stockholders do not
approve the amendments, the Board will remain classified, with each class of directors serving for three-year staggered terms.
Required Vote
Regarding Proposal 1, the Declassification Amendments
must receive the affirmative vote of at least a majority of the voting power of all of the outstanding shares of capital stock of the
Company entitled to vote generally in the election of directors, voting together as a single class.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” PROPOSAL 1.
PROPOSAL 2 - TO APPROVE, BY NON-BINDING ADVISORY
VOTE, THE RESOLUTION
APPROVING THE COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATION
In accordance with Section 14A of the Exchange
Act and the related rules of the SEC, the Company is asking its stockholders to vote to approve, on a non-binding advisory basis, the
compensation of our named executive officers as disclosed in this Proxy Statement. This proposal, commonly known as a “say-on-pay”
proposal, gives our stockholders the opportunity to express their views on the compensation of our named executive officers. This vote
is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and
the principles, policies and practices described in this Proxy Statement. Accordingly, the following advisory resolution is submitted
for stockholder vote at the annual meeting:
RESOLVED, that the stockholders of
Gryphon Digital Mining, Inc. approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed
in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the compensation tables regarding named executive
officer compensation and the narrative disclosures that accompany the compensation tables.
Although the “say-on-pay” vote is
non-binding, the Board and the compensation committee will carefully review and consider the voting results when evaluating our named
executive officer compensation program.
Required Vote
The Say on Pay Proposal requires the affirmative
vote of a majority of the shares present in person or represented by proxy at the annual meeting and entitled to vote thereon to be approved.
You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Only votes “For,” or “Against” will affect the outcome with respect to this proposal, and assuming a quorum is
present, abstentions will have no effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” PROPOSAL 2.
PROPOSAL 3
TO APPROVE, BY NON-BINDING ADVISORY VOTE, THE FREQUENCY OF FUTURE
NON-BINDING ADVISORY VOTES ON RESOLUTIONS APPROVING FUTURE NAMED
EXECUTIVE
OFFICER COMPENSATION
In Proposal 2 above, the Company is asking its
stockholders to vote on a non-binding advisory resolution on named executive officer compensation and the Company will provide this type
of advisory vote at least once every three years. Pursuant to Section 14A of the Exchange Act and the related rules of the SEC, in this
Proposal 3, the Company is asking its stockholders to vote on the frequency of future non-binding advisory votes on named executive officer
compensation.
The Board believes that an advisory vote on executive
compensation every three years is the most appropriate policy for the Company at this time, and recommends that stockholders vote for
future non-binding advisory votes on named executive officer compensation to occur every three years. While our named executive officer
compensation programs are designed to promote a long-term connection between pay and performance, and the Board recognizes that named
executive officer compensation disclosures are made annually, the rules of the SEC permit the Company to solicit this advisory vote only
every three years and the Company believes that management time and attention is better served by soliciting this advisory vote only every
three years.
Pursuant to this non-binding advisory vote on
the frequency of future non-binding advisory votes on named executive officer compensation, stockholders will be able to specify one of
four choices for this proposal on the proxy card or voting instruction: one year, two years, three years or abstain. Stockholders are
not voting to approve or disapprove the Board’s recommendation. The vote is non-binding on the Board. Nevertheless, the Board and
the compensation committee will carefully review the voting results. Notwithstanding the Board’s recommendation and the outcome
of the stockholder vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its
practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.
Required Vote
The Say When on Pay Proposal requires the affirmative
vote of a majority of the shares present in person or represented by proxy at the annual meeting and entitled to vote thereon to be approved.
You may vote for the frequency of the Say When on Pay Proposal as “ONE YEAR,” “TWO YEARS,” “THREE YEARS,”
or you may vote “ABSTAIN” on this proposal. Only votes for “ONE YEAR,” “TWO YEARS” or “THREE YEARS” will affect the outcome with respect to this
proposal, and assuming a quorum is present, abstentions will have no effect.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS a vote for “THREE YEARS” as the preferred frequency of the non-binding advisory
resolution approving the Company’s Named Executive Officer compensation.
PROPOSAL
4 - ELECTION OF A DIRECTOR
Our Board currently consists of five directors.
Our Certificate of Incorporation and bylaws, as amended, provide that the total number of directors constituting the entire Board shall
be seven directors; provided that, the total number of directors constituting the entire Board of Directors may be changed to such number
as may be fixed from time to time exclusively by resolution adopted by the affirmative vote of at least a majority of the Board. Our Board
is currently divided into three classes, designated as Class I, Class II and Class III directors, with only one class of
directors being elected in each year and each class serving a three-year term. The term of office of the Class I directors, consisting
of Steve Gutterman and Heather Cox, will expire at our 2025 annual meeting of stockholders. The term of office of the Class II directors,
consisting of Brittany Kaiser and Rob Chang, will expire at our 2026 Annual Meeting of Stockholders. Jessica Billingsley, a continuing
Class III director whose term of office expires as of the Annual Meeting, has been nominated by the Board for re-election at the Annual
Meeting. If elected at the Annual Meeting, Ms. Billingsley will serve until the 2027 Annual Meeting of Stockholders (if Proposal 1 is
not approved), or until the 2025 Annual Meeting of Stockholders (if Proposal 1 is approved).
We have not formally established any specific,
minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating
nominees for director, our Board of Directors considers educational background, diversity of professional experience, knowledge of our
business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our shareholders.
It is the Company’s policy to invite and
encourage directors and the director nominee to attend the Annual Meeting. Jessica Billingsley attended the 2023 meeting.
Directors are elected by a plurality of the votes
of the shares present in person or represented by proxy and entitled to vote on the election of directors, and which did not abstain.
Accordingly, for Proposal 4, the nominee has to receive the highest number of votes cast in order to be elected. Shares represented by
executed copies of the accompanying proxies will be voted, if authority to do so is not withheld, for the election of Ms. Billingsley.
If the nominee becomes unavailable for election
as a result of an unexpected occurrence, shares that would have been voted for such nominee will instead be voted for the election of
a substitute nominee that the Board will propose. The person nominated for election has agreed to serve if elected. The Company has no
reason to believe that the nominee will be unable to serve.
NOMINEE FOR THE CLASS III DIRECTOR POSITION
The following is a brief biography of the nominee
for director and a discussion of the specific experience, qualifications, attributes or skills of such nominee that led the nominating
and governance committee to recommend that person as a nominee for director, as of the date of this Proxy Statement.
Jessica Billingsley, 46, has served as a director
on our board of directors since the closing of the Business Combination. Prior to the Business Combination, Ms. Billingsley served as
Chief Executive Officer and director of Akerna since starting in June 2019, and Chairman of the Board starting in July 2019. Ms.
Billingsley co-founded MJF, Akerna’s wholly-owned subsidiary, in 2010 and served as President of MJF from 2010 to April 2018 and
Chief Executive Officer since May 2018. An early investor in one of Colorado’s first legal medical cannabis businesses, Ms. Billingsley
created the category of cannabis seed-to-sale technology after seeing the need first-hand. Prior to MJF, Ms. Billingsley was the founder
and chief executive officer of Zoco, LLC, a technology services firm with clients across the United States. Ms. Billingsley has 20 years
of technology and systems experience with rapidly scaling businesses, and founded her first business at the age of 22. Ms. Billingsley
served on the board of the National Cannabis Industry Association from 2012 – 2019 and currently serves as Chair of the Board of
the United States Cannabis Council. Ms. Billingsley was named one of Fortune’s 10 most promising women entrepreneurs in 2015 and
named one of Inc. Magazine’s 100 Female Founders in 2018. Ms. Billingsley holds a dual degree from the University of Georgia in
Computer Science and Communications. Ms. Billingsley was selected to serve on our board of directors based on her extensive experience
with technology and systems companies, broad experience in the telecommunications industry, and her background as an entrepreneur.
Required Vote
Regarding Proposal 4, the Board’s
nominee will be elected by a plurality of the votes of the shares present in person or represented by proxy and entitled to vote on
the director election matter, and which did not abstain. Only votes “For,” or “Against” will affect the
outcome with respect to this proposal, and assuming a quorum is present, abstentions will have no effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE ELECTION OF THE NOMINEE LISTED IN THIS PROPOSAL 4.
CONTINUING DIRECTORS
Brittany Kaiser, Chairperson of the Board
Brittany Kaiser, 36, has served as our Chairperson
of the board since the closing of the Business Combination and as the chairperson of Legacy Gryphon’s board of directors since February 4,
2021 and as a director of Legacy Gryphon since December 21, 2020. Ms. Kaiser is also an independent director of Lucy Scientific Discovery
Inc. (Nasdaq: LSDI), a psychotropics contract manufacturing company, since December 2020, Chief Executive Officer and director of Achayot
Partners LLC, a digital asset consulting firm, since April 2019, President and director of Own Your Data Foundation, a non-profit foundation
implementing digital intelligence education programs since August 2019 and co-founder of Digital Asset Trade Association, an advocacy
group for distributed ledger technology since February 2018. Prior to that, Ms. Kaiser served as business development director at SCL
USA, a provider of consumer research, targeted advertising and other data-related services from March 2017 to January 2018 and SCL Group
Ltd. (UK) from February 2015 to March 2017. Ms. Kaiser graduated from Middlesex University School of Law in 2015. Ms. Kaiser was selected
to serve on our board of directors based on her broad experience in diverse leadership roles, including digital asset consulting, non-profit
leadership, and distributed ledger technology advocacy.
Robby Chang
Robby Chang, 46, has served as
Gryphon’s Chief Executive Officer and a director since the closing of the Business Combination and as Legacy Gryphon’s
Chief Executive Officer and a director since January 14, 2021. Mr. Chang has also been a director of Fission Uranium Corp.
(TSX: FCU), a mineral exploration company, since April 2018, a director of Ur-Energy, Inc. (NYSE American: URG), an exploration
stage mining company, since March 2018, and a director of Shine Minerals Corp., a company engages in the acquisition, exploration,
and evaluation of mineral properties, from November 2018 to June 2024. Mr. Chang is also the Chief Executive Officer and founder of Chang
Advisory Inc., a consulting service company, since December 2020. Prior to that, from August 2019 to January 2021, Mr. Chang
was an independent consultant for traditional mining and crypto currency companies. From July 2018 to March 2020, Mr. Chang was
a member of the board of advisors of District Metals Corp. (TSX.V: DMX), a mineral exploration stage company. From February 2018 to
August 2019, Mr. Chang served as CFO of Riot Platforms, Inc. (Nasdaq: RIOT), a provider of Bitcoin mining and data center
hosting, and oversaw the company’s business operations, investor relations and finances. From January 2011 to January 2018,
Mr. Chang was the managing director and Head of Metals and Mining Research of Cantor Fitzgerald. Mr. Chang graduated from
the Rotman School of Management at University of Toronto with his MBA in 2006. We believe Mr. Chang is fit to serve on our
board of directors based on his diverse leadership experience across multiple industries, including mineral exploration,
cryptocurrency, consulting, and metals and mining research.
Heather Cox
Heather Cox, 53, has been at the forefront of
building and leading disruptive fintech, healthtech, data and digital businesses throughout her career, from the early days of E*TRADE
to more recently in the healthcare space serving as the Chief Digital Health and Analytics Officer for Humana (NYSE: HUM) from August
2018 to February 2023. At Humana, she was accountable for building the firm’s digital care delivery operations and leading enterprise
advanced analytics, including the application of Artificial Intelligence at scale in healthcare. Prior to Humana, Heather served as Chief
Technology and Digital Officer at United Services Automobile Association (“USAA”), a financial services company providing
insurance and banking products from September 2016 to March 2018, where she built personalized and digitally enabled end-to-end experiences
for USAA members. Heather served as CEO of Citi FinTech at Citigroup, a fintech start-up that she designed that allowed Citigroup to harness
innovation in the global fintech ecosystem. Prior, she headed Card Operations for Capital One, where she reshaped customer and digital
experience for Capital One cardholders. Heather has been named to several American Banker Women to Watch Lists, including a designation
of the #3 Woman to Watch nationally in banking in 2017. In 2015, she was named Digital Banker of the Year by American Banker and one of
the 10 most innovative CEOs in banking by Bank Innovation. Since March 2018, Heather has served on the board of directors of NRG Energy
(Nasdaq: NRG), and since August 2022, has served on the board of directors of Atlantic Union Bankshares Corporation (Nasdaq: AUB). Heather
graduated cum laude with a Bachelor of Arts in Economics from the University of Illinois at Urbana- Champaign. Ms. Cox was selected to
serve on our board of directors based on her extensive career in fintech, healthtech, data, and digital businesses, demonstrating her
expertise in driving innovation and digital transformation.
