Andover National (AANC) 10-K/A2020 FY Annual report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

x    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 000-55882

ANDOVER NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

(786) 871-3333

(Registrant's telephone number, including area code)

Securities registered under Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Exchange Act: Class A Common Stock, par value $0.001

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨   No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨   No x

No market value has been computed based upon the fact that no active trading market has been established.

As of April 15, 2021, there were 3,560,462 shares of Class A Common Stock, and 81,198 shares of Class B Common Stock, outstanding. 

DOCUMENTS INCORPORATED BY REFERENCE: None 

TABLE OF CONTENTS

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A (the “Amendment”) amends our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, originally filed with the Securities and Exchange Commission (the “SEC”), on March 31, 2021 (the “Original Filing”). We are filing this Amendment to include the information required by Part III and not included in the Original Filing. This Amendment amends the Original Filing to include the information required by Part III of the Original Filing because we have not and will not file a definitive proxy statement within 120 days after the end of our 2020 fiscal year. As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), this Amendment amends Item 15 of Part IV of the Original Filing to include new certifications by our principal executive officer and principal financial officer under Section 302 of the Sarbanes-Oxley Act of 2002.

Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing. Accordingly, this Amendment should be read in conjunction with our filings with the SEC subsequent to the date of the Original Filing.

Forward-Looking Statements

This Amendment contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on management’s expectations and are subject to certain factors, risks and uncertainties that may cause actual results, outcome of events, timing and performance to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements should be evaluated together with the many uncertainties that affect our business, particularly those mentioned in the Risk Factors in Item 1A of our Original Filing and in our periodic reports on Form 10-Q and Form 8-K. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements attributable to us or to any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

All references in this Amendment to “we,” “us,” and “our” refer to Andover National Corporation, a Delaware corporation, and its consolidated subsidiaries unless the context requires otherwise.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Board of Directors

Our board of directors currently consists of six (6) members. The following table sets forth the names and ages of all of our directors. 

Biographical information with respect to our directors is provided below. There are no family relationships between any of our executive officers or directors.

Peter A. Cohen, our Chief Executive Officer and Executive Chairman, has served as our Executive Chairman since February 2019 and as our Chief Executive Officer since October 2019. Mr. Cohen has served as Vice Chairman of the board of directors of Scientific Games Corporation since September 2004 and as a member of the board of directors of PolarityTE, Inc. since June 2018. Mr. Cohen previously served as Chairman of Cowen Inc. (formerly known as Cowen Group, Inc.), a diversified financial services company, from 2009 through June 2018, and served as its Chief Executive Officer from 2009 through December 2017. Mr. Cohen was a founding partner and principal of Ramius LLC, a private investment management firm formed in 1994 that acquired Cowen in late 2009. From 1990 to 1994, Mr. Cohen served as Chairman and Chief Executive Officer of Republic New York Securities, as Vice Chairman of the board of directors of Republic New York Corporation, as well as a member of its executive management committee. Mr. Cohen was Chairman and Chief Executive Officer of Shearson American Express from 1983 to 1990. Over his career, Mr. Cohen also founded several companies, including RCG Longview (a real estate management business), Hale & Hearty Soup (a New York-based quick service restaurant chain), Linkem S.p.A. (a wireless broadband company operating in Italy), and Omnitel Pronto Italia (a cellular telephone company now operating as Vodafone in Italy). Mr. Cohen is currently a Trustee of Mount Sinai Medical Center and has served on its board of directors for approximately thirty years. He earned a Bachelor of Science degree from Ohio State University, and a Master of Business Administration degree from Columbia University.