Steve Gutterman
Mr. Gutterman, 54, has built, led, acquired
and invested in market-changing companies for almost 30 years. Since July 2021 he has served as CEO of Falcon International, a large private
cannabis company in California. Previously, he served from January 2020 to July 2021 as CEO of General Cannabis Corp, also known as TREES
Corporation (OTC: CANN), a cannabis retailer and cultivator company, and from May 2018 to November 2020 as President of Harvest Health
& Recreation Inc. (CSE: HARV), since acquired by Trulieve (CSE: TRUL) to form the largest cannabis company in the US as measured by
revenue. Prior to Harvest Health & Recreation Inc., he held a variety of senior roles including at E*TRADE Financial (Nasdaq: ETFC)
from February 2000 to July 2005, where he was EVP and COO of E*TRADE Bank. During his tenure, the bank’s assets increased from $1 billion
to $35 billion. He also served as the CEO of GeoPoll from November 2012 to July 2018, a market research company and was Managing
Director of MBH Enterprises, a private equity company focused on technology and infrastructure, from August 2005 to November 2012. Mr.
Gutterman was selected to serve on our board of directors based on his extensive experience in building, leading, acquiring, and investing
in transformative companies over the past 25 years. His track record of success demonstrate his strategic prowess and ability to drive
growth and innovation across various sectors.
BOARD
DIVERSITY
Each of the categories listed in the below table has the meaning as
it is used in Nasdaq Rule 5605(f).
| Board Diversity Matrix |
| Board Size: |
|
|
|
|
|
|
|
|
| Total Number of Directors |
|
5 |
|
|
|
|
|
|
| | |
Male | |
Female | |
Non-Binary | |
Gender Undisclosed |
| Gender: | |
2 | |
3 | |
— | |
— |
| | |
| |
| |
| |
|
| Number of directors who identify in any of the categories below: | |
| |
| |
| |
|
| African American or Black | |
— | |
— | |
— | |
— |
| Alaskan Native or American Indian | |
— | |
— | |
— | |
— |
| Asian | |
1 | |
— | |
— | |
— |
| Hispanic or Latinx | |
— | |
— | |
— | |
— |
| Native Hawaiian or Pacific Islander | |
— | |
— | |
— | |
— |
| White | |
4 | |
— | |
— | |
— |
| Two or more races or ethnicities | |
— | |
— | |
— | |
— |
| LGBTQ+ | |
— | |
— | |
— | |
— |
| Undisclosed | |
— | |
— | |
— | |
— |
Of our five current directors, four identify as having at least one
diversity characteristic (i.e., female, non-binary, LGBTQ+ and/or race or ethnicity other than white).
INFORMATION
REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
INDEPENDENCE OF THE BOARD OF DIRECTORS
As our common stock is listed on the Nasdaq Capital
Market, our determination of the independence of directors is made using the definition of “independent director” contained
in Nasdaq Listing Rule 5605(a)(2). Our Board has affirmatively determined that each of Ms. Kaiser, Ms. Billingsley, Ms. Cox and Mr.
Gutterman are “independent directors,” as that term is defined in the Nasdaq rules. Under the Nasdaq rules, our Board must
be composed of a majority of “independent directors.” Additionally, subject to certain limited exceptions, our Board’s
audit, compensation, and nominating and corporate governance committees also must be composed of all independent directors.
Audit committee members must also satisfy the
independence criteria set forth in Rule 10A-3 under the Exchange Act. Under the rules of Nasdaq, a director will only qualify as
an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship
that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
To be considered to be independent for purposes
of Rule 10A-3 of the Exchange Act, a member of an audit committee of a listed company may not, other than in his capacity as a member
of our audit committee, our Board, or any other committee of our Board: (1) accept, directly or indirectly, any consulting, advisory,
or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company
or any of its subsidiaries.
BOARD LEADERSHIP STRUCTURE
The Board has an independent chairperson, Ms.
Kaiser, who has authority, among other things, to call and preside at Board meetings, including meetings of the independent directors,
to set meeting agendas and to determine materials to be distributed to the Board. Accordingly, the Board Chairperson has substantial ability
to shape the work of the Board. The Company believes that separation of the positions of Board Chairperson and Chief Executive Officer
reinforces the independence of the Board in its oversight of the business and affairs of the Company. In addition, the Company believes
that having an independent Board Chairperson creates an environment that is more conducive to objective evaluation and oversight of management’s
performance, increasing management accountability and improving the ability of the Board to monitor whether management’s actions
are in the best interests of the Company and the Company’s stockholders. As a result, the Company believes that having an independent
Board Chairperson enhances the effectiveness of the Board as a whole.
There are no family relationships among any of
the directors or executive officers., nor have any of our executive officers or key employees been involved in a legal proceeding that
would be required to be disclosed pursuant to Item 401(f) of Regulation S-K of the Exchange Act.
ROLE OF THE BOARD IN RISK OVERSIGHT
One of the key functions of the Board is informed
oversight of the Company’s risk management process. The Board does not have a standing risk management committee, but rather administers
this oversight function directly through the Board as a whole, as well as through various standing committees of the Board that address
risks inherent in their respective areas of oversight. In particular, the Board is responsible for monitoring and assessing strategic
risk exposure and the Company’s audit committee is responsible for considering and discussing the Company’s major financial
risk exposures and the Company’s risk assessment and risk management policies (including those related to data privacy, data security
and cybersecurity). The Company’s audit committee also periodically reviews the general process for the oversight of risk management
by the Board.
The nominating and governance committee monitors
compliance with legal and regulatory requirements and the effectiveness of the Company’s corporate governance practices, including
whether they are successful in preventing illegal or improper liability-creating conduct. The Company’s nominating and governance
committee is responsible for overseeing the Company’s risk management efforts generally, including the allocation of risk management
functions among the Board and its committees. The Company’s compensation committee is responsible for assessing and monitoring whether
any of the Company’s compensation policies and programs has the potential to encourage excessive risk-taking.
MEETINGS OF THE BOARD OF DIRECTORS
The Board met 18 times during 2023. Each Board
member attended 75% or more of the aggregate number of meetings of the Board and of the committee(s) on which he or she served, that were
held during the portion of 2023 for which he or she was a director or committee member.
Nasdaq rules require that the non-management directors
of the board meet at regularly scheduled executive sessions, without management present, in order to empower the non-management directors
to serve as a more effective check on management. During 2023, the Company’s non-management directors met in executive session,
without management present, at the end of regularly scheduled board meetings or during scheduled executive session calls. Ms. Billingsley,
the Company’s Board Chairman at the time, presided over the executive sessions.
INFORMATION REGARDING COMMITTEES OF THE BOARD OF DIRECTORS
The Board has three committees: an audit committee, a compensation
committee and a nominating and governance committee. The following table provides membership and meeting information for 2023 for each
of the Board committees.
| Name |
|
Audit
Committee |
|
Compensation
Committee |
|
Nominating &
Governance
Committee |
| Barry Fishman^ |
|
X |
|
X |
|
X |
| Matthew R. Kane |
|
X |
|
X |
|
X |
| Tahira Rehmatullah |
|
X |
|
X |
|
X |
| Scott Sozio |
|
|
|
|
|
|
| Jessica Billingsley |
|
|
|
|
|
|
| Number of meetings in 2023 |
|
4 |
|
2 |
|
0 |
| ^ | On November 15, 2023, Mr. Barry Fishman resigned as a director
of the Akerna Board. |
Committees of the Board of Directors
Presently, our board of directors has the following
standing committees: Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. Each of the standing
committees is composed solely of independent directors. The charters for each committee are available on the Company’s website at
www.gryphondigitalmining.com
Audit Committee
We have established an audit
committee of the Board of Directors. Mr. Gutterman, Ms. Kaiser and Ms. Billingsley serve as the members of our audit committee. Under
the Nasdaq listing standards and applicable SEC rules, we are required to have three members of the audit committee, all of whom must
be independent. Each of Mr. Gutterman, Ms. Kaiser and Ms. Billingsley are independent.
Mr. Gutterman serves as the
chair of the audit committee. Each member of the audit committee is financially literate and our Board has determined that Mr. Gutterman
qualifies as an “audit committee financial expert” as defined in applicable SEC rules.
We have adopted an audit committee
charter, which details the principal responsibilities of the audit committee, including:
| |
● |
To assist board oversight of (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) our independent auditor’s qualifications and independence, and (iv) the performance of our internal audit function and independent auditors; the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us; |
| |
|
|
| |
● |
To (i) approve all audit engagement fees and terms and (ii) pre-approve all audit and permitted non-audit and tax services that may be provided by the Company’s independent auditors or other registered public accounting firms. |
| |
|
|
| |
● |
At least annually, to evaluate the qualifications, performance and independence of the Company’s independent auditors, including an evaluation of the lead audit partner; and to assure the regular rotation of the lead audit partner at the Company’s independent auditors and consider regular rotation of the accounting firm serving as the Company’s independent auditors. |
| |
|
|
| |
● |
To review and discuss with the Company’s independent auditors and management the Company’s quarterly financial statements and the disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to be included in the Company’s Quarterly Report on Form 10-Q before such Form 10-Q is filed; and to review and discuss the Form 10-Q for filing with the SEC. |
| |
|
|
| |
● |
To review, approve and oversee any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K promulgated by the SEC) and any other potential conflict of interest situations on an ongoing basis, in accordance with Company policies and procedures, and to develop policies and procedures for the Committee’s approval of related party transactions. |
| |
|
|
| |
● |
To review with management and the Company’s independent auditors: (i) any major issues regarding accounting principles and financial statement presentation, including any significant changes in the Company’s selection or application of accounting principles; (ii) any significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including the effects of alternative GAAP methods; and (iii) the effect of regulatory and accounting initiatives and off-balance sheet structures on the Company’s financial statements. |
| |
|
|
| |
● |
To assist and advise the Board and the Compensation Committee thereof in enforcing the Company’s executive compensation clawback policy and related laws, rules and regulations. |
Report of the Audit Committee of the Board of Directors
The audit committee has reviewed
and discussed with management our audited consolidated financial statements and “Management’s Report on Internal Control over
Financial Reporting” in Item 9A included in the Annual Report on Form 10-K.
The audit committee also discussed
with Marcum LLP (“Marcum”) the matters required to be discussed by the applicable requirements of the Public Company Accounting
Oversight Board (the “PCAOB”) and the SEC. The audit committee received the written disclosures and the letter from Marcum
required by applicable requirements of the PCAOB regarding Marcum’s communication with the audit committee concerning independence
and has discussed with Marcum their independence.
Based upon the review and discussions
described above, the audit committee recommended to the Board that the audited consolidated financial statements be included in the Annual
Report on Form 10-K for filing with the SEC. We have selected RBSM LLP as our independent registered public accounting firm for the
year ending December 31, 2024 and have approved submitting the selection of the independent registered public accounting firm for
ratification by the stockholders.
Steve Gutterman, Chair
Jessica Billingsley
Brittany Kaiser
The material in this audit committee report is
not “soliciting material,” is not deemed “filed” with the Commission and is not to be incorporated by reference
in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective
of any general incorporation language in any such filing.
Compensation Committee
We have established a compensation
committee of our Board of Directors. The members of our compensation committee are Ms. Billingsley, Ms. Cox and Ms. Kaiser. Ms. Billingsley
serves as chair of the compensation committee. We have adopted a compensation committee charter, which details the principal responsibilities
of the compensation committee, including:
| |
● |
To review and approve the Company’s compensation programs and arrangements applicable to its executive officers, including without limitation salary, incentive compensation, equity compensation and perquisite programs, and amounts to be awarded or paid to individual officers under those programs and arrangements, or make recommendations to the Board regarding approval of the same. |
| |
|
|
| |
● |
To determine the objectives of the Company’s executive officer compensation programs, identify what the programs are designed to reward, and modify (or recommend that the Board modify) the programs as necessary and consistent with such objectives and intended rewards. |
| |
|
|
| |
● |
To ensure appropriate corporate performance measures and goals regarding executive officer compensation are set and determine the extent to which they are achieved and any related compensation earned. |
| |
|
|
| |
● |
To at least annually review and approve the Company’s goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of such goals and objectives, and determine and approve the CEO’s compensation level based on this evaluation. |
| |
|
|
| |
● |
To review and approve any new equity compensation plan or any material change to an existing plan where stockholder approval has not been obtained. |
| |
|
|
| |
● |
To assist management in complying with our proxy statement and annual report disclosure requirements; |
| |
|
|
| |
● |
To implement and enforce the Company’s executive compensation clawback policy and related laws, rules and regulations, including determining what constitutes “incentive-based compensation” and, if a clawback is triggered due to a financial statement restatement, the amount of any clawback. |
The charter also provides
that the compensation committee may select, retain and terminate independent legal counsel and other experts or consultants, as it deems
appropriate, without seeking approval of the Board or management, including the authority to approve the fees payable to such counsel,
experts or consultants and any other term of retention. However, before engaging or receiving advice from a compensation consultant, external
legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors
required by Nasdaq and the SEC.
Nominating and Corporate Governance Committee
We have established a nominating and corporate
governance committee of the Board of Directors. The members of our nominating and corporate governance committee are Ms. Kaiser, Mr. Gutterman
and Ms. Billingsley. Ms. Kaiser serves as chair of the nominating and corporate governance committee.
We have adopted a nominating
and corporate governance committee charter, which details the principal responsibilities of the nominating and corporate governance committee,
including:
| |
● |
The identification, evaluation and recommendation of qualified candidates to become Board members. |
| |
|
|
| |
● |
The oversight of the implementation of and monitoring compliance with the Company’s Code of Business Conduct (other than with respect to complaints regarding accounting or auditing issues). |
| |
|
|
| |
● |
Coordinating and overseeing Board, committee, and director evaluations. |
| |
|
|
| |
● |
Periodic review of the Company’s governance documents as appropriate. |
The charter also provides
that the nominating and corporate governance committee may, in its sole discretion, retain or obtain the advice of, and terminate, any
search firm to be used to identify director candidates, and will be directly responsible for approving the search firm’s fees and
other retention terms.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of our compensation committee
is or has been an officer or employee of our company. None of our executive officers currently serves, or in the past year has served,
as a member of the Board’s compensation committee (or other board committee performing equivalent functions) of any entity that
has one or more of its executive officers serving on our Board or compensation committee.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Any interested party may communicate in writing
with any particular director, including the Company’s chairperson, any committee of the Board, or the directors as a group, by sending
such written communication to the Company’s Corporate Secretary at the Company’s principal executive offices at 1180 N. Town
Center Drive, Suite 100, Las Vegas, NV 89144. Copies of written communications received at such address will be provided to the Board
or the relevant director unless such communications are considered, in the reasonable judgment of the Company’s Corporate Secretary,
to be of a purely marketing nature or inappropriate for submission to the intended recipient(s). The Corporate Secretary or his designee
may analyze and prepare a response to the information contained in communications received and may deliver a copy of the communication
to other Company staff members or agents who are responsible for analyzing or responding to complaints or requests. Communications concerning
potential director nominees submitted by any of the Company’s stockholders will be forwarded to the chairman of the nominating and
governance committee.
CODE OF BUSINESS CONDUCT AND ETHICS FOR EMPLOYEES, EXECUTIVE OFFICERS
AND DIRECTORS
We have adopted a code of ethics applicable to
our directors, officers and employees (the “Code of Ethics”). We have filed a copy of our Code of Ethics and our audit committee,
compensation committee and nominating and corporate governance charters as exhibits to this Report. Our stockholders are also able to
review these documents by accessing our public filings at the SEC’s website at www.sec.gov. In addition, a copy of the
Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions
of our Code of Ethics in a Current Report on Form 8-K.
INSIDER TRADING POLICY
The Company has adopted a written Insider Trading
Policy applicable to all directors, officers and employees. The policy also applies to derivative securities relating to the Company’s
stock.
PROPOSAL
5 - RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The audit committee of the Board has selected
RBSM LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024 and has further
directed that management submit the selection of its independent registered public accounting firm for ratification by the stockholders
at the Annual Meeting. RBSM LLP has audited the Company’s financial statements since April 26, 2024. Representatives of RBSM LLP
are expected to be present at the virtual Annual Meeting. They will have an opportunity to make a statement if they so desire and will
be available to respond to appropriate questions.
Neither the Company’s bylaws nor other governing
documents or law require stockholder ratification of the selection of RBSM LLP as the Company’s independent registered public accounting
firm. However, the audit committee is submitting the selection of RBSM LLP to the stockholders for ratification as a matter of good corporate
practice. If the stockholders fail to ratify the selection, the audit committee will reconsider whether or not to retain that firm. Even
if the selection is ratified, the audit committee in its discretion may direct the appointment of different independent auditors at any
time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Marcum LLP was the Company’s
independent registered public accounting firm for the fiscal years ended December 31, 2023 and 2022. As discussed in greater detail below,
the following table shows the fees paid or accrued by us to Marcum during the fiscal years ended December 31, 2023 and 2022:
| Type of Service | |
2023 | | |
2022 | |
| Audit Fees | |
$ | 304,880 | | |
$ | 325,480 | |
| Audit-Related Fees (1) | |
| 222,694 | | |
| 118,965 | |
| Tax Fees | |
| — | | |
| — | |
| Other Fees | |
| — | | |
| — | |
| Total | |
$ | 527,574 | | |
$ | 444,445 | |
| (1) | Consists of audit-related fees related to registration statements. |
“Audit Fees” relate
to fees and expenses billed by Marcum for the annual audits, including the audit of our financial statements, review of our quarterly
financial statements and for comfort letters and consents related to stock issuances.
“Audit-Related Fees”
relate to fees for assurance and related services that traditionally are performed by independent auditors that are reasonably related
to the performance of the audit or review of the financial statements, such as due diligence related to acquisitions and dispositions,
attestation services that are not required by statute or regulation, internal control reviews and consultation concerning financial accounting
and reporting standards.
“Tax Fees” relate
to fees for all professional services performed by professional staff in our independent auditor’s tax division, except those services
related to the audit of our financial statements. These include fees for tax compliance, tax planning and tax advice, including federal,
state and local issues. Services may also include assistance with tax audits and appeals before the Internal Revenue Service and similar
state and local agencies, as well as federal, state and local tax issues related to due diligence.
“All Other Fees”
relate to fees for any services not included in the above-described categories.
On
April 26, 2024 (the “Dismissal Date”), the Company dismissed Marcum
as the independent registered public accounting firm for the Company. The dismissal was approved by the audit committee and the Board.
The change in independent registered public accounting firm was not the result of any disagreement with Marcum.
Marcum’s
audit reports on the financial statements as of December 31, 2023 and 2022 of the Company did not provide an adverse opinion or disclaimer
of opinion to the Company’s financial statements, nor did it modify its opinion as to uncertainty, audit scope or accounting principles,
except that such report contained an explanatory paragraph regarding the Company’s ability to continue as a going concern.
For
the Company’s two most recent fiscal years, and in the subsequent interim period through the Dismissal Date, there were (i) no “disagreements”
within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions between the Company and Marcum on any matters
of accounting principles or practices, financial statement disclosures or auditing scope or procedures which, if not resolved to Marcum’s
satisfaction, would have caused Marcum to make reference thereto in its reports on the financial statements of the Company for such periods,
and (ii) no “reportable events” (as defined in Item 304(a)(1)(v)
of Regulation S-K), except that material weaknesses in internal control over financial
reporting were identified and described in the Company’s Annual Form 10-K for the years ended December 31, 2023 and 2022 as filed
with the SEC.
On
April 26, 2024, as recommended and approved by the audit committee and the Board, the Company engaged RBSM LLP as the Company’s
independent public accounting firm to audit the Company’s consolidated financial statements for the fiscal year ending December
31, 2024 and to review the Company’s quarterly consolidated financial statements for each of the quarters ending March 31, 2024,
June 30, 2024, and September 30, 2024. RBSM previously served as the independent registered public accounting firm of Legacy Gryphon prior
to the closing of the Merger.
For
the Company’s two most recent fiscal years, and in the subsequent interim period through the Dismissal Date, neither the Company
nor anyone on its behalf consulted with RBSM regarding: (i) the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a
written report nor oral advice was provided to the Company that RBSM concluded was an important factor considered by the Company in reaching
a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement
(as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v)
of Regulation S-K).
PRE-APPROVAL POLICIES AND PROCEDURES
The audit committee charter provides that the
audit committee will pre-approve all audit services and non-audit services to be provided by our independent auditors before the accountant
is engaged to render these services. The audit committee may delegate its authority to pre-approve services to one or more committee members,
provided that the designees present the pre-approvals to the full committee at the next committee meeting. Since the formation of our
audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit
services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit
services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
Required Vote
To be approved, Proposal 5, the ratification of RBSM LLP as independent
auditors, must receive “For” votes from the holders of a majority of shares present in person or represented by proxy and
entitled to vote on the matter, and which did not abstain. Only votes “For,” or “Against” will affect the outcome with respect to this proposal, and assuming a quorum is
present, abstentions will have no effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” PROPOSAL 5.
EXECUTIVE
OFFICERS
The following table sets forth information concerning the Company’s
executive officers:
| Name |
|
Age |
|
Position |
| Rob Chang |
|
46 |
|
Chief Executive Officer, President and Director |
| Simeon Salzman |
|
43 |
|
Chief Financial Officer |
EXECUTIVE OFFICERS
The following sets forth certain information with respect to the Company’s
executive officer who is not currently a director. Information with respect to the Company’s Chief Executive Officer, Rob Chang,
is set forth above in “Continuing Directors.”
Simeon Salzman, Chief Financial Officer
and Secretary
Simeon Salzman has served
as Gryphon’s Chief Financial Officer since the closing of the Business Combination and joined Legacy Gryphon’s management
team as the Chief Financial Officer on June 19, 2023. Mr. Salzman is an accomplished financial executive with a diverse background
in overseeing financial functions and driving growth. From late 2020 to March 2023, Mr. Salzman served as the Chief Financial Officer
and Chief Accounting Officer for Marathon Digital Holdings, Inc. (Nasdaq: MARA), a digital asset technology company. During his tenure,
the company experienced significant market capitalization growth, peaking at $8 billion, up from the market capitalization of $500 million.
In addition, he was an integral part of the negotiations with major investment firms and was able to secure substantial capital investments
utilizing debt and equity offerings totaling approximately $2 billion dollars. Prior to that, from July 2018 to October 2020, Mr. Salzman
served as the Chief Financial Officer of the Las Vegas Monorail Company, where he managed the financial operations of a completely electric,
zero-emission driverless monorail transit system that served approximately 4.6 million passengers annually. During his tenure, he
implemented effective financial strategies, ensuring compliance and achieving significant cost savings. Before joining the Las Vegas Monorail
Company, Mr. Salzman held the position of Chief Financial Officer for Wendoh Media and Corner Bar Management from May 2015 through
July 2018. He successfully revitalized various food and beverage establishments in Downtown Las Vegas by streamlining operations resulting
in double-digit returns to the bottom line. Mr. Salzman holds dual degrees with a Bachelor of Science in Accounting and a Bachelor
of Arts in Criminal Justice & Criminology from the University of Maryland, College Park. He is also a Certified Public Accountant.
Executive officers serve at the pleasure of our Board of Directors.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company’s
shares of common stock as of July 11, 2024 for:
| ● | each person, or group of affiliated persons, who is known
by the Company to beneficially own more than 5% of its shares of common stock; |
| ● | each of the Company’s named executive officers; |
| ● | each of the Company’s directors; and |
| ● | all of the Company’s current executive officers and
directors as a group. |
The percentage ownership information is based
upon 40,194,786 shares of common stock outstanding as of July 11, 2024. The Company has determined beneficial ownership in accordance
with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting
power or investment power with respect to those securities. In addition, the rules include shares of common stock issuable pursuant to
the exercise of stock options, restricted and deferred stock units, restricted stock awards or warrants that were outstanding on July
11, 2024 and which are exercisable on or before September 9, 2024, which is 60 days after July 11, 2024. These shares are deemed to be
outstanding and beneficially owned by the person holding those options, restricted and deferred stock units, restricted stock awards or
warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose
of computing the percentage ownership of any other person.
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, subject
to applicable community property laws. Except as otherwise noted below, the address for persons listed in the table is c/o Gryphon Digital
Mining, Inc., 1180 N. Town Center Drive, Suite 100, Las Vegas, NV 89144.
| Name of Beneficial Owner | |
Total # of
Shares
Beneficially
Owned | | |
Percentage of
Ownership(1) | |
| Robby Chang(2) | |
| 3,309,648 | | |
| 8.2 | % |
| Brittany Kaiser(3) | |
| 1,178,349 | | |
| 2.9 | % |
| Simeon Salzman | |
| 169,423 | | |
| * | |
| Heather Cox(4) | |
| 42,104 | | |
| * | |
| Steve Gutterman(5) | |
| 28,070 | | |
| * | |
| Jessica Billingsley(6) | |
| 3,094 | | |
| * | |
| All directors and officers as a group (6 persons named above) | |
| 4,730,688 | | |
| 11.8 | % |
| | |
| | | |
| | |
| Other 5% Stockholders | |
| | | |
| | |
| Dan Tolhurst(7) | |
| 3,309,649 | | |
| 8.2 | % |
| Roxy Capital Corp.(8) | |
| 3,309,362 | | |
| 8.2 | % |
| RJL 18 Capital Canada LP(9) | |
| 3,201,399 | | |
| 8.0 | % |
| * | Represents beneficial ownership of less than 1%. |
| (1) |
Based on 40,194,786 shares of common stock outstanding as of July 11, 2024. |
| (2) |
Based on a Schedule 13D filed on February 16, 2024. Represents shares held by Chang Advisory Inc. Mr. Chang is the Chief Executive Officer of Chang Advisory Inc. and has voting and investment control over the shares held by it. Mr. Chang disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein. |
| (3) |
Represents shares held by Achayot Partners LLC. Ms. Kaiser is the CEO and 50% owner of Achayot Partners LLC and shares voting and investment control over the shares held by it with Natalie Kaiser, the other 50% owner of Achayot Partners LLC. Ms. Kaiser disclaims beneficial ownership of such shares except to the extent of her pecuniary interest therein. |
| (4) |
Includes 14,035 shares issuable upon settlement of restricted stock units. |
| (5) |
Includes 14,035 shares issuable upon settlement of restricted stock units. |
| (6) |
Represents 2,696 shares held by Jessica Billingsley Living Trust and 398 shares held directly by Ms. Billingsley. Ms. Billingsley, the trustee of the Jessica Billingsley Living Trust, has sole and dispositive power over the shares held by the Jessica Billingsley Living Trust. |
| (7) |
Based on a Schedule 13G filed on February 22, 2024. The address of the reporting person is 24 Petersham House, London, UK, SW7 3HD. |
| (8) |
Based on a Schedule 13G filed on February 16, 2024. Eric Lazer is the CEO and 100% owner of Roxy Capital Corp. and has voting and investment control over the shares held by it. Mr. Lazer disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein. The address of Roxy Capital Corp. is 20 Canal Beach, Old Fort Bay, P.O. Box N7776, Nassau, Bahamas 00000. |
| (9) |
Based on a Schedule 13G filed on February 16, 2024. Dean Lazer is the CEO and 100% owner of RJL 18 Capital LP and has voting and investment control over the shares held by it. Mr. Lazer disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein. The address of RJL 18 Capital LP is 150 King Street, West 200, Toronto, Canada M5H 1J9. |
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the
Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity
securities, to file with the SEC initial reports of ownership and reports of changes in ownership of the Company’s shares of common
stock and other equity securities. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company’s knowledge, based solely
on a review of the copies of such reports furnished to it and written representations that no other reports were required, during the
fiscal year ended December 31, 2023, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with, except that one Form 4 (2 transactions) for Matthew R. Kane,
a director of Akerna, was not filed.
EXECUTIVE
COMPENSATION
Summary Compensation Table
The following table sets forth
all information concerning the compensation earned, for the fiscal years ended December 31, 2023 and 2022 for services rendered to us
by persons who served as our named executive officers at the end of December 31, 2023.
| | |
| | |
Salary | | |
Bonus | | |
Stock
Awards | | |
All Other
Compensation | | |
Total | |
| Name and Principal Position | |
Year | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
| (a) | |
(b) | | |
(c) | | |
(d) | | |
(e) | | |
| | |
| |
| Jessica Billingsley | |
2023 | | |
| 300,000 | | |
| 134,130 | (1) | |
| — | | |
| — | | |
| 434,130 | |
| Former Chief Executive Officer | |
2022 | | |
| 297,916 | | |
| — | | |
| — | | |
| 6,587 | (2) | |
| 304,503 | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Ray Thompson | |
2023 | | |
| 235,417 | | |
| 34,323 | (3) | |
| — | | |
| — | | |
| 269,740 | |
| Former Chief Operating Office | |
2022 | | |
| 233,854 | | |
| — | | |
| — | | |
| — | | |
| 233,854 | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| David McCullough | |
2023 | | |
| 250,000 | | |
| 35,641 | (4) | |
| — | | |
| — | | |
| 285,641 | |
| Former Chief Technology Officer | |
2022 | | |
| 240,432 | | |
| — | | |
| — | | |
| — | | |
| 240,432 | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| L. Dean Ditto | |
2023 | | |
| 250,000 | | |
| 15,496 | (5) | |
| — | | |
| — | | |
| 265,496 | |
| Former Chief Financial Officer | |
2022 | | |
| 68,750 | | |
| — | | |
| 25,000 | (6) | |
| 49,200 | (7) | |
| 142,950 | |
| (1) | In connection with the year ended 2022, Ms. Billingsley was
awarded a discretionary cash bonus in 2023 of $134,130 that was paid in January of 2024. |
| (2) | In addition to cash and stock awards, Ms. Billingsley may
redeem loyalty awards generated by corporate purchases made on certain credit cards for her personal use. During the year ended 2022,
Ms. Billingsley redeemed $6,587 in loyalty awards for her personal use. |
| (3) | In connection with the year ended 2022, Mr. Thompson was
awarded a discretionary cash bonus in 2023 of $34,323 that was paid in January of 2024. |
| (4) | In connection with the year ended 2022, Mr. McCullough was
awarded a discretionary cash bonus in 2023 of $35,641 that was paid in January of 2024. |
| (5) | In connection with the year ended 2022, Mr. Ditto was awarded
a discretionary cash bonus in 2023 of $15,496 that was paid in January of 2024. |
| (6) | On July 25, 2022, Mr. Ditto was awarded a discretionary bonus
of 6,701 restricted shares with a grant date fair value of $25,000. These shares fully vested on the grant date. |
| (7) | In the period during 2022 in which Mr. Ditto was serving
as the Company’s Interim Chief Financial Officer, he was compensated as a consultant for $49,200. |
Legacy Gryphon Executive
Compensation
The following table sets forth
information concerning the compensation of the named executive officer for the years ended December 31, 2023 and December 31,
2022:
| Name and Principal Position | |
Year | | |
Salary(1) | | |
Bonus | | |
Stock
Awards(2) | | |
Total
Compensation | |
| Rob Chang | |
2023 | | |
$ | 228,167 | | |
$ | 228,167 | | |
$ | | | |
$ | 456,334 | |
| Chief Executive Officer | |
2022 | | |
| 230,640 | (1) | |
| — | | |
| — | | |
| 230,640 | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| Simeon Salzman | |
2023 | | |
| 107,692 | | |
$ | 100,000 | | |
| 530,496 | (2) | |
| 738,188 | |
| Chief Financial Officer | |
2022 | | |
| — | | |
| — | | |
| — | | |
| — | |
| (1) |
The amounts for Mr. Chang’s salary and bonus in the table were converted from Canadian dollars to United States dollars using an average exchange rate of (i) 1 CAD for 0.7688 USD for 2022 and (ii) 1 CAD for 0.7408 USD for 2023. |
| (2) |
The amounts reported in this column reflect the aggregate grant date
fair value of shares granted to the applicable named executive officer as computed in accordance with Financial Accounting Standards Board
Accounting Standards Codification Topic 718 (“ASC Topic 718”). These amounts do not necessarily correspond to the actual value
recognized by the applicable named executive officer. The assumptions used in the valuation of these awards are consistent with the valuation
methodologies specified in Note 1 to Gryphon’s consolidated financial statements included elsewhere in this Proxy Statement. See
the narrative below for more information on the stock awards in this column. |
Consulting Agreement with Chang Advisory, Inc.
Mr. Chang serves as Gryphon’s
Chief Executive Officer pursuant to a Consulting Agreement between Gryphon and Chang Advisory, Inc. (“Chang Advisory”), effective
January 14, 2021. Mr. Chang is the sole owner of Chang Advisory. Under the agreement, Chang Advisory’s base fee was initially
CAD $175,000 per year. The agreement provided that the base fee would increase to CAD $300,000 per year upon the closing of either: (i) an
equity financing totaling at least CAD $5 million or (ii) a debt and equity financing totaling at least CAD $10 million.
This condition was met in March 2021 and, accordingly, the base fee was raised to CAD $300,000 per year. Under the agreement, Chang
Advisory’s base fee for any year may not be reduced without the written consent of both Chang Advisory and Gryphon, and Chang Advisory
is entitled to an annual cash incentive opportunity with a target equal to 100% of Chang Advisory’s base fee for such year. The
agreement further provides that Gryphon will pay to Chang Advisory harmonized sales tax on any invoice or other compensation paid to Chang
Advisory in the event that Gryphon’s head office becomes located in Canada or in the event that any law or governmental authority
requires that such tax be remitted by Chang Advisory in respect of any such compensation.
On the effective date of the
agreement, Chang Advisory became entitled to purchase, for USD $0.004 per share, 15.2% of the outstanding shares of common stock of Gryphon
as of such date. In the event that Chang Advisory’s engagement with Gryphon terminates by reason of Chang Advisory’s resignation
or by reason of a material breach by Chang Advisory of the agreement, or for cause (as defined below), prior to the one-year anniversary
of the effective date of the agreement, Gryphon or any other affiliate of Gryphon had the right (but not the obligation) to repurchase
(i) 75% of the such shares if such termination occurred within six months of the effective date of the agreement; and (ii) 50%
of such shares if such termination occurred after six months and within one year of such effective date, in each case for a price
of USD $0.004 per share. Such repurchase right expired on the one-year anniversary of the effective date of the agreement.
In the event that Chang Advisory’s
engagement is terminated by Gryphon without cause, is terminated by Chang Advisory for good reason, or in the event that there is a change
in control (as defined in the agreement), all unvested equity awards held by Chang Advisory will accelerate vesting and, with respect
to any stock options, such options will remain fully exercisable until their original expiry date. In the event of Chang Advisory’s
termination for cause or voluntary resignation, all equity awards granted to Chang Advisory that are outstanding on the date of such termination
or resignation will continue to vest on the original schedule and any stock options will remain exercisable until the earlier of (i) the
expiration date set forth in the applicable stock option agreement; or (ii) the expiration of 6 months measured from the date
of such termination or resignation.
The agreement also provides
that Chang Advisory will be entitled to receive reimbursement from Gryphon for all reasonable business expenses, and Mr. Chang and
his partner and dependents will be eligible to participate in the benefit plans that are available to the executive officers of Gryphon.
Under the agreement, Gryphon will indemnify Chang Advisory and Mr. Chang to the fullest extent permitted by law against all costs,
charges, awards, legal fees and expenses which Chang Advisory and/or Mr. Chang is/are involved because of its/his/their association
with Gryphon, and Gryphon will at all times maintain a Directors and Officers Insurance Policy under which Chang Advisory and Mr. Chang
will be insured.
Upon termination of engagement
due to the death or disability (as defined in the agreement) of Chang Advisory, Chang Advisory will be entitled to receive: (i) any
unpaid annual bonus for the year immediately prior to the year of such termination (in an amount equal to the greater of the bonus percentage
accrued by Gryphon or Chang Advisory’s target annual bonus) and (ii) a pro-rated share of Chang Advisory’s target annual
bonus for the year of such termination (in an amount equal to the bonus percentage accrued by Gryphon through the last closed accounting
month prior to such termination but with such bonus percentage being deemed to be fully accrued if Gryphon is at least on target to attain
the appropriate financial targets for such year). In addition, in the case of termination due to disability, Gryphon will continue Chang
Advisory’s and/or Mr. Chang’s participation in the benefit plans for so long as he remains disabled as defined under
those plans.
Under the agreement, should
Gryphon terminate Chang Advisory’s engagement (other than for cause or as a result of Chang Advisory’s death or disability),
or in the event Chang Advisory resigns for good reason, or in the event of a termination of Chang Advisory’s engagement whether
by Chang Advisory or by Gryphon for any reason other than cause within 6 months of a change in control, then Gryphon will pay to
Chang Advisory (i) a termination fee equal to the annual fee; (ii) bonus for any prior year that has been earned but is unpaid
(in an amount equal to the greater of the bonus percentage accrued by Gryphon or Chang Advisory’s target annual bonus); and (iii) a
pro-rated share of Chang Advisory’s target annual bonus for the year of such termination (in an amount equal to the bonus percentage
accrued by Gryphon through the last closed accounting month prior such termination but with such bonus percentage being deemed to be fully
accrued if Gryphon is at least on target to attain the appropriate financial targets for such year).
For purposes of the agreement,
“cause” means that Chang Advisory or Mr. Chang has engaged in any one of the following: (i) intentional misconduct
involving Gryphon or its assets, including, without limitation, material misappropriation of Gryphon’s funds or property; (ii) reckless
or willful misconduct in the performance of Chang Advisory’s duties in the event such conduct continues after Gryphon has provided
30 days written notice to Chang Advisory and a reasonable opportunity to cure such misconduct; (iii) conviction of, or plea
of nolo contendere to, any felony or misdemeanor involving dishonesty or fraud; (iv) the material violation of any of Gryphon’s
policies, including without limitation, Gryphon’s policies on equal engagement opportunity and the prohibition against unlawful
harassment; (v) the material breach of any provision of the agreement after 30 days written notice to Chang Advisory of such
breach and a reasonable opportunity to cure such breach; or (vi) any other misconduct that has a material adverse effect on the business
or reputation of Gryphon after 30 days written notice to Chang Advisory of such breach and a reasonable opportunity to cure the adverse
effects of such misconduct.
Executive Employment Agreement with Simeon
Salzman
Gryphon and Simeon Salzman
are party to an Executive Employment Agreement dated June 19, 2023, the effective date of the employment agreement. Because Mr. Salzman
recently joined Gryphon in, his compensation is not disclosed in the 2022 Summary Compensation Table presented above. The employment agreement
provides for the terms described in this paragraph. Mr. Salzman will serve as the Chief Financial Officer of Gryphon (and, under
certain circumstances, such other position as Gryphon’s Chief Executive Officer may designate), reporting to Gryphon’s Chief
Executive Officer. Mr. Salzman will receive a base salary of $200,000 and will be eligible to receive an annual bonus with a target
of up to 50% of his then-current base salary. Mr. Salzman will receive a time-based equity grant covering 390,800 Gryphon Shares
(the “Equity Grant”), vesting as follows (subject to Mr. Salzman’s continued employment with Gryphon through the
relevant vesting date): 1/6 of the Equity Grant will vest upon the 6-month anniversary of the effective date of the employment agreement
and the remainder of the Equity Grant will vest in substantially equal quarterly installments commencing with the first quarter following
the 6 month anniversary of the effective date of the employment agreement. The vesting of the Equity Grant will be accelerated if
Mr. Salzman is continuously employed through of a change in control of Gryphon (excluding a reverse takeover transaction or merger
for the purposes of listing Gryphon on a public exchange). Mr. Salzman will be entitled to receive those benefits that are made available
to the other similarly situated executive employees of Gryphon, and will be reimbursed for reasonable out-of-pocket expenses. Upon the
termination of the employment agreement during the first two full financial reporting quarters of Gryphon by (a) Mr. Salzman for
good reason (as defined in the employment agreement) or (b) by Gryphon without cause (as defined in the employment agreement), then, subject
to Mr. Salzman’s execution and non- revocation of and compliance with a separation and release agreement in a form provided
by Gryphon, Gryphon will pay Mr. Salzman an amount equal to 3 months of his then current base salary. Upon such a termination
of the employment agreement following the first two full financial reporting quarters of Gryphon, Gryphon will pay Mr. Salzman an
amount equal to (a) 12 months of his then current base salary, plus (b) Mr. Salzman’s then-current annual bonus target.
OUTSTANDING EQUITY AWARDS AT THE END OF 2023
A summary of the number and the value of the outstanding
equity awards as of December 31, 2023 held by the named executive officers is set out in the table below.
| | |
Stock Awards(1) | |
| Name | |
Number of
Shares or
Units of
Stock
That Have Not
Vested
(#) | | |
Market Value
of Shares or
Units of Stock
That Have Not
Vested
($) | | |
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested
(#) | | |
Equity
Incentive Plan
Awards: Market
or Payout Value
of Unearned
Shares, Units or
Other Rights
That Have Not
Vested
($) | |
| Jessica Billingsley | |
| — | | |
| — | | |
| 250 | (2) | |
| 109 | |
| Former Chief Executive Officer | |
| — | | |
| — | | |
| 250 | (3) | |
| 109 | |
| | |
| | | |
| | | |
| | | |
| | |
| Ray Thompson | |
| — | | |
| — | | |
| 250 | (2) | |
| 109 | |
| Former Chief Operating Office | |
| — | | |
| — | | |
| 250 | (3) | |
| 109 | |
| | |
| | | |
| | | |
| | | |
| | |
| David McCullough | |
| — | | |
| — | | |
| 250 | (2) | |
| 109 | |
| Former Chief Technology Officer | |
| — | | |
| — | | |
| 250 | (3) | |
| 109 | |
| (1) | Each RSU represents a contingent right to receive one share
of Common Stock of the Company. |
| (2) | Represents 250 RSUs which were scheduled to vest on
July 1, 2024. |
| (3) | Represents 250 RSUs which were scheduled to vest
on December 1, 2024. |
Pension Benefits
None of our employees participate in or have account
balances in qualified or non-qualified defined benefit plans sponsored by us. Our Compensation Committee may elect to adopt qualified
or non-qualified benefit plans in the future if it determines that doing so is in our company’s best interest.
Non-qualified Deferred Compensation
None of our employees participate
in or have account balances in non-qualified defined contribution plans or other non-qualified deferred compensation plans maintained
by us. Our Compensation Committee may elect to provide our officers and other employees with non-qualified defined contribution or other
non-qualified compensation benefits in the future if it determines that doing so is in our company’s best interest.
Employee Benefits and Stock Plans
2024 Omnibus Incentive Plan
Set forth below is a summary
of the material features of the 2024 Plan, which was adopted in connection with the closing of the Business Combination.
The 2024 Plan provides for
the following grants: (a) incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986 (the
“Code”)) (“ISO” or “ISOs”); (b) nonstatutory stock options (i.e., options other than ISOs) (“NSO”
or “NSOs”), (c) stock appreciation rights (“SAR” or “SARs”), (d) restricted stock grants,
(e) restricted stock unit grants (“RSU” or “RSUs”), (f) performance grants, and (g) other grants
based in whole or in part by reference to shares that are granted pursuant to the terms and conditions of the 2024 Plan.
Subject to any Capitalization
Adjustment (as defined and described below) and the automatic increase (as described later in this paragraph), and any other applicable
provisions in the 2024 Plan, the total number of shares reserved and available for issuance pursuant to the 2024 Plan is 5,810,033 shares
which was 15% of the total number of shares of Common Stock outstanding at the closing of the Business Combination (the “Share Reserve”).
The Share Reserve will automatically increase on January 1st of each year, for a period of not more than ten years,
commencing on January 1, 2025 and ending on (and including) January 1, 2033 by the lesser of (a) 3% of the total number
of the shares of Common Stock outstanding on December 31st of the immediately preceding calendar year, and (b) such
number of shares determined by the Board.
Following the effective date
of the 2024 Plan (the “Plan Effective Date”), any shares subject to an outstanding grant or any portion thereof granted under
the 2024 Plan will be returned to the Share Reserve and will be available for issuance in connection with subsequent grants under the
2024 Plan to the extent such shares: (a) are cancelled, forfeited, or settled in cash; (b) are used to pay the exercise price
of such outstanding grant or any Tax-Related Items (as defined below) arising in connection with vesting, exercise or settlement of such
outstanding grant; (c) are surrendered pursuant to an Exchange Program (as defined below); (d) expire by their terms at any
time; or (e) are reacquired by the Company pursuant to a forfeiture provision or repurchase right by the Company (collectively, “Returning
Shares”). Shares subject to Substitute Grants (as defined below) will not be deducted from the Share Reserve and may not be returned
to the Share Reserve as Returning Shares.
Subject to the provisions
relating to Capitalization Adjustments described below, the maximum number of shares that may be issued pursuant to the exercise of ISOs
is 5,810,033 shares which was 15% of the total number of shares of common stock outstanding at the closing of the Merger (the “Incentive
Stock Option Limit”).
If, after the Plan Effective
Date, the number of outstanding shares is changed or the value of the shares is otherwise affected by a stock dividend, extraordinary
dividend or distribution (whether in cash, shares or other property, other than a regular cash dividend) recapitalization, stock split,
reverse stock split, subdivision, combination, consolidation, reclassification, spin-off or similar change in the capital structure of
the Company or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board
Accounting Standards Codification Topic 718 (or any successor thereto), without consideration (a “Capitalization Adjustment”),
then (a) the maximum number and class of shares or type of security reserved for issuance and future grant from the Share Reserve,
(b) the exercise price, purchase price, and number and class of shares or type of security subject to outstanding grants, and (c) the
number and class of shares subject to the Incentive Stock Option Limit, will be proportionately adjusted, subject to any required action
by the board of directors or the stockholders of the Company and in compliance with applicable laws; provided that fractions of a share
will not be issued.
The shares issuable under
the 2024 Plan will be authorized but unissued or forfeited shares, treasury shares or shares reacquired by the Company in any manner.
Incentive stock options may
be granted only to employees of the Company, and its parent and any subsidiary entities (to the extent permitted under Section 422
of the Code). All other grants may be granted to employees, consultants and directors, provided such consultants and directors render
bona fide services not in connection with the offer and sale of securities in a capital-raising transaction.
The maximum number of shares
subject to grants (and of cash subject to cash-settled grants) granted under the 2024 Plan or otherwise during any one calendar year to
any non-employee director for service on the board of directors, taken together with any cash fees paid by the Company to such non-employee
director during such calendar year for service on the board of directors, will not exceed $1,000,000 in total value (calculating the value
of any such grants based on the grant date fair value of such grants for financial reporting purposes).
Each option or SAR will be
in such form and will contain such terms and conditions as the Administrator (defined below) deems appropriate. Each SAR will be denominated
in share equivalents. The provisions of separate options or SARs need not be identical.
Options and SARs may be exercisable
within the times or upon the events determined by the Administrator and as set forth in the grant agreement governing such grant. No option
or SAR will be exercisable after the expiration of ten (10) years from the date the option or SAR is granted, or such shorter period
specified in the grant agreement. In addition, in the case of an ISO granted to a person who, at the time the ISO is granted, directly
or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any
parent or subsidiary (“Ten Percent Holder”), such option may not be exercisable after the expiration of five (5) years
from the date the ISO is granted.
The exercise price of an option
or SAR will be such price as is determined by the Administrator and set forth in the grant agreement; provided that (a) in the case
of an ISO (i) granted to a Ten Percent Holder, the exercise price will be no less than one hundred ten percent (110%) of the fair
market value (as defined in the 2024 Plan) on the date of grant and (ii) granted to any other employee, the exercise price will be
no less than one hundred percent (100%) of the fair market value on the date of grant, and (b) in the case of an NSO or SAR, the
exercise price will be such price as is determined by the Administrator. Notwithstanding the foregoing, an option or SAR that is a Substitute
Grant (as defined below) may be granted with an exercise price lower than one hundred percent (100%) of the fair market value.
Upon exercise of a SAR, a
grantee will be entitled to receive payment from the Company in an amount determined by multiplying (a) the difference between the
fair market value of a share on the date of exercise over the exercise price, by (b) the number of shares with respect to which the
SAR is exercised. At the discretion of the Administrator, the payment from the Company for the SAR exercise may be in cash, in shares
of equivalent value, or in some combination thereof.
Unless explicitly provided
otherwise in a grantee’s grant agreement, if a grantee’s continuous service status (as defined in the 2024 Plan) is terminated,
the grantee (or his or her legal representative, in the case of death) may exercise his or her option or SAR (to the extent such grant
was exercisable on the termination date) within the following period of time following the termination of the grantee’s continuous
service status: (a) three (3) months following a termination of a grantee’s continuous service status by the Company or
any parent or subsidiary without cause (as defined in the 2024 Plan) or by the grantee for any reason (other than due to death or disability
(as disability is defined in the Plan)); (b) six (6) months following a termination due to the grantee’s disability; (c) twelve
(12) months following a termination due to the grantee’s death; and (d) twelve (12) months following the grantee’s
death, if such death occurs following the date of such termination but during the period such grant is otherwise exercisable (as provided
in clauses (a) or (b) above).
Except as otherwise provided
in the grant agreement, if a grantee’s continuous service status is terminated by the Company or any parent or subsidiary for cause,
the grantee’s options or SARs will terminate and be forfeited immediately upon such grantee’s termination of continuous service
status, and the grantee will be prohibited from exercising any portion (including any vested portion) of such grants on and after the
date of such termination of continuous service status.
To the extent that the aggregate
fair market value of shares with respect to which options designated as ISOs are exercisable for the first time by any grantee during
any calendar year (under all plans of the Company or any parent or subsidiary of the Company) exceeds One Hundred Thousand Dollars ($100,000),
such excess options will be treated as NSOs. For this purpose, ISOs will be taken into account in the order in which they were granted,
and the fair market value of the shares subject to an ISO will be determined as of the date of the grant of such option.
Without stockholder approval,
the Administrator may modify, extend or renew outstanding options or SARs, and authorize the grant of new options or SARs in substitution
therefor, including in connection with an Exchange Program. Any such action may not, without the written consent of a grantee, materially
impair any of such grantee’s rights under any grant previously granted, except that the Administrator may reduce the exercise price
of an outstanding option or SAR without the consent of a grantee by a written notice (notwithstanding any adverse tax consequences to
the grantee arising from the repricing); provided, however, that the exercise price may not be reduced below the fair market value on
the date the action is taken to reduce the exercise price.
A restricted stock grant is
an offer by the Company to sell or issue (with no payment required, unless explicitly provided otherwise in a grantee’s grant agreement)
shares to a grantee that are subject to certain specified restrictions. Each restricted stock grant will be in such form and will contain
such terms and conditions as the Administrator will deem appropriate. The terms and conditions of restricted stock grants may change from
time to time, and the terms and conditions of separate grant agreements need not be identical.
The purchase price for shares
issued pursuant to a restricted stock grant, if any, will be determined by the Administrator on the date the restricted stock grant is
granted and, if permitted by applicable law, no cash consideration will be required in connection with the payment for the purchase price
where the Administrator provides that payment will be in the form of services previously rendered.
Grantees holding restricted
stock grants will be entitled to receive all dividends and other distributions paid with respect to such shares, unless the Administrator
provides otherwise at the time the grant is granted. If any such dividends or distributions are paid in shares, the shares will be subject
to the same restrictions on transferability and forfeitability as the restricted stock grants with respect to which they were paid.
An RSU grant is a grant covering
a number of shares that may be settled in cash, or by issuance of those shares at a date in the future. Each RSU grant will be in such
form and will contain such terms and conditions as the Administrator will deem appropriate. The terms and conditions of RSU grants may
change from time to time, and the terms and conditions of separate grant agreements need not be identical. Unless otherwise determined
by the Administrator, no purchase price will apply to an RSU settled in shares. Payment of vested RSUs will be made as soon as practicable
after the date(s) determined by the Administrator and set forth in the grant agreement. The Administrator, in its sole discretion,
may settle vested RSUs in cash, shares, or a combination of both.
The Administrator may permit
grantees holding RSUs to receive dividend equivalent rights (as defined in the 2024 Plan) on outstanding RSUs if and when dividends are
paid to stockholders on shares. In the discretion of the Administrator, such dividend equivalent rights may be paid in cash or shares,
and may either be paid at the same time as dividend payments are made to stockholders or delayed until shares are issued pursuant to the
underlying RSUs, and may be subject to the same vesting or performance requirements as the RSUs. If the Administrator permits dividend
equivalent rights to be made on RSUs, the terms and conditions for such dividend equivalent rights will be set forth in the applicable
grant agreement.
A performance grant is a grant
that may be granted, may vest or may become eligible to vest contingent upon the attainment during a performance period of performance
goals determined by the Administrator. Performance grants may be granted as options, SARs, restricted stock, RSUs or other grants, including
cash-based grants.
Performance grants will be
based on the attainment of performance goals that are established by the Administrator for the relevant performance period. Prior to the
grant of any performance grant, the Administrator will determine and each grant agreement will set forth the terms of each performance
grant. A performance grant may but need not require the grantee’s completion of a specified period of service. The Administrator
will determine the extent to which a performance grant has been earned in its sole discretion. The Administrator may reduce or waive any
criteria with respect to a performance goal, or adjust a performance goal (or method of calculating the attainment of a performance goal)
to take into account unanticipated events, including changes in law and accounting or tax rules, as the Administrator deems necessary
or appropriate, or to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships. The
Administrator may also adjust or eliminate the compensation or economic benefit due upon attainment of performance goals in its sole discretion,
subject to any limitations contained in the grant agreement and compliance with applicable law.
Other forms of grants valued
in whole or in part by reference to, or otherwise based on, shares, including the appreciation in value thereof (e.g., options or stock
rights with an exercise price or strike price less than 100% of the fair market value of the shares at the time of grant) may be granted
either alone or in addition to other grants provided for in the 2024 Plan. Subject to the provisions of the 2024 Plan and applicable law,
the Administrator may determine the persons to whom and the time or times at which such other grants will be granted, the number of shares
(or the cash equivalent thereof) to be granted pursuant to such other grants and all other terms and conditions of such other grants.
Payment from a grantee for
shares acquired pursuant to the 2024 Plan may be made in cash or cash equivalents or, where approved for the grantee by the Administrator
and where permitted by applicable law (and to the extent not otherwise set forth in the applicable grant agreement): (a) by cancellation
of indebtedness of the Company owed to the grantee; (b) by surrender of shares held by the grantee that are clear of all liens, claims,
encumbrances or security interests and that have a fair market value on the date of surrender equal to the aggregate payment required;
(c) by waiver of compensation due or accrued to the grantee for services rendered or to be rendered to the Company or an affiliate;
(d) by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented
by the Administrator in connection with the 2024 Plan; (e) by the Company withholding otherwise deliverable shares having a fair market
value on the date of withholding equal to the aggregate payment required; (f) by any combination of the foregoing; or (g) by
any other method of payment as is permitted by applicable law.
Regardless of any action taken
by the Company or any affiliate, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment
on account, employment tax, stamp tax or other Tax-Related Items related to the grantee’s participation in the 2024 Plan and legally
applicable to the grantee, including any employer liability for which the grantee is liable (the “Tax-Related Items”) is the
grantee’s responsibility.
Unless otherwise provided
in the grantee’s grant agreement, the Administrator, or its delegate(s) (as permitted by applicable law), in its sole discretion
and pursuant to such procedures as it may specify from time to time and subject to limitations of applicable law, may require or permit
a grantee to satisfy any applicable withholding obligations for Tax-Related Items, in whole or in part by (without limitation): (a) requiring
the grantee to make a cash payment; (b) withholding from the grantee’s wages or other cash compensation paid to the grantee
by the Company or any affiliate; (c) withholding from the shares otherwise issuable pursuant to a grant; (d) permitting the
grantee to deliver to the Company already-owned shares or (e) withholding from the proceeds of the sale of otherwise deliverable
shares acquired pursuant to a grant either through a voluntary sale or through a mandatory sale arranged by the Company. The Company or
an affiliate may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable
withholding rates, including up to the maximum applicable rate in the grantee’s jurisdiction.
Except as expressly provided
in the 2024 Plan or an applicable grant agreement, or otherwise determined by the Administrator, grants granted under the 2024 Plan will
not be transferable or assignable by the grantee, other than by will or by the laws of descent and distribution. Any options, SARs or
other grants that are exercisable may only be exercised: (a) during the grantee’s lifetime only by (i) the grantee, or
(ii) the grantee’s guardian or legal representative; (b) after the grantee’s death, by the legal representative
of the grantee’s heirs or legatees. The Administrator may permit transfer of grants in a manner that is not prohibited by applicable
law.
No grantee will have any of
the rights of a stockholder with respect to any shares until the shares are issued to the grantee, except for any dividend equivalent
rights permitted by an applicable grant agreement. After shares are issued to the grantee, the grantee will be a stockholder and have
all the rights of a stockholder with respect to such shares, including the right to vote and receive all dividends or other distributions
made or paid with respect to such shares, subject to any repurchase or forfeiture provisions in any restricted stock grant, the terms
of the Company’s insider trading policy, and applicable law.
Without prior stockholder
approval, the Administrator may conduct an Exchange Program, subject to consent of an affected grantee (unless not required in connection
with a repricing pursuant to the 2024 Plan, or under the terms of a grant agreement) and compliance with applicable law. For purposes
of the 2024 Plan, “Exchange Program” means a program pursuant to which (a) outstanding grants are surrendered, cancelled
or exchanged for cash, the same type of grant or a different grant (or combination thereof) or (b) the exercise price of an outstanding
grant is increased or reduced.
All grants granted under the
2024 Plan will be subject to clawback or recoupment under any clawback or recoupment policy adopted by the board of directors or the Administrator
or required by applicable law during the term of grantee’s employment or other service with the Company that is applicable to officers,
employees, directors or other service providers of the Company. In addition, the Administrator may impose such other clawback, recovery
or recoupment provisions in a grant agreement as the Administrator determines necessary or appropriate.
Except as otherwise provided
in the applicable grant agreement or as determined by the Administrator, if a grantee’s continuous service status terminates for
any reason, vesting of a grant will cease and such portion of a grant that has not vested will be forfeited, and the grantee will have
no further right, title or interest in any then-unvested portion of the grant. In addition, the Company may receive through a forfeiture
condition or a repurchase right any or all of the shares held by the grantee under a restricted stock grant that have not vested as of
the date of such termination, subject to the terms of the applicable grant agreement.
In the event that the Company
is subject to a change in control (as defined in the 2024 Plan), outstanding grants acquired under the 2024 Plan will be subject to the
agreement evidencing the change in control, which need not treat all outstanding grants in an identical manner. Such agreement, without
the grantee’s consent, may provide for one or more of the following with respect to all outstanding grants as of the effective date
of such change in control: (a) the continuation of an outstanding grant by the Company (if the Company is the successor entity);
(b) the assumption of an outstanding grant by the successor or acquiring entity (if any) of such change in control (or by its parents,
if any); (c) the substitution by the successor or acquiring entity in such change in control (or by its parents, if any) of equivalent
awards with substantially the same terms for such outstanding grants; (d) the full or partial acceleration of exercisability or vesting
and accelerated expiration of an outstanding grant and lapse of the Company’s right to repurchase or re-acquire shares acquired
under a grant or lapse of forfeiture rights with respect to shares acquired under a grant; (e) the settlement of such outstanding
grant (whether or not then vested or exercisable) in cash, cash equivalents, or securities of the successor entity (or its parent, if
any) with a fair market value equal to the required amount provided in the definitive agreement evidencing the change in control, followed
by the cancellation of such grants; or (e) the cancellation of outstanding grants in exchange for no consideration.
The Company, from time to
time, may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other
company or otherwise, by either (a) granting a grant under the 2024 Plan in substitution of such other company’s award; or
(b) assuming such award as if it had been granted under the 2024 Plan if the terms of such assumed award could be applied to a grant
granted under the 2024 Plan (a “Substitute Grant”). Such substitution or assumption will be permissible if the holder of the
Substitute Grant would have been eligible to be granted a grant under the 2024 Plan if the other company had applied the rules of the
2024 Plan to such grant. The exercise price and the number and nature of shares issuable upon exercise or settlement of any such Substitute
Grant will be adjusted appropriately pursuant to Section 424(a) of the Code and/or Section 409A of the Code, as applicable.
The 2024 Plan will be administered
by the Compensation Committee or the Board acting as the Compensation Committee(the “Administrator”). Without limitation,
the Administrator will have the authority to, subject to the preceding sentence: construe and interpret the 2024 Plan, any grant agreement
and any other agreement or document executed pursuant to the 2024 Plan; prescribe, amend, expand, modify and rescind or terminate rules
and regulations relating to the 2024 Plan or any grant (including the terms or conditions of any grant); approve persons to receive grants;
determine the form, terms and conditions of grants; determine the number of shares or other consideration subject to grants; determine
the fair market value in good faith and interpret the applicable provisions of the 2024 Plan and the definition of fair market value in
connection with circumstances that impact the fair market value, if necessary; determine whether grants will be granted singly, in combination
with, in tandem with, in replacement of, or as alternatives to, other grants under the 2024 Plan or awards under any other incentive or
compensation plan of the Company or any affiliate; grant waivers of any conditions of the 2024 Plan or any grant; determine the vesting,
exercisability and payment of grants; correct any defect, supply any omission or reconcile any inconsistency in the 2024 Plan, any grant
or any grant agreement; determine whether a grant has been earned or has vested; determine the terms and conditions of any, and to institute
any exchange program; adopt or revise rules and/or procedures (including the adoption or revision of any subplan under the 2024 Plan)
relating to the operation and administration of the 2024 Plan to facilitate compliance with requirements of local law and procedures outside
the united States (provided that board of directors approval will not be necessary for immaterial modifications to the 2024 Plan or any
grant agreement made to ensure or facilitate compliance with the laws or regulations of the relevant foreign jurisdiction); delegate any
of the foregoing to one or more persons pursuant to a specific delegation as permitted by the terms of the 2024 Plan and applicable law,
including Section 157(c) of the Delaware General Corporation Law; and make all other determinations necessary or advisable in
connection with the administration of the 2024 Plan. We expect that our Compensation Committee will administer the 2024 Plan.
To the maximum extent permitted
by applicable laws, each member of the Administrator (including officers of the Company or an affiliate of the Company, if applicable),
or of the board of directors, as applicable, will be indemnified and held harmless by the Company against and from (i) any loss,
cost, liability or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim,
action, suit or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure
to act under the 2024 Plan or pursuant to the terms and conditions of any grant except for actions taken in bad faith or failures to act
in good faith, and (ii) any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid
by him or her in satisfaction of any judgment in any such claim, action, suit or proceeding against him or her; provided that such member
will give the Company an opportunity, at its own expense, to handle and defend any such claim, action, suit or proceeding before he or
she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification will not be exclusive of any other
rights of indemnification to which such persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, by contract,
as a matter of law or otherwise, or under any other power that the Company may have to indemnify or hold harmless each such person.
The 2024 Plan and all grants
granted thereunder will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to that
body of laws pertaining to conflict of laws.
The Administrator may amend
the 2024 Plan or any grant in any respect the Administrator deems necessary or advisable, subject to the limitations of applicable law
and the 2024 Plan. If required by applicable law, the Company will seek stockholder approval of any amendment of the 2024 Plan that (a) materially
increases the number of shares available for issuance under the 2024 Plan (excluding any Capitalization Adjustment); (b) materially
expands the class of individuals eligible to receive grants under the 2024 Plan; (c) materially increases the benefits accruing to
grantees under the 2024 Plan; (d) materially reduces the price at which shares may be issued or purchased under the 2024 Plan; (e) materially
extends the term of the 2024 Plan; (f) materially expands the types of grants available for issuance under the 2024 Plan; or (g) as
otherwise required by applicable law.
The 2024 Plan will terminate
automatically on the tenth (10th) anniversary of the Plan Effective Date. No grant will be granted pursuant to the 2024 Plan after such
date, but grants previously granted may extend beyond that date. The Administrator may suspend or terminate the 2024 Plan at any earlier
date at any time. No grants may be granted under the 2024 Plan while the 2024 Plan is suspended or after it is terminated.
No amendment, suspension or
termination of the 2024 Plan or any grant may materially impair a grantee’s rights under any outstanding grant, except with the
written consent of the affected grantee or as otherwise expressly permitted in the 2024 Plan. Subject to the limitations of applicable
law, if any, the Administrator may amend the terms of any one or more grants without the affected grantee’s consent (a) to
maintain the qualified status of the grant as an ISO under Section 422 of the Code; (b) to change the terms of an ISO, if such
change results in impairment of the grant solely because it impairs the qualified status of the grant as an ISO; (c) to clarify the
manner of exemption from, or to bring the grant into compliance with, Section 409A of the Code; or (d) to facilitate compliance
with other applicable laws.
Summary of U.S. Federal Income Tax Consequences
The following summary is intended
only as a general guide to the U.S. federal income tax consequences of participation in the 2024 Plan. The summary is based on existing
U.S. laws and regulations, and there can be no assurance that those laws and regulations will not change. The summary is not complete
and does not discuss the tax consequences upon a grantee’s death, or the income tax laws of any municipality, state or foreign country
in which the grantee may reside. Tax consequences for any particular grantee may vary based on individual circumstances.
Incentive Stock Options. A
grantee recognizes no taxable income for regular income tax purposes because of the grant or exercise of an option that qualifies as incentive
stock option under Section 422 of the Code. If a grantee exercises the option and then later sells or otherwise disposes of the shares
acquired through the exercise the option after both the two-year anniversary of the date the option was granted and the one-year anniversary
of the exercise, the grantee will recognize a capital gain or loss equal to the difference between the sale price of the shares and the
exercise price, and we will not be entitled to any deduction for federal income tax purposes.
However, if the grantee disposes
of such shares either on or before the two-year anniversary of the date of grant or on or before the one-year anniversary of the date
of exercise (a “disqualifying disposition”), any gain up to the excess of the fair market value of the shares on the date
of exercise over the exercise price generally will be taxed as ordinary income, unless the shares are disposed of in a transaction in
which the grantee would not recognize a loss (such as a gift). Any gain in excess of that amount will be a capital gain. If a loss is
recognized, there will be no ordinary income, and such loss will be a capital loss. Any ordinary income recognized by the grantee upon
the disqualifying disposition of the shares generally should be deductible by the Company for federal income tax purposes, except to the
extent such deduction is limited by applicable provisions of the Code.
For purposes of the alternative
minimum tax, the difference between the option exercise price and the fair market value of the shares on the exercise date is treated
as an adjustment item in computing the grantee’s alternative minimum taxable income in the year of exercise. In addition, special
alternative minimum tax rules may apply to certain subsequent disqualifying dispositions of the shares or provide certain basis adjustments
or tax credits for purposes.
Nonstatutory Stock Options. A
grantee generally recognizes no taxable income as the result of the grant of such an option. However, upon exercising the option, the
grantee normally recognizes ordinary income equal to the amount that the fair market value of the shares on such date exceeds the exercise
price. If the grantee is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the
sale of the shares acquired by exercising a nonstatutory stock option, any gain or loss (based on the difference between the sale price
and the fair market value on the exercise date) will be taxed as capital gain or loss. Any ordinary income recognized by the grantee upon
exercising a nonstatutory stock option generally should be deductible by the Company for federal income tax purposes, except to the extent
such deduction is limited by applicable provisions of the Code. No tax deduction is available to the Company with respect to the grant
of a nonstatutory stock option or the sale of the shares acquired through the exercise of the nonstatutory stock option.
Stock Appreciation Rights. In
general, no taxable income is reportable when a stock appreciation right is granted to a grantee. Upon exercise, the grantee generally
will recognize ordinary income equal to the fair market value of any shares received. Any additional gain or loss recognized upon any
later disposition of the shares would be capital gain or loss.
Restricted Stock Awards. A
grantee acquiring shares of restricted stock generally will recognize ordinary income equal to the fair market value of the shares on
the vesting date, reduced by any amount paid by the grantee for such shares. If the grantee is an employee, such ordinary income generally
is subject to withholding of income and employment taxes. The grantee may elect, under Section 83(b) of the Code to accelerate
the ordinary income tax event to the date of acquisition by filing an election with the Internal Revenue Service no later than thirty
(30) days after the date the shares are acquired. Upon the sale of shares acquired under a restricted stock award, any gain or loss,
based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed
as capital gain or loss.
Restricted Stock Unit Awards. There
are no immediate tax consequences of receiving an award of restricted stock units. A grantee who is awarded restricted stock units generally
will recognize ordinary income equal to the fair market value of shares issued to such grantee at the end of the applicable vesting period
or, if later, the settlement date elected by the administrator or a grantee. Any additional gain or loss recognized upon any later disposition
of any shares received would be capital gain or loss.
Performance Shares and
Performance Unit Awards. A grantee generally will recognize no income upon the grant of a performance share or a performance
unit award. Upon the settlement of such awards, grantees normally will recognize ordinary income in the year of receipt in an amount equal
to the cash received and the fair market value of any cash or unrestricted shares received. If the grantee is an employee, such ordinary
income generally is subject to withholding of income and employment taxes. Upon the sale of any shares received, any gain or loss, based
on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as
capital gain or loss.
Section 409A. Section 409A
of the Code provides certain requirements for non-qualified deferred compensation arrangements with respect to an individual’s deferral
and distribution elections and permissible distribution events. Awards granted under the 2024 Plan with a deferral feature will be subject
to the requirements of Section 409A of the Code. If an award is subject to and fails to satisfy the requirements of Section 409A
of the Code, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested,
which may be before the compensation is actually or constructively received. Also, if an award subject to Section 409A of the Code
violates the provisions of Section 409A of the Code, Section 409A of the Code imposes an additional 20% federal income tax on
compensation recognized as ordinary income, and interest on such deferred compensation.
Tax Effect for the Company. We
generally will be entitled to a tax deduction in connection with an award under the 2024 Plan equal to the ordinary income realized by
a grantee when the grantee recognizes such income (for example, the exercise of a nonstatutory stock option) except to the extent such
deduction is limited by applicable provisions of the Code. Special rules limit the deductibility of compensation paid to our chief executive
officer, chief financial officer and other “covered employees” as determined under Section 162(m) of the Code and
applicable guidance. Under Section 162(m) of the Code, the annual compensation paid to any of these specified executives will
be deductible only to the extent that it does not exceed $1,000,000.
THE FOREGOING IS ONLY A SUMMARY
OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION UPON GRANTEES AND THE COMPANY WITH RESPECT TO AWARDS UNDER THE 2024 PLAN. IT DOES
NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE IMPACT OF EMPLOYMENT OR OTHER TAX REQUIREMENTS, THE TAX CONSEQUENCES OF A GRANTEE’S
DEATH, OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE, OR FOREIGN COUNTRY IN WHICH THE GRANTEE MAY RESIDE.
Benefits and Perquisites
The Company is in the process
of developing a benefits program for its named executive officers, which will include medical, dental, vision, life and AD&D insurance,
as well as short- and long-term disability coverage. Additionally, flexible spending accounts, vacation time, paid holidays, and participation
in a 401(k) plan are being considered as part of our benefits package.
DIRECTOR
COMPENSATION
Director Compensation for Legacy Gryphon
The following table and accompanying
narrative set forth information about the 2023 compensation provided to certain of members of the Legacy Gryphon Board and the Akerna
Board, all of whom currently serve as members of the Board of Directors of the Company. These individuals are as follows:
| ● | Rob Chang (current member of the Gryphon Board) |
| ● | Brittany Kaiser (current member of the Gryphon Board) |
| ● | Jessica Billingsley (Chief Executive Officer of Akerna and
Chairperson of the Akerna Board) |
Rob Chang is a Gryphon named
executive officer who also served on the Legacy Gryphon Board of directors during 2022. The 2023 compensation information for Mr. Chang
is presented in the Summary Compensation Table above and he was not entitled to any additional compensation for his service on the Legacy
Gryphon Board during 2022 or 2023. Jessica Billingsley served as Chairperson of the Akerna Board and Akerna’s Chief Executive Officer.
| Name | |
Fees
Earned
($) | | |
Stock
Awards
($) | | |
Total
($) | |
| Rob Chang | |
| — | | |
| — | | |
| — | |
| Brittany Kaiser | |
| 200,000 | | |
| — | | |
| 200,000 | |
| Heather Cox | |
| 50,625 | | |
| 94,830 | | |
| 145,455 | |
| Steve Gutterman | |
| 50,625 | | |
| 94,830 | | |
| 145,455 | |
| Jessica Billingsley(1) | |
| — | | |
| — | | |
| — | |
| (1) | At the end of 2023, Ms. Billingsley held no unvested equity
awards. |
Prior to the Closing, Legacy Gryphon did not
have a formal compensation policy for non-employee directors and instead entered into Director Agreements with its directors.
The Company’s director compensation policy
is intended to provide a total compensation package that enables the Company to attract and retain qualified and experienced individuals
to serve as directors and to align its directors’ interests with those of its stockholders. Effective June 14, 2024, the retainers
paid to non-employee directors for service on the Board and for service on each committee of the Board on which the director is a member
are as follows:
| ● | Each non-employee director receives an annual
cash retainer of $35,000. |
| ● | Each non-employee director serving on a board
committee other than as chairperson receives $10,000 for such service. |
| ● | Each non-employee director serving as a chairperson
of a board committee receives $12,500 for such service. |
Director Agreement with Ms. Kaiser
Ms. Kaiser and Gryphon entered
into a Director Agreement on May 12, 2021, pursuant to which she agreed to serve Gryphon as a member of the Legacy Gryphon Board
upon the terms and conditions set forth in Director Agreement, subject to any necessary approval by Gryphon’s stockholders after
an initial one-year term on the Legacy Gryphon Board. The Director Agreement requires Ms. Kaiser to use her best efforts to promote
the interests of Gryphon and to dedicate a minimum of 20 hours per week to Gryphon. Under the Director Agreement, Ms. Kaiser is entitled
to a base fee of $200,000 per year, which may not be reduced without the written consent of Ms. Kaiser. During the term of Director Agreement,
Gryphon will reimburse Ms. Kaiser for all reasonable out-of-pocket expenses incurred by Ms. Kaiser, subject to certain pre-approval requirements.
In connection with the entry into the Director Agreement, Achayot Partners LLC received 700,000 shares of Gryphon’s common
stock. Ms. Kaiser is the CEO and 50% owner of Achayot Partners LLC with Natalie Kaiser, the other 50% owner of Achayot Partners LLC. The
term of the Director Agreement is the period commencing on the May 12, 2021 and terminating upon the earliest of (a) May 12,
2024; (b) the death of Ms. Kaiser; (c) the termination of Ms. Kaiser from her membership on the Legacy Gryphon Board by the
mutual agreement of Gryphon and Ms. Kaiser; (d) the removal of Ms. Kaiser from the Legacy Gryphon Board by the majority stockholders
of Gryphon or the stockholder who appointed Ms. Kaiser, as applicable; and (e) the resignation by Ms. Kaiser from the Legacy Gryphon
Board. During her service as a member of the Legacy Gryphon Board and for a period of one year thereafter, Ms. Kaiser will not interfere
with Gryphon’s relationship with, or endeavor to entice away from Gryphon, any person who, on the date of the termination of Ms.
Kaiser’s service as a member of the Legacy Gryphon Board and/or at any time during the one year period prior to the termination
of such service, was an employee or customer of Gryphon or otherwise had a material business relationship with Gryphon. Ms. Kaiser is
also subject to a customary non-competition covenant in favor of Gryphon during her service as a member of the Legacy Gryphon Board
and for a period of six months thereafter. Under the Director Agreement, Gryphon will indemnify Ms. Kaiser for her activities as
a member of the Legacy Gryphon Board to the fullest extent permitted under applicable law and will use its best efforts to maintain Directors
and Officers Insurance benefitting the Legacy Gryphon Board.
Director Compensation for Akerna
The following table sets forth
the compensation granted to directors of Akerna who were not also executive officers during the fiscal year ended December 31, 2023
and who are not currently directors of the Company. Compensation of directors of Akerna that were not also executive officers is detailed
above and is not included in this table.
| Name | |
Fees Earned or Paid in Cash
($) | | |
Stock
Awards
($) | | |
Option
Awards
($) | | |
Non-equity
Incentive Plan
Compensation
($) | | |
Nonqualified
Deferred
Compensation
Earnings
($) | | |
All Other
Compensation
($) | | |
Total
($) | |
| Barry Fishman | |
| 31,396 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 31,396 | |
| Matt Kane | |
| 41,750 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 41,750 | |
| Tahira Rehmatullah | |
| 41,750 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 41,750 | |
| Scott Sozio(1) | |
| 175,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 175,000 | |
| (1) | Mr. Sozio received compensation pursuant to his role
as the Head of Corporate Development and is not compensated independently as a director. |
Narrative Disclosure to Director Compensation
Table for Akerna
Compensation granted to our directors who are
not also executive officers or employees during the fiscal year ended December 31, 2023 was paid in cash including base annual compensation
of $20,000 and annual committee fees of $21,750 for participation on each of the audit, compensation, corporate governance and nominating
committees. Mr. Fishman’s compensation was prorated as he resigned as a director on November 15, 2023.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
For the year ended December 31, 2023, no share grants were issued under
the Company’s equity compensation plans.
The following summary information is presented
as of December 31, 2023, as adjusted to reflect the 1-for-20 reverse stock split effected immediately prior to the Closing of the Business Combination:
| |
|
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants,
and rights
(a) |
|
|
Weighted-
average
exercise price
of outstanding
options,
warrants,
and
rights
(b) |
|
|
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a))
(c) |
|
| Equity
compensation plans approved by security holders |
|
|
11,250 |
|
|
$ |
1,793.20 |
|
|
|
8,601 |
|
| Equity compensation plans not approved by security holders |
|
|
Not Applicable |
|
|
|
Not Applicable |
|
|
|
Not Applicable |
|
| TOTAL |
|
|
11,250 |
|
|
$ |
1,793.20 |
|
|
|
8,601 |
|
TRANSACTIONS
WITH RELATED PERSONS
During 2023 and 2024,
we were not a participant in any transaction or series of transactions in which the amount involved did exceed or may exceed the lesser
of $120,000 or 1% of the average of our total assets at year-end for 2022 and 2023 in which any directors, director nominees, executive
officers, greater than 5% beneficial owners and their respective immediate family members (each, a “Related Person”) had or
will have a direct or indirect material interest, other than the compensation arrangements (including with respect to equity compensation)
described in “Executive Compensation” beginning on page 23 and “Director Compensation” on page 35.
Indemnification
Our Certificate of Incorporation
contains provisions limiting the liability of directors, and our amended and restated bylaws provides that we will indemnify the directors
and executive officers to the fullest extent permitted under Delaware law. Our Certificate of Incorporation and bylaws also provide the
Board with discretion to indemnify the other officers, employees, and agents when determined appropriate by the Board. In addition, we
entered into an indemnification agreement with each of its directors and executive officers, which requires us to indemnify them.
Related Person Transactions Policy and Procedure
Our Code of Ethics requires
us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except
under guidelines approved by the Board (or the audit committee). Related-party transactions are defined as transactions in which (1) the
aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) the Company or any of its subsidiaries
is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5%
beneficial owner of shares of Common Stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b),
has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial
owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult
to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family,
receives improper personal benefits as a result of his or her position.
Our audit committee, pursuant
to its written charter, is responsible for reviewing and approving related-party transactions to the extent we enter into such transactions.
The audit committee will consider all relevant factors when determining whether to approve a related party transaction, including whether
the related party transaction is on terms no less favorable to us than terms generally available from an unaffiliated third-party under
the same or similar circumstances and the extent of the related party’s interest in the transaction.
HOUSEHOLDING
OF PROXY MATERIALS
The SEC has adopted rules that permit companies
and intermediaries (e.g., brokers) to satisfy the delivery requirements for annual meeting materials with respect to two or more stockholders
sharing the same address by delivering a single set of annual meeting materials addressed to those stockholders. This process, which is
commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders
who are the Company’s stockholders will be “householding” the Company’s proxy materials. A single set of proxy
materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected
stockholders. Once you have received notice from your broker that they will be “householding” communications to your address,
“householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer
wish to participate in “householding” and would prefer to receive a separate set of Annual Meeting materials, please notify
your broker or us. Direct your written request to Gryphon Digital Mining, Inc., Attn: Corporate Secretary, 1180 N. Town Center Drive,
Suite 100, Las Vegas, NV 89144. Stockholders who currently receive multiple copies of the Annual Meeting materials at their addresses
and would like to request “householding” of their communications should contact their brokers.
ADDITIONAL
INFORMATION
You can obtain a copy of the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2023 from the SEC’s website at http://www.sec.gov, or without charge upon written request
to: Gryphon Digital Mining, Inc., Attn: Corporate Secretary, 1180 N. Town Center Drive, Suite 100, Las Vegas, NV 89144.
If you would like additional copies of this Proxy
Statement or if you have questions about the proposals to be presented at the Annual Meeting, you should contact the Company’s proxy
solicitation agent at the following address and telephone number:
Morrow Sodali LLC
Toll Free: (800) 662-5200 or (203) 658-9400
Email: GRYP.info@investor.morrowsodali.com
NEXT
YEAR’S ANNUAL MEETING
Stockholder Proposals for Inclusion in the Proxy Materials for the
2025 Annual Meeting of Stockholders
For stockholders to present proper proposals (other
than nominations of directors) for inclusion in our proxy materials for the 2025 annual meeting of stockholders on a timely basis, the
relevant information must be received by the Company’s Corporate Secretary at the principal executive offices of the Company, 1180
N. Town Center Drive, Suite 100, Las Vegas, NV 89144, on or before [●], 2025; provided that in the event that the date of the 2025
annual meeting is advanced more than 30 days prior to, or delayed by more than 30 days after, the anniversary of this year’s annual
meeting, the relevant information must be received by the Company no later than the deadline set forth in a public announcement made by
the Company, which deadline will be a reasonable time after that public announcement and a reasonable time before the Company begins to
print and send its proxy materials for the 2025 annual meeting. All such proposals must comply with all of the requirements of Rule 14a-8
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding the inclusion of the stockholder proposals
in company-sponsored proxy materials.
Director Nominations by a Stockholder Intending to Solicit Proxies
for the 2025 Annual Meeting of Stockholders
In addition to satisfying all the requirements
under the Company’s bylaws, to comply with the SEC’s universal proxy rules for the Company’s 2025 annual meeting, stockholders
who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth
all of the information required by Rule 14a-19 under the Exchange Act no later than [●], 2025 provided that the date of the meeting
has not changed by more than 30 calendar days. If such meeting date is changed by more than 30 days, then notice must be provided by the
later of 60 calendar days prior to the date of the annual meeting or the 10th calendar day following the day on which public
announcement of the date of the annual meeting is first made. If the stockholder does not also comply with the requirements of Rule 14a-4(c)(2)
under the Exchange Act, we may exercise discretionary voting authority under proxies that we solicit to vote in accordance with our best
judgment on any such stockholder proposal or nomination. To make a submission or to request a copy of our amended and restated bylaws,
stockholders should contact our Corporate Secretary.
General Requirements
Any proposal must be delivered to, or mailed and
received by, the Company’s Corporate Secretary at the principal executive offices of the Company, in writing and in proper form,
and must set forth the information required by the Company’s amended and restated bylaws and applicable requirements under the Exchange
Act rules described above. Any adjournment or postponement of an annual meeting for which notice or a public announcement has been given
or made shall not commence a new time period (or extend any time period) for the giving of any stockholder’s notice as described
in this section entitled “Next Year’s Annual Meeting.”
OTHER
MATTERS
The Board knows of no other matters that will
be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, it is the intention
of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.
Dated: [●], 2024
Annex A
FORM OF CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
OF GRYPHON DIGITAL MINING, INC.
Gryphon Digital Mining, Inc., a corporation organized
and existing under the laws of the State of Delaware (the “Corporation”), does hereby certify as follows:
1. The name of the Corporation is Gryphon Digital
Mining, Inc.
2. The Certificate of Incorporation of the Corporation
is amended by deleting Article Fifth, Sections B and C of the Certificate of Incorporation of the Corporation in their entirety and inserting
the following:
B. Classes of Directors;
Terms of Office. From the effective date of this Amendment to the Certificate of Incorporation (the “Effective Date”), all of the directors shall be elected annually and shall hold office until the next annual meeting of stockholders or until his or
her respective successor is duly elected and qualified or until such director’s earlier death, resignation, disqualification or
removal from office.
Any vacancy on the Board of Directors that results
from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum
is present, and any other vacancy occurring in the Board of Directors may be filled by a majority of the directors then in office, even
if less than a quorum, or by a sole remaining director. Any director appointed in accordance with the preceding sentence shall serve for
a term expiring at the next annual meeting of stockholders after his or her appointment and shall hold office until his or her successor
shall be elected and shall qualify, subject, however, to prior death, resignation, disqualification or removal from office.
Notwithstanding the foregoing provisions of this
Section V.B, and subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, each director
shall serve until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation,
disqualification or removal from office.
C. Removal. Subject to the
rights of any series of Preferred Stock to elect additional directors under specified circumstances, and subject to any limitation imposed
by law, any individual director or directors elected after the Effective Date or
thereafter may be removed with or without cause by the affirmative vote of the holders of at least sixty six and two-thirds percent (66
2/3%) of the voting power of all then-outstanding shares of capital stock of the Corporation entitled to vote generally at an election
of directors, voting together as a single class.
3. This Certificate of Amendment has been duly
adopted by the Board of Directors and stockholders of the Corporation in accordance with Section 242 of the General Corporation Law of
the State of Delaware.
4. This Certificate of Amendment shall be effective
upon filing.
IN WITNESS WHEREOF, the Corporation has caused
this Certificate of Amendment to be duly executed in its corporate name as of the [___] day of [__], 2024.
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