Jeffrey C. Piermont, our President, Chief Operating Officer and Secretary, has served as our President and Chief Operating Officer and as a member of our board of directors since September 2018. Mr. Piermont previously served as President and Chief Operating Officer of Boulderado Group LLC (“Boulderado”), a private investment firm, from 2010 until 2018. In addition to his responsibilities at Boulderado, Mr. Piermont concurrently served from 2015 to 2017 in a variety of roles – including Chief Administrative Officer, Secretary, Treasurer, and Principal – at Boston Omaha Corporation (NASDAQ: BOMN), a publicly traded holding company controlled in part by Boulderado. Prior to joining Boulderado, Mr. Piermont worked at Alternative Investment Management (AIM13) from 2006 to 2010 as an Investment Professional focused on the firm’s portfolio of hedge fund investments. Earlier in his career, Mr. Piermont served as an Assistant Vice President at Merrill Lynch in New York from 2004 to 2006, and as an Analyst in Citigroup’s Corporate Strategy and Finance Group within their Global Wealth Management Business (Smith Barney) from 2003 to 2004. Mr. Piermont earned a Bachelor of Science degree in accounting and a Bachelor of Science degree in finance from Syracuse University. 

Rehana S. Farrell joined our board of directors in February 2019. Ms. Farrell currently serves as the Executive Director of Youth INC, a charitable organization dedicated to transforming the lives of children in New York City. Prior to joining Youth INC in 2015, Ms. Farrell served as Chief Operating Officer at Cain Hoy Enterprises, a private equity firm in New York City that she helped form in 2014. She previously served as Chief Administrative Officer at Guggenheim Investments from 2012 to 2014, in a variety of global financial and operating roles at Merrill Lynch from 2004 to 2011, at Smith Barney in Strategy and Finance from 2003 to 2004, as a consultant at Booz Allen Hamilton in 1998, and at Prudential Financial from 1992 to 2003. Ms. Farrell earned a Bachelor of Arts degree from Smith College and a Master of Business Administration degree from Columbia University.

Jules B. Kroll joined our board of directors in February 2019. Mr. Kroll currently serves as the Chairman of Kroll Bond Rating Agency. In 1972, he established Kroll Associates Inc., the prototype of a professional services firm dedicated to mitigating risk. His firm, which he sold to Marsh & McLennan Companies in 2004, ultimately reached annual revenues of $1 billion. Mr. Kroll was named “Entrepreneur of the Year” by his alma mater Cornell University in 2003 and was honored with the U.S. Entrepreneurial Award by British American Business Inc. in 2002. He is a member of the board of directors of the Managed Funds Association and currently serves as board president of the John Jay College of Criminal Justice Foundation. Mr. Kroll received a Bachelor of Arts degree from Cornell University and a Juris Doctor from Georgetown University Law Center.

William Greenblatt joined our board of directors in February 2021. Mr. Greenblatt has served as the Founder and Chairman of Montague Street Capital since April 2017. In 1986, Mr. Greenblatt founded Sterling Check, one of the pioneers of the background screening industry, and served as its chief executive officer until December 2014 and chairman of the board of directors until November 2019. Mr. Greenblatt was named “Entrepreneur of the Year” by Ernst & Young in 2006 and received the “Entrepreneur of the Year Award” from the University of Maryland in 2010. Mr. Greenblatt serves as the chairman of the board of directors of each of OpenDoctors247 and Bushwick, LLC as well as a member of the board of directors of Fairygodboss.com, Sterling Check, Remote Legal, the University of Maryland, The Benjamin Cardozo School of Law and United Jewish Appeal. Mr. Greenblatt earned a Bachelor of Arts degree from the University of Maryland and a Juris Doctor from The Benjamin Cardozo School of Law.

Joshua Pechter joined our board of directors in February 2021. Mr. Pechter has served as the Founder and Managing Partner of Cacti Asset Management and its private fund, Cacti Partners, LP, since 2001, managing over $1 billion of value equities for high net worth families, insurance companies and endowments.  Mr. Pechter has also served as a member of the board of directors of Pechter, Inc., a diversified steel manufacturing and distribution business, for the past 25 years.  Mr. Pechter earned a Bachelor of Arts degree from Pennsylvania State University and a Masters of Business Administration from Emory University. 

Executive Officers

The following table sets forth certain information regarding our executive officers who were not also directors as of April 15, 2021. Our officers are appointed by, and serve at the pleasure of, our board of directors.

Milun K. Patel, our Chief Financial Officer, has served as our Chief Financial Officer since November 2019. Prior to being named our Chief Financial Officer, Mr. Patel served as our Head of Corporate Development since July 2019. Mr. Patel previously served as a Managing Director of Overbrook Management Corporation, an investment firm, from April 2015 to June 2019. Before joining Overbrook Management, Mr. Patel served as Portfolio Manager of KLS Diversified Asset Management, an investment firm focused on high-yield and distressed credit investment opportunities, from March 2014 to April 2015. Mr. Patel has also held senior positions at Jefferies International Ltd. as a high-yield credit trader and Bear Stearns & Co. as an investment analyst. Mr. Patel started his investment career as an equity analyst at OSS Capital Management, an equity focused hedge-fund. During his career, Mr. Patel has worked in Europe and Asia and has been responsible for significant private and public investments across various asset classes and capital structures. Mr. Patel received a Bachelor of Science degree from The Pennsylvania State University in 1998.

Director Independence

We are not currently listed on any trading market and therefore we are not required to have a board of directors comprised of a majority of independent directors or separate committees comprised of independent directors. We use the definition of “independence” under the Nasdaq Rules, as applicable and as may be modified or supplemented from time to time and the interpretations thereunder, to determine if the members of our board of directors are independent. In making this determination, our board of directors considers, among other things, transactions and relationships between each director and his immediate family and us, including those reported in this Amendment under the caption “Certain Relationships and Related Transactions.” The purpose of this review is to determine whether any such relationships or transactions are material and, therefore, inconsistent with a determination that the directors are independent. On the basis of such review and its understanding of such relationships and transactions, our board of directors has determined that Rehana S. Farrell and Jules B. Kroll are “independent directors”.

Our board of directors will continually assess its size, structure and composition, taking into consideration its current strengths, skills and experience, and the requirements and strategic direction of the Company. As required, our board of directors will seek out and recommend suitable candidates for consideration as members of the board or directors.

Board of Directors Meetings and Committees

In 2020, the board of directors held two meetings which were attended by all currently serving members of the board of directors.

We do not have any committees of our board of directors. Because of the lack of financial resources available to us, we also do not have an “audit committee financial expert” as such term is described in Item 401 of Regulation S-K promulgated by the SEC.

Delinquent Section 16 Reports

Our records reflect that all reports which were required to be filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, were filed on a timely basis.

Code of Ethics

We expect that our officers and directors will maintain appropriate standards of honesty and ethical conduct in connection with the performance of their duties on our behalf. In recognition of this expectation, we have adopted a Code of Ethics. The purpose of this Code of Ethics is to codify standards we believe are reasonably necessary to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships and full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC, or other regulatory bodies and in our other public communications.   

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table summarizes the total compensation for the two fiscal years ended December 31, 2020 to (1) Peter A. Cohen, who has served as our Chief Executive Officer since October 2019, (2) Jeffrey C. Piermont, who has served as our President and Chief Operating Officer since September 2018 and (3) Milun K. Patel, who has served as our Chief Financial Officer since November 2019, who are all of our named executive officers as of December 31, 2020.

Summary Compensation Table

Narrative Disclosure to Summary Compensation Table

Except as set forth below, we currently have no written employment agreements with any of our officers, directors, or key employees.

Jeffrey C. Piermont

On January 9, 2019, we entered into an employment agreement (the “Piermont Employment Agreement”) effective as of November 1, 2018, with Jeffrey C. Piermont for an initial term expiring on December 31, 2020, and subject to automatic renewal for successive one-year terms thereafter unless previous notice of termination is provided. The Piermont Employment Agreement provides for initial base salary of $300,000 for Mr. Piermont, as well as an annual bonus in amounts to be determined by the board of directors or a committee thereof, based on the achievement of specific objectives.  In January 2021, the board of directors approved an increase in base salary for Mr. Piermont to $330,000 effective as of January 1, 2021.

In the event the Piermont Employment Agreement is terminated for any reason other than for “Cause,” death or “Disability” or by Mr. Piermont for “Good Reason,” (each as defined in the Piermont Employment Agreement), subject to the execution and effectiveness of a separation agreement and release, Mr. Piermont shall be entitled to receive as severance a lump sum cash payment in an amount equal to: (i) the greater of (x) the amount which would have been payable to Mr. Piermont as base salary through the remainder of the term up to a maximum of eighteen (18) months of base salary; and (y) an amount equal to four (4) months of Mr. Piermont’s then effective base salary for each full year of service completed by Mr. Piermont, up to a maximum of twelve (12) months of base salary; plus (ii) the amount of any awarded but unpaid annual bonus in respect of the year preceding the year Mr. Piermont’s employment terminates; plus (iii) target incentive compensation communicated to Mr. Piermont under any management incentive plan then in effect during the year (or fiscal year) in which the termination takes place, pro-rated to account for the percentage of time Mr. Piermont was actively employed during the period used to measure performance for the purpose of determining incentive awards under such plan. In addition, Mr. Piermont shall be entitled to receive up to twelve (12) months payment of COBRA for continued health care benefits.

Mr. Piermont also entered into an inventions assignment, non-solicitation, and non-competition agreement that applies during the term of the Mr. Piermont’s employment and for twelve (12) months thereafter.

Outstanding Equity Awards at Fiscal Year-End

Pension Benefits

We do not have any qualified or nonqualified defined benefit plans.

Nonqualified Deferred Compensation

We do not have any nonqualified defined contribution plans or other deferred compensation plans.

Director Compensation

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Equity Compensation Plan Information

The following table sets forth information about the Company’s 2019 Equity Incentive Plan (the “2019 Plan”):

Summary Description of the 2019 Plan

In February 2019, the Company assumed the 2019 Plan in connection with its change of domicile to Delaware from Utah pursuant to a merger. The terms of the 2019 Plan provide for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, deferred stock awards, dividend equivalent awards, stock payment awards, performance-based awards and other stock-based awards. Stock options may be granted under the 2019 Plan with an exercise price not less than 100% of the fair market value of the common stock on the date of grant. Stock options under the 2019 Plan may be granted with terms of up to ten years. The total number of shares of our common stock initially reserved for issuance under the 2019 Plan was equal to 1,000,000. Additionally, the number of shares of common stock that may be issued under the 2019 Plan automatically increases on each January 1, beginning with January 1, 2020, and continuing until January 1, 2029 by an amount equal to the lesser of (i) 5% of the number of outstanding shares of common stock on that date and (ii) an amount determined by the Board. As of December 31, 2020, 919,700 shares of common stock were available for future grants under the 2019 Plan.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information regarding shares of our Class A Common Stock beneficially owned as of April 15, 2021 by: (i) each of our named officers and directors; (ii) all officers and directors as a group; and (iii) each person known by us to beneficially own five percent or more of the outstanding shares of its common stock. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. We deem shares of Common Stock that may be acquired by an individual or group within 60 days of April 15, 2021 pursuant to the exercise of options or warrants to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by these stockholders. Percentage of ownership is based on 3,560,462 shares of Class A Common Stock outstanding on April 15, 2021. 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Certain Relationships and Related Transactions

Director Independence

See “Directors, Executive Officers and Corporate Governance —Director Independence” above. 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth fees paid to our current independent registered public accounting firm, MaloneBailey, LLP, for the years ended December 31, 2020 and 2019.

PART IV

ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The financial statements, financial statement schedules and exhibits listed in the exhibit index of the Original Filing and the exhibits listed in the exhibit index of this Amendment are filed with, or incorporated by reference in, this Amendment. 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this Amendment No. 1 to Annual Report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York of New York on the 28th day of April, 2021.

Pursuant to the requirements of Securities Exchange Act of 1934, this Amendment No. 1 to Annual Report on Form 10-K/A has been signed below by the following persons on behalf of the registrant and in the capacities indicated below and on the dates indicated.

Exhibits Index

The following exhibits are filed with or incorporated by referenced in this report: