UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
DC 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, 2009




o
            
            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 001-12555








ATRINSIC,
INC








(Exact
name of registrant as specified in its charter)




Delaware
            
            06-1390025(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer Identification No.)





469
7th Avenue, 10th Floor, New York, NY 10018


(Address
of principal executive offices) (ZIP Code)




(212)
716-1977


(Registrant’s
telephone number, including area code)










Securities
registered pursuant to Section 12(b) of the Act:






Title of each
      class
            Name of each
      exchange on which registeredCommon Stock, $0.01
      par value
            The NASDAQ Global
      Market





Securities
registered pursuant to Section 12(g) of the Act:


Common
Stock, $0.01 par value




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes
o 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 Act.


Yes
o 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 o




Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Website, if
any, every Interactive Data File required to be submitted and posted 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
and post such files). Yes o  No x









Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o





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




Large
      accelerated filer   ̈
            Accelerated
      filer    ̈Non-accelerated
      filer    ̈ (Do not check if
      a smaller reporting company)
            Smaller reporting company   
      x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act)


Yes
o No x





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates, computed using the closing price of $1.34, as of June 30, 2009,
was $18,129,060.





Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes x No
o





As
of March 24, 2010, the issuer had 20,878,933 shares of common stock issued and
outstanding (which number excludes 2,741,318 shares issued and held in
treasury).




DOCUMENTS
INCORPORATED BY REFERENCE





None








STATEMENT REGARDING AMENDMENT NO. 1




This
Amendment No. 1 to Form 10-K on Form 10-K/A (this “Amendment”) is being
filed for the purpose restating Part III of the Annual Report on Form 10-K for
the fiscal year ended December 31, 2009, filed with the Securities and Exchange
Commission on March 31, 2010 (the “Original Filing”).




Except
as expressly noted herein, this Amendment does not reflect events occurring
after the March 31, 2010 filing date of our Original Filing, and we do not
undertake to update any item of our Original Filing, except in each case to
reflect the changes discussed in this Amendment. Accordingly, this Amendment
should be read in conjunction with the Original Filing. As a result of these
amendments, we are also filing as exhibits to this Amendment the certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Because no financial
statements are contained within this Amendment, we are not including
certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.











TABLE
OF CONTENTS




PART IIIItem
      10
              
              Directors,
      Executive Officers and Corporate Governance
              
              1Item
      11
              
              Executive
      Compensation
              
              6Item
      12
              
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              
              21Item
      13
              
              Certain
      Relationships and Related Transactions, and Director
      Independence
              
              24Item
      14
              
              Principal
      Accounting Fees and Services
              
              24PART IVItem
      15
              
              Exhibits,
      Financial Statement Schedules
              
              26









PART
III
  ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND
CORPORATE GOVERNANCE
  The
following table sets forth the name, age and position of each of our current
directors as of April 15, 2010.
 Name
                
                Age
                
                Director
      Since
                
                PositionJeffrey
      Schwartz (1)
                
                44
                
                2008
                
                Chief
      Executive Officer and DirectorRaymond
      Musci
                
                49
                
                2007
                
                Executive
      Vice President, Corporate Development, DirectorLawrence
      Burstein
                
                67
                
                2008
                
                DirectorJerome
      Chazen
                
                83
                
                2005
                
                Chairman
      of the BoardMark
      Dyne
                
                48
                
                2008
                
                DirectorStuart
      Goldfarb
                
                55
                
                2010
                
                DirectorRobert
      Ellin
                
                43
                
                2006
                
                Director
 
 (1)
              Jeffrey
      Schwartz has no relation to Traffix, Inc.’s former CEO, also named Jeffrey
      Schwartz.
 
 Board
of Directors
  Jeffrey
Schwartz.  Mr. Schwartz
currently serves as our Chief Executive Officer. He has served as a director of
the company since November 11, 2008.  Prior to his appointment as Chief
Executive Officer of the Company, Mr. Schwartz served as director and chair of
the Audit Committee of Atrinsic. Mr. Schwartz served as the Chairman and Chief
Executive Officer of Lateral Media, Inc., a web publishing and performance
marketing company. In June 2007, Mr. Schwartz founded and became managing
partner of Vertical Passion Media, LLC, a creator of web publishing and
advertising properties, which was later sold to eForce Media.  In 2006, Mr.
Schwartz founded and was chairman of AutoCentro, an automotive retail network
focused on the Hispanic market.  From December 2001 to April 2005, Mr.
Schwartz served as President and Chief Executive Officer of Autobytel, Inc., a
Nasdaq listed company, and as its Vice Chairman from April 2005 to April 2006,
where he created a leading online automotive marketing services company, with a
market capitalization exceeding $500 million, and having over 25,000
participating dealer franchises and operations in the U.S., Europe and Asia.
Prior to joining Autobytel, Mr. Schwartz was President and Chief Executive
Officer and a director of Autoweb.com, Inc. from November 2000 to August 2001,
also a Nasdaq listed company. He previously served as Autoweb's Vice President,
Strategic Development from October 1999 to November 2000.  From 1995 to
October 1999, Mr. Schwartz held various positions at The Walt Disney Company,
including Corporate Vice President with responsibilities in corporate alliance
business development.   Mr. Schwartz received Bachelor of Arts, Master
of Arts, and Ph.D. degrees in Political Science from the University of Southern
California.  Mr. Schwartz serves as a director of U.S. Auto Parts
Network, Inc., a leading automotive ecommerce company listed on
Nasdaq.  The Board selected Mr. Schwartz to serve as a director
because of his extensive experience as chief executive officer for several
companies and his service in a variety of leadership positions in the areas of
fund raising, business development and building a management team. Mr. Schwartz
provides critical insight into the areas of organizational and operational
management.
  Raymond
Musci. Mr. Musci serves as our Executive Vice President, Corporate
Development.  Mr. Musci has also served as a director since May 2007.
From August 2006 through February 2008, Mr. Musci served as President of New
Motion Mobile, Inc., and prior to joining our organization as an employee, Mr.
Musci was a consultant to our operations from January through August of 2006.
Mr. Musci brings over 25 years of high tech, media, entertainment and consumer
product experience to us, and was selected to serve as a director of the
company for this reason. From 1999 to 2006, Mr. Musci was Chief Executive
Officer of Bam! Entertainment, Inc., a company he founded in 1999 that published
and distributed movie, sports and cartoon video games to a wide range of
retailers. Prior to Bam!, from 1996 to 1999, Mr. Musci was president and
chief executive officer of the U.S. subsidiary of Infograms Entertainment, Inc.,
now better known as Atari, Inc. In that position, he oversaw all aspects of the
company's North American unit, was responsible for 250 employees, and grew
global revenues from $60 million to $300 million, and U.S. revenues from $80
million to $150 million. Before joining Infograms/Atari, Mr. Musci was founder,
president and chief executive officer of Ocean Of America, Inc., a publisher and
distributor of entertainment software. Founded in 1990, Mr. Musci built the
company to annual revenues of $50 million, and sold it to Infograms/Atari in
1996. Mr. Musci holds a degree in criminal justice with a minor in business
administration from Western New Mexico University. Mr. Musci is a
director of Talon International, Inc., a
former public reporting Company and served as a member of the board
of directors of Brilliant Digital Entertainment, Inc. from October 1996 until
April 2009, a former public reporting company.
  1
  LawrenceBurstein.
Mr. Burstein became a director upon the completion of our merger with Traffix,
Inc. on February 4, 2008. Mr. Burstein has been a director of Traffix since
April 1999. Since March 1996, Mr. Burstein has been Chairman of the Board and a
principal shareholder of Unity Venture Capital Associates, Ltd., a private
venture capital firm. For approximately ten years prior thereto, Mr. Burstein
was the President, a director and principal stockholder of Trinity Capital
Corporation, a private investment banking concern. Trinity ceased operations
upon the formation of Unity Venture Capital Associates, Ltd. in 1996. Mr.
Burstein is a director of several companies, being, respectively, THQ, Inc.,
engaged in the development and marketing of video games for Sony, Microsoft and
Nintendo; CAS Medical Systems, Inc., engaged in the manufacture and marketing of
blood pressure monitors and other disposable products, principally for the
neonatal market; I.D. Systems Inc., engaged in the design, development and
production of a wireless monitoring and tracking system which uses radio
frequency technology; and Millennium India Acquisition Corp., a publicly trading
holding company.  In addition, Mr. Burstein was formerly a director of
publicly traded American Telecom Systems, Inc., a company engaged in the
development and marketing of convergent telecommunication
services.  Mr. Burstein was selected as a member of our Board of
Directors because he adds substantial expertise from his venture capital finance
background and his executive experience, as well as his service as a board
member on other public companies.  His experience provides the Company
with valuable insight with respect to financing and operational strategies and
corporate governance issues.
  Jerome A.
Chazen. Mr. Chazen is currently the Chairman of our Board of Directors,
and has served as one of our directors since April 2005. Mr. Chazen is also
Chairman of Chazen Capital Partners, a private investment company. Prior to
Chazen Capital Partners, Mr. Chazen was one of the four founders of Liz
Claiborne Inc., where he is also Chairman Emeritus. Mr. Chazen is also the
founder and Benefactor of the Jerome A. Chazen Institute of International
Business, the focal point of all international programs at Columbia Business
School. Mr. Chazen received his Bachelor Degree from the University of Wisconsin
and his MBA from Columbia Business School. Mr. Chazen has been a director of
Taubman Centers, Inc., since 1992.  Mr. Chazen was chosen to be a
director of the company because of his extensive knowledge and experience in
executive management, finance, corporate governance matters, private investing
and product marketing.
 
 Mark
Dyne.  
Mr. Dyne has served as a director of the company since November 11,
2008.  Mr. Dyne currently serves as the Chief Executive Officer and
Chairman of Europlay Capital Advisors, LLC, a merchant banking and advisory
firm, and has served in this capacity since 2002. In this capacity, he provides
corporate and advisory services. Prior to joining Europlay, Mr. Dyne served as
Chief Executive Officer of Sega Gaming Technology Inc. (USA), a gaming company,
and Chief Executive Officer of Virgin Interactive Entertainment Ltd., a
distributor of computer software programs and video games based in London,
England. Mr. Dyne was a founder and former director of Sega Ozisoft Pty Ltd., a
leading distributor of entertainment software in both Australia and New Zealand.
Mr. Dyne served as one of the first board members and was one of the earliest
investors in Skype and Joost.com. Mr. Dyne was chosen to be a member of our
board because of his long history of developing digital properties and
technology focused businesses around the world.  From 1997 until
present, Mr. Dyne has served on the Board of Directors of Talon International,
Inc., formerly a public reporting company.
  Stuart Goldfarb.Mr. Goldfarb has served as a director of the Company since January 12,
2010. From 2001 to 2009 Mr. Goldfarb was President and CEO of Direct Brands,
Inc.  Under his leadership, the company grew to be the world’s largest
direct marketer of music, DVDs, and books, with household brands such as
Columbia House, BMG Music, Doubleday Book Club, Book-of-the-Month-Club,
cdnow.com and many more.  Prior to that, Mr. Goldfarb was President
and CEO of bol.com, Bertelsmann’s premier online retailer of books and music,
doing business in 18 European and Asian countries.  Before joining
Bertelsmann, he was Vice Chairman of Value Vision International, a cable TV home
shopping and e-commerce company.  He was formerly Executive Vice
President, Worldwide Business Development at NBC, where he held various
executive level positions.  Mr. Goldfarb was selected to be a member
of our Board of Directors because of extensive history and success in operating
entertainment and media related companies.
  Robert S.
Ellin. Mr. Ellin has served as one of our directors since October 24,
2006, and served as our Chief Executive Officer and President from October 24,
2006 to February 12, 2007. Mr. Ellin is a Managing Member of Trinad, which is a
hedge fund dedicated to investing in micro-cap public companies. Mr. Ellin
currently sits on the board of Command Security Corporation (CMMD), ProLink
Holdings Corporation (PLKH), U.S. Wireless Data, Inc. (USWI) and Mediavest, Inc
(MVSI). Prior to joining Trinad Capital LP in 2004, Mr. Ellin was the founder
and President of Atlantis Equities, Inc., a personal investment company. Founded
in 1990, Atlantis has actively managed an investment portfolio of small
capitalization public company as well as select private company investments. Mr.
Ellin frequently played an active role in Atlantis investee companies including
board representation, management selection, corporate finance and other advisory
services. Through Atlantis and related companies Mr. Ellin spearheaded
investments into ThQ, Inc. (OTC:THQI), Grand Toys (OTC: GRIN), Forward
Industries, Inc. (OTC: FORD) and completed a leveraged buyout of S&S
Industries, Inc. where he also served as President from 1996 to 1998. Prior to
founding Atlantis Equities, Mr. Ellin worked in Institutional Sales at LF
Rothschild and prior to that he was the Manager of Retail Operations at Lombard
Securities. Mr. Ellin received a Bachelor of Arts from
Pace University.  Mr. Ellin was selected as a member of our
Board of Directors because of his background in financing micro-cap companies
and his executive experience, as well as his service as a board member on other
public companies.
  2
  OTHER
EXECUTIVE OFFICERS
  Thomas Plotts.Mr. Plotts, 40, was appointed as our Interim Chief Financial Officer on
December 16, 2009.  Prior to his appointment as our Interim CFO, he
was Atrinsic’s Vice President of Finance & SEC Reporting, a position he held
since February 2007. From 2005 to 2007, Mr. Plotts was Chief Financial Officer
of DBH Resources, a privately held risk management company, which was
successfully sold to AON Corporation (NYSE: AOC) in 2007. From 2001 to 2005, Mr.
Plotts was Director of Business Information Systems and Corporate Development
at Cardiac Science Corporation (NASDAQ: CSCX). Mr. Plotts served in the
Australian Army Reserve, and was commissioned as a Lieutenant in 1988. Mr.
Plotts has a Bachelor of Economics degree from the University of Western
Australia and a Masters of Business Administration from the Marshall School of
Business at the University of Southern California.
 
 Andrew
Stollman. Mr. Stollman, 45, became our President and a director upon the
completion of our merger with Traffix, Inc. on February 4, 2008.  Mr.
Stollman resigned from his position as a director on November 11, 2008 but
remains in his current operating role with the company.  Mr. Stollman
had been Traffix’s President since November, 2002, its Chief Operating Officer
from January, 2001 to November, 2002, and its Secretary and a director of the
company since January 1995. From February 2000 until January 2001, Mr. Stollman
was also Traffix’s Executive Vice President and from January 1995 until February
2000, he was its Senior Vice President. Mr. Stollman was also Traffix’s
President from September 1993 to December 1994.
 
 FURTHER
INFORMATION CONCERNING THE BOARD OF DIRECTORS
 
 DirectorIndependence.  Our
board of directors consists of five “independent” members, as that term is
defined in Section 5605 of the Marketplace Rules as required by the NASDAQ Stock
Market: Jerome Chazen, Lawrence Burstein, Robert Ellin, Mark Dyne and Stuart
Goldfarb. Our board also has two seats held by non-independent executive
directors: Jeffrey Schwartz and Raymond Musci.
 
 Our Board
considered the objective tests and the subjective tests for determining who is
an “independent director” under the NASDAQ rules. The subjective test states
that an independent director must be a person who lacks a relationship that, in
the opinion of the Board, would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. In assessing
independence under the subjective test, our Board took into account the
standards in the objective tests, and reviewed and discussed additional
information provided by the directors and the Company with regard to each
director’s business and personal activities as they may relate to Atrinsic and
Atrinsic’s management. Based on all of the foregoing, as required by NASDAQ
rules, the Board made a subjective determination as to each independent director
that no relationships exists which, in the opinion of the Board, would interfere
with the exercise of independent judgment in carrying out the responsibilities
of a director.
 
 In making
its independence determinations, the Board will consider transactions occurring
since the beginning of the third fiscal year prior to the date of its
determination between Atrinsic and entities associated with the independent
directors or members of their immediate family. All identified transactions that
appear to relate to Atrinsic and a person or entity with a known connection to a
director will be presented to the Board for consideration. In each case, the
Board will determine whether, because of the nature of the director’s
relationship with the entity and/or the amount involved, the relationship
impaired the director’s independence.
  3
  Meetings.The Board of Directors
held nine meetings during fiscal 2009.  All directors then serving
attended 75% or more of all of the meetings of the Board of Directors and the
committees on which they served in fiscal 2009.  The Company has not
established a specific policy with respect to members of the Board of Directors
attending annual stockholder meetings, however, the company encourages its
directors to attend annual stockholder meetings.  Five directors
attended our 2009 Annual Meeting of Stockholders.
 
 Board Committees. Our
Board of Directors maintains an Audit Committee, Compensation Committee and
Nominating and Governance Committee.  Our Board may also establish
special committees from time to time to perform specifically delegated
functions. The Board of Directors has adopted a written charter that governs the
conduct and responsibilities of each of the Audit Committee, Compensation
Committee and Nominating and Governance Committee, copies of which may be found
on our website located at http://www.atrinsic.com.
 
 Audit Committee. Our Audit
Committee currently is chaired by Lawrence Burstein and seated by Stuart
Goldfarb and Jerome Chazen.  Jeffrey Schwartz, a member of the Audit
Committee in 2009, resigned from his position on the Audit Committee in
connection with his appointment as our Interim Chief Executive Officer on
October 6, 2009.  Each of Mr. Burstein, Mr. Chazen and Mr. Goldfarb
qualify as “independent” directors within the meaning of the applicable rules
for companies traded on The NASDAQ Global Market (NASDAQ), and Mr. Schwartz
qualified as “independent” as well while serving on the
committee.   We have determined that each member of our Audit
Committee qualifies as an “audit committee financial expert” within the meaning
of the rules and regulations of the SEC, with Mr. Burstein having acquired the
requisite experience from having served on the audit committees of three other
public companies for more than 10 years.  Among other
responsibilities, the Audit Committee reviews the scope and results of quarterly
audit reviews and the year-end audit with management and the independent
auditors, reviews and discusses the adequacy of our internal controls, and
recommends to the Board of Directors selection of independent auditors for the
coming year.  During 2009, our audit committee held six
meetings.
 
 Compensation Committee.Our Compensation
Committee is currently Chaired by Lawrence Burstein, and seated by Robert Ellin
and Jerome Chazen, each who qualify as “independent” directors within the
meaning of the applicable rules for companies traded on NASDAQ. The
Compensation Committee of the Board of Directors is primarily responsible for
determining the annual salaries and other compensation of directors and
executive officers and administering our equity compensation
plans.  Our Compensation Committee determines the compensation to be
paid to our officers and directors, with recommendations from our full Board of
Directors and management as to the amount and/or form of such
compensation.  While our Board may utilize the services of consultants
in determining or recommending the amount or form of executive and director
compensation, we do not at this time employ consultants for this purpose. During
2009, our compensation committee held two meetings, and matters relating to
compensation were also discussed at full meetings of our Board of
Directors.
 
 Nominating and Governance
Committee.  Our Nominating and Governance Committee is
currently chaired by Stuart Goldfarb and seated by Robert
Ellin.  Jeffrey Schwartz, a member of the Nominating and Governance
Committee in 2009, resigned from his position on the committee in connection
with his appointment as our Interim Chief Executive Officer on October 6,
2009.  Stuart Goldfarb and Robert Ellin qualify as “independent”
directors within the meaning of the applicable rules for companies traded
NASDAQ.   During 2009, our nominating and governance committee
did not meet, however, matters relating to nominations and governance were
discussed at full meetings of our Board of Directors.
 
 Our
Nominating and Governance Committee reviews and makes recommendations regarding
the functioning of the Board of Directors as an entity, recommends corporate
governance principles applicable to Atrinsic and assists the Board of Directors
in its reviews of the performance of the Board and each of its
committees.  The Committee also reviews those Board members who are
candidates for re-election to our Board of Directors, and makes the
determination to nominate a candidate who is a current member of the Board of
Directors for re-election for the next term. The Committee’s methods for
identifying candidates for election to the Board of Directors (other than those
proposed by our stockholders, as discussed below) include the solicitation of
ideas for possible candidates from a number of sources—members of the Board of
Directors; our executives; individuals personally known to the members of the
Board of Directors; and other research. The Committee may also from time to time
retain one or more third-party search firms to identify suitable candidates. The
Committee members also nominate outside candidates for inclusion on the Board of
Directors.  The diversity of the background of an individual and their
field of expertise is a consideration for membership on our Board. We consider
diversity broadly to include differences of viewpoint, professional experience,
individual characteristics, qualities and skills resulting in the ability for
naturally varying perspectives among our Board of Directors while simultaneously
providing skills that complement our full Board so that the Board, as a unit,
possesses the appropriate skills and experience to oversee our
business.
  4
 
 An
Atrinsic stockholder may nominate one or more persons for election as a director
at an annual meeting of stockholders if the stockholder complies with the
notice, information and consent provisions contained in our Bylaws. Stockholders
who desire the Nominating and Governance Committee to consider a candidate for
nomination as a director at the 2011 annual meeting must submit advance notice
of the nomination to the Committee a reasonable time prior to the mailing date
of the proxy statement for the 2011 annual meeting. The recommendation should be
addressed to our Corporate Secretary.
 
 A
stockholder’s notice of a proposed nomination for director to be made at an
annual meeting must include the following information:
 
 ·
              the
      name and address of the stockholder proposing to make the nomination and
      of the person or persons to be
nominated;
 
 ·
              a
      representation that the holder is a stockholder entitled to vote his or
      her shares at the annual meeting and intends to vote his or her shares in
      person or by proxy for the person or persons nominated in the
      notice;
 
 ·
              a
      description of all arrangements or understandings between the
      stockholder(s) supporting the nomination and each
  nominee;
 
 ·
              any
      other information concerning the proposed nominee(s) that we would be
      required to include in the proxy statement if the Board of Directors made
      the nomination; and
 
 ·
              the
      consent of the nominee(s) to serve as director if
  elected.
 
 Code of Ethics.  Our
Board of Directors has adopted a Code of Ethical Conduct (the “Code of Conduct”)
which constitutes a “code of ethics” as defined by applicable SEC rules and a
“code of conduct” as defined by applicable NASDAQ rules. We require all
employees, directors and officers, including our Chief Executive Officer,
President and Chief Financial Officer, to adhere to the Code of Conduct in
addressing legal and ethical issues encountered in conducting their work. The
Code of Conduct requires that these individuals avoid conflicts of interest,
comply with all laws and other legal requirements, conduct business in an honest
and ethical manner and otherwise act with integrity and in our best interest.
The Code of Conduct contains additional provisions that apply specifically to
our Chief Financial Officer and other financial officers with respect to full
and accurate reporting. The Code of Conduct is available on our website at
www.atrinsic.com and has been filed as an exhibit to our Original Filing. You
may also request a copy of the Code of Conduct by writing or calling us
at:
 
 Atrinsic,
Inc.
 Attn:
Investor Relations
 469 7th
Ave, 10th Floor
 New York,
NY 10018
 
 Any
waiver of the Code of Conduct pertaining to a member of our Board or one of our
executive officers will be disclosed in a report on Form 8-K filed with the
Securities and Exchange Commission.
 
 Section
16(A) Beneficial Ownership Reporting Compliance
 
 Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our directors
and executive officers and the holders of more than 10% of our common stock to
file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of our equity securities. Executive
officers, directors and greater-than-ten percent stockholders are required by
SEC regulations to furnish us with all Section 16(a) forms they file. Based
solely on our review of the copies of the forms received by us and written
representations from certain reporting persons that they have complied with the
relevant filing requirements, we believe that, during the year ended December
31, 2009, all of our executive officers, directors and the holders of 10%
or more of our common stock complied with all Section 16(a) filing
requirements, except one initial statement of beneficial ownership of securities
and one statement of changes in beneficial ownership on Form 4, which were filed
late by Zachary Greenberger; one statement of changes in beneficial ownership on
Form 4 was filed late by Larry Burstein, reporting one late transaction; one
statement of changes in beneficial ownership on Form 4 was filed late by Burton
Katz, reporting one late transaction; one statement of changes in beneficial
ownership on Form 4 was filed late by Robert Ellin, reporting one late
transaction; one statement of changes in beneficial ownership on Form 4 was
filed late by Mark Dyne, reporting one late transaction; one statement of
changes in beneficial ownership on Form 4 was filed late by Andrew Zaref,
reporting one late transaction; one statement of changes in beneficial ownership
on Form 4 was filed late by Jeffrey Schwartz, reporting one late transaction;
one statement of changes in beneficial ownership on Form 4 was filed late by
Jerome Chazen, reporting one late transaction; and one statement of changes in
beneficial ownership on Form 4 was filed late by Andrew Stollman, reporting one
late transaction.
  5
  ITEM
11. EXECUTIVE COMPENSATION
  Summary
Compensation Table
 
 The
following table provides disclosure concerning all compensation earned for
services to us in all capacities for our fiscal years ended December 31, 2009
and 2008 (i) as to each person serving as our Chief Executive Officer during our
fiscal year ended December 31, 2009, and (ii) as to our two most highly
compensated executive officers other than our Chief Executive Officer who were
serving as executive officers during our fiscal year ended December 31, 2009,
whose compensation exceeded $100,000. The people listed in the table below are
referred to as our “named executive officers”.
  Name
      and Principal Position
                Year
                
                Salary
                
                
                Bonus
                
                
                Stock
      Awards
                  (5)
                
                
                Option
      Awards
                  (6)
                
                
                All
      Other
                  Compensation
                
                
                TotalJeffrey
      Schwartz
                2009
                
                $
                106,248
                
                
                $
                -
                
                
                $
                4,398
                
                
                $
                -
                
                
                $
                63,332
                
                
                $
                173,978Chief
      Executive
                  Officer
      (1)
                2008
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                17,125
                
                
                $
                17,125Burton
      Katz
                2009
                
                $
                383,327
                
                
                $
                -
                
                
                $
                77,688
                
                
                $
                -
                
                
                $
                875,200
                
                
                $
                1,336,215Chief
      Executive
                  Officer
      and Director (2)
                2008
                
                $
                403,657
                
                
                $
                21,250
                
                
                $
                -
                
                
                $
                1,206,999
                
                
                $
                21,274
                
                
                $
                1,653,180Andrew
      Stollman
                2009
                
                $
                425,000
                
                
                $
                -
                
                
                $
                77,688
                
                
                $
                -
                
                
                $
                30,219
                
                
                $
                532,907President
      (3)
                2008
                
                $
                385,510
                
                
                $
                271,250
                
                
                $
                -
                
                
                $
                1,206,999
                
                
                $
                21,534
                
                
                $
                1,885,293Andrew
      Zaref
                2009
                
                $
                411,467
                
                
                $
                -
                
                
                $
                56,500
                
                
                $
                -
                
                
                $
                217,700
                
                
                $
                685,667Chief
      Financial
                  Officer
      (4)
                2008
                
                $
                183,333
                
                
                $
                100,000
                
                
                $
                -
                
                
                $
                446,209
                
                
                $
                13,331
                
                
                $
                742,873
 
 (1) Mr.
Schwartz was appointed Chief Executive Officer (Interim) on October 6, 2009 and
on January 27, 2010, Mr. Schwartz was appointed as our Chief Executive
Officer.  In fiscal year ended December 31, 2009, Mr. Schwartz
received $4,398 of stock awards and $61,000 of cash as compensation for his
services as a director prior to becoming our Chief Executive Officer (interim)
and received $106,248 in cash compensation for his service as Interim Chief
Executive Officer.  Other compensation consists of $2,332 of health
insurance premiums and Mr. Schwartz’s cash compensation as a member of our
Board.
 
 (2) Effective
February 4, 2008, Mr. Katz entered into a new employment agreement in which he
was granted options to purchase 300,000 shares of common stock at an exercise
price of $10.92 per share. In 2009, pursuant to his employment agreement, Mr.
Katz was granted 275,000 restricted stock units that were scheduled to vest
after the closing of trading on the date that the average per share trading
price of the Company’s common stock during any period of 10 consecutive trading
days equaled or exceeded $7.50. The fair value of these awards reflect a 25%
probability of vesting.  Also in 2009, as a result of the adoption of
a one time option exchange program, Mr. Katz forfeited his 300,000 options
mentioned above to purchase shares of the Company’s common stock in exchange for
100,000 restricted stock units. Vesting terms of the restricted stock units
issued in connection with the exchange program were not finalized by the board
and as a result these restricted stock units have not been recorded for
accounting purposes.  For 2009, included in Mr. Katz’s salary is
$334,289 of his regular salary and a vacation payout of $49,038. Other
compensation paid to Mr. Katz included payments of $9,000 and $12,177 for 2009
and 2008, respectively, related to an auto allowance pursuant to the terms of
his employment agreement as well as $16,200 and $9,097 for 2009 and 2008,
respectively, in health insurance premiums.  In 2008, Mr. Katz earned
a cash bonus of $21,250 for his efforts in successfully integrating Traffix and
Atrinsic.  On October 20, 2009, Atrinsic Inc and Burton Katz entered into a
Separation and Mutual Release Agreement.  Pursuant to the agreement,
the company agreed to pay Mr. Katz an aggregate of $850,000 of severance, which
is included in “other compensation”, and cancelled all 375,000 restricted stock
units held by Mr. Katz.
  6
  (3) In
connection with the merger of Atrinsic and Traffix, Inc., Atrinsic entered into
an employment agreement with Andrew Stollman on February 4,
2008.  Pursuant to his employment agreement, Mr. Stollman was granted
options to purchase 300,000 shares of common stock at an exercise price of
$10.92 and received a sign-on bonus of $250,000 upon execution of his employment
agreement. In 2008, Mr. Stollman also earned a cash bonus of $21,250 for his
efforts in successfully integrating Traffix and Atrinsic. In 2009, Mr.
Stollman was granted 275,000 restricted stock units that will vest after the
closing of trading on the date that the average per share trading price of the
Company’s common stock during any period of 10 consecutive trading days equals
or exceeds $7.50. The fair value of these awards reflect a 25% probability of
vesting. In 2009, as a result of the adoption of a one time option exchange
program, Mr. Stollman forfeited the above mentioned 300,000 options to purchase
shares of the Company’s common stock in exchange for 100,000 restricted stock
units. Vesting terms of the restricted stock units issued in connection with the
exchange program were not finalized by the board and as a result these
restricted stock units have not been recorded for accounting
purposes. Other compensation paid to Mr. Stollman consisted of payments of
$10,000 and $11,177 for 2009 and 2008, respectively, related to an auto
allowance pursuant to the terms of his employment agreement, life insurance
premiums of $4,019 and $1,260 for 2009 and 2008, respectively, as well as
$16,200 and $9,097 for 2009 and 2008, respectively, in health insurance
premiums.
 
 (4)  On
July 14, 2008, Atrinsic entered into an employment agreement with Andrew
Zaref.  In connection with his employment agreement, Mr. Zaref was
granted an option to purchase 200,000 shares of our common stock. The options
were exercisable at an exercise price of $4.16 per share, and were scheduled to
vest over three years and expire on July 14, 2018. In 2009, as a result of the
adoption of our one time option exchange program, Mr. Zaref forfeited these
200,000 options to purchase shares of the Company’s common stock, in exchange
for 66,667 restricted stock units. Vesting terms of the restricted stock units
issued in connection with the exchange program were not finalized by the board
and as a result these restricted stock units have not been recorded for
accounting purposes. In 2009, pursuant to his employment agreement, Mr. Zaref
was also granted 200,000 restricted stock units that were scheduled to vest
after the closing of trading on the date that the average per share trading
price of the Company’s common stock during any period of 10 consecutive trading
days equaled or exceeded $7.50. The fair value of these awards reflect a
25% probability of vesting. Other compensation paid to Mr. Zaref included
payments of $9,000 and $7,610 for 2009 and 2008, respectively, related to an
auto allowance pursuant to the terms of his employment agreement as well as
$16,200 and $5,721 for 2009 and 2008, respectively, in health insurance
premiums. On December 18, 2009, we entered into a Separation and Mutual Release
Agreement with Mr. Zaref pursuant to which Mr. Zaref resigned from his position
as CFO of the Company.  In connection with Mr. Zaref’s resignation,
his 266,667 restricted stock units were cancelled and he was paid $192,500 in
severance, which amount is included in “other compensation”. Mr. Zaref’s 2009
salary includes his regular salary of $380,697, and vacation pay of
$30,770.
 
 (5) The
dollar amount is the aggregate grant date fair value of stock awards granted in
the fiscal year in accordance with Financial Accounting Standards Board
Accounting Standards Codification Topic 718. The fair value of restricted stock
units issued was recorded at fair market value at date of grant and in some
cases, using a binomial model. For awards subject to performance conditions, the
value reported is computed based upon the probable outcome of the performance
condition as of the grant date. For further information, refer to Note 13 -
"Stock Based Compensation," in our Consolidated Financial Statements in our
Original Filing filed with the SEC on March 31, 2010.
 
 (6) The
dollar amount is the aggregate grant date fair value of option awards granted in
the fiscal year in accordance with Financial Accounting Standards Board
Accounting Standards Codification Topic 718. The fair value of options was
estimated on the date of grant using the Black-Scholes option pricing model with
the following assumptions: (a) risk free rate of 3.0% to 3.5% (b) dividend yield
of 0.0%, (c) expected option life of 5.6, and (d) expected volatility of 58%.
For awards subject to performance conditions, the value reported is computed
based upon the probable outcome of the performance condition as of the grant
date. For further information, refer to Note 13 - "Stock Based Compensation," in
our Consolidated Financial Statements in our Original Filing filed with the SEC
on March 31, 2010.
  7
  Narrative
Disclosure to Summary Compensation Table
 
 Introduction
 
 In this
section, we describe our compensation objectives and policies as applied to our
named executive officers during 2009. The following discussion and analysis is
intended to provide a framework within which to understand the actual
compensation awarded to, earned or held by each named executive officer during
2009, as reported in the summary compensation table set forth
above.
 
 Determination
of Compensation
 
 The
Compensation Committee of the Board of Directors (the “Committee”) is
responsible for determining the annual salaries and other compensation of
directors and executive officers, administering our equity compensation plans
and assisting the Board of Directors in fulfilling its oversight
responsibilities with respect to management succession and other significant
human resources matters.
  Among
other things, the Committee is required to determine and approve the
compensation of the chief executive officer, review and approve the compensation
of the Company’s other executive officers, review and approve any incentive
compensation plan or equity-based plan for the benefit of executive officers,
and review and approve any employment agreement, severance arrangement or
change-in-control arrangement for the benefit of executive
officers.
 
 Throughout
this report, the individuals who served as the Company’s chief executive officer
as well as the other individuals included in the Summary Compensation Table
above, are referred to as the “named executive officers.”
  Philosophy
  Our
overall business compensation program seeks to align executive compensation with
the achievement of the Company’s business objectives and with individual
performance towards these objectives. It also seeks to enable the Company to
attract, retain, and reward executive officers and other key employees who
contribute to our success and to incentivize them to enhance long-term
stockholder value.
  To
implement this philosophy, the total compensation program is designed to be
competitive with the programs of other companies of comparable revenue in the
integrated mobile entertainment and internet media business, and to be fair and
equitable to both the Company and the executives. As part of the Company’s
determination of compensation levels for Messrs. Katz and Stollman when
negotiating their employment agreements, the company reviewed the compensation
policies of the following companies:  Glu Mobile, Inc., Think
Partnerships, Inc., Dada S.p.A., Miva, Inc., Buongiorno S.p.A., Infospace, Inc.
and ValueClick, Inc.  In addition, in setting compensation levels,
consideration was given to each executive’s overall responsibilities,
professional qualifications, business experience, job performance, technical
expertise and career potential, and the combined value of these factors to the
company’s long-term performance and growth.
  Objectives
of Executive Compensation
  The main
objectives of our compensation strategy include the following:
 
 ·
              pay
      competitively within our industry to attract and retain key
      employees,
 
 ·
              pay
      for performance to motivate and align our executives interests with that
      of our stockholders; and
 
 ·
              design
      compensation programs with a balance between short-term and long-term
      objectives, including encouraging management ownership of our common
      stock.
 
 The
Committee strives to meet these objectives while maintaining market competitive
pay levels and ensuring that we make efficient use of equity
awards.  In furtherance of these objectives, the Committee at times
retains outside compensation experts. To this end, the Company engaged Ross
Consulting Group during 2008 to provide consulting services with respect to the
Company’s executive compensation policies.  In 2009, the Company did
not retain outside consultants to provide advice in relation to executive
compensation.
  8
  The
Committee seeks to properly compensate executive officers for their services to
the Company and to create incentives to focus on the specific goals identified
as significant for the Company. The Committee identifies and considers a wide
range of measures for individual performance, company performance, and, as
appropriate, share price appreciation, and, with the assistance of outside
advisors including legal counsel, develops specific performance goals based on
these measures. In addition, the Committee endeavors to preserve the Company’s
tax deduction for all compensation paid, which can be accomplished primarily by
conditioning compensation on the achievement of certain performance goals, as
discussed below.
 
 Executive
Compensation Components
 
 The
primary components of the executive compensation program are:
 
 ·
              base
      salary;
 
 ·
              annual
      performance-based cash bonus;
 
 ·
              long-term
      equity incentive awards in the form of stock options, restricted stock
      units and/or restricted stock; and
 
 ·
              other
      benefits.
 
 Annual
Base Salary
 
 We strive
to provide our senior executives with a level of assured cash compensation in
the form of annual base salary that is competitive with companies in the digital
entertainment and entertainment content business and similar enterprises and
companies that are comparable in size and performance.  We strive to
set base salaries at levels which are designed to motivate and retain our
executives.  The annual base salaries for Messrs. Katz, our former
Chief Executive Officer, and Mr. Stollman, our President, in 2009 were $425,000
which were negotiated in connection with the closing of our merger with Traffix,
Inc., and reflect in part the base compensation that Messrs. Katz and Stollman
were receiving at their respective companies prior to the merger.  The
annual base salary of Mr. Zaref (our former Chief Financial Officer) was
$400,000 and the monthly salary of Mr. Schwartz in 2009 while he was acting as
our Interim Chief Executive Officer was $30,000, each of which were established
based on their respective negotiations with the Company.
 
 When
establishing the base salaries for our Named Executive Officers, the
Compensation Committee considered a number of factors including the individual’s
duties and responsibilities, their potential for making significant
contributions to the company in the future, their backgrounds in the digital
entertainment and entertainment content business and other general discretionary
considerations as the Compensation Committee deemed
appropriate.
 
 Annual
Cash Bonuses
 
 Annual
cash incentive bonuses create a measurable and predictable connection between
total executive compensation and our annual performance. Unlike base salaries,
annual incentive bonuses are at risk based on how well we perform and how our
executive officers contribute to that performance. The Compensation Committee
determines the extent to which the performance targets and measurement criteria
previously established for a particular year have been achieved based on
financial information provided by our Chief Financial Officer, as a result of
our audited annual financial statements, including the adjustment to such
statements for non-GAAP adjustments in arriving at non-GAAP incentive
measurements. The Compensation Committee may, in determining whether performance
targets have been met, adjust our financial results to exclude the effect of
unusual charges or items contributing income to the current year or other events
that distort results specifically attributable to management’s effectiveness for
the current year.  In addition, for incentive compensation measurement
at the net income level, the Compensation Committee adjusts its calculations to
exclude the unanticipated effect on financial results of changes in the Internal
Revenue Code or other tax laws or regulations. The Compensation Committee may,
in its discretion, increase or decrease the amount of a participant’s incentive
award based upon such factors as it may determine as appropriate, and necessary
under the philosophy and objectives of their policies.
  9
 
 In 2009,
as a result of the volatility in the marketplace, cash bonuses paid to our Named
Executive Officers, if any, were to be paid at the discretion of the
Compensation Committee based on the performance of the company and the executive
during the fiscal year.  In 2009, no annual cash bonuses were paid to
the Company’s Named Executive Officers as a result of the Company’s
performance.
 
 Annual
cash bonuses for the Named Executive Officers in 2008 were based on performance
criteria established by the Compensation Committee for 2008.  Annual
cash bonuses for Messrs. Katz and Stollman were based on two quantitative
measures, EBITDA and revenues, and one qualitative measure, the integration of
Traffix, Inc. into Atrinsic.  None of the quantitative measures was
achieved; however, each executive earned $21,250 for successfully integrating
the two companies.
 
 In 2010,
as a result of the current volatility in the marketplace, cash bonuses paid to
our Named Executive Officers, if any, will be paid at the discretion of the
Compensation Committee based on the performance of the Company and the executive
during the fiscal year.
 
 Long-Term
Equity Incentive Awards
 
 The
Compensation Committee has designed our equity incentive awards to serve as the
primary vehicle for providing long-term incentives to our senior executives and
key employees. We also regard equity incentive awards as a key retention tool.
During 2009, equity incentive awards were available for grant under our 2005,
2007 and 2009 Plans, which are described more fully below.
 
 As
described in the footnotes to the Summary Compensation Table, the Compensation
Committee has granted long-term equity incentive compensation awards to the
Named Executive Officers in the form of non-qualified stock option awards as
well as restricted stock units. The vesting provisions of our equity awards are
established in order to encourage employee retention and focus management’s
attention on sustaining financial performance and building stockholder value
over an extended term.
 
 The
following are descriptions of our 2005, 2007 and 2009 Stock Incentive
Plans:
 
 2005
Plan
 
 In 2005,
New Motion Mobile, Inc., our wholly owned subsidiary, established the Stock
Incentive Plan (the “2005 Plan”), for eligible employees and other directors and
consultants. In connection with the closing of our exchange transaction with New
Motion Mobile, Inc. on February 12, 2007, we assumed all of New Motion Mobile’s
obligations under the plan. Under the 2005 Plan, officers, employees and
non-employees may be granted options to purchase our common stock at no less
than 100% of the market price at the date the option is granted. Since New
Motion Mobile’s stock was not publicly traded prior to the exchange
transaction, the market price at the date of grant was historically determined
by New Motion Mobile’s board of directors. Incentive stock options granted
to date typically vest at the rate of 33% on the first anniversary of the
vesting commencement date, and 1/24th of the remaining shares on the last day of
each month thereafter until fully vested. The options expire ten years from the
date of grant subject to cancellation upon termination of employment. Upon the
approval of the 2007 Stock Incentive Plan, our Board adopted a resolution to
prevent further grants of awards under the 2005 Plan.
 
 2007
Plan
 
 On
February 16, 2007, our Board of Directors approved the 2007 Stock Incentive Plan
(the “2007 Plan”). The maximum number of shares available for grant under the
plan is 1,400,000 shares of common stock.  Under the 2007 Plan,
officers, employees and non-employees may be granted options to purchase our
common stock at no less than 100% of the market price at the date the option is
granted. Incentive stock options granted under the 2007 Plan typically vest at
the rate of 33% on the first anniversary of the vesting commencement date, and
1/24th of the remaining shares on the last day of each month thereafter until
fully vested. The options expire ten years from the date of grant subject to
cancellation upon termination of employment. With the approval of our 2009 Stock
Incentive Plan by our stockholders, no further awards will be granted under the
2007 Plan, except that any shares of common stock that have been forfeited or
cancelled in accordance with the terms of the applicable award under the 2007
Plan may be subsequently again awarded in accordance with the terms of the 2007
Plan prior to its expiration in 2017.
  10
  2009
Plan
 
 On June
25, 2009, the Company adopted the 2009 Stock Incentive Plan.  Under
the plan, the Company is authorized to grant equity-based awards in the form of
stock options, restricted common stock, restricted stock units, stock
appreciation rights, and other stock based awards to employees (including
executive officers), directors and consultants of the Company and its
subsidiaries. The maximum number of shares available for grant under the plan is
2,750,000 shares of common stock.  The number of shares available for
award under the plan is subject to adjustment for certain corporate changes and
based on the types of awards provided, all in accordance with the provisions of
the plan.
 
 One
Time Option Exchange Program
 
 In 2009,
the Company completed a one-time stock option exchange
program.  Pursuant to the exchange program, certain out-of-the-money
stock options previously issued to each of Burton Katz, our former Chief
Executive Officer, Andrew Stollman, our President, Andrew Zaref, our former
Chief Financial Officer, and Zack Greenberger, our former Chief Technology
Officer and Vice President, Operations (collectively, the “Optionees”), were
exchanged for restricted stock units (the “Option Exchange
Program”).  Messrs. Katz, Stollman, Zaref and Greenberger forfeited
stock options to purchase 300,000, 300,000, 200,000 and 50,000 shares of the
company’s common stock, respectively, in exchange for awards of 100,000,
100,000, 66,667 and 16,667 restricted stock units (“RSUs”), respectively, which
were granted pursuant to our 2009 Stock Incentive Plan.
 
 The RSUs
issued under the Option Exchange Program represent the right to receive shares
of common stock on specified future dates when the RSUs vest.  There
is no exercise price or purchase price for these shares of stock.  The
RSUs issued to each of the Optionee’s were unvested on the date of the exchange
and were scheduled to vest over three years based on quantitative and
qualitative performance metrics which have yet to be established by the
compensation committee, with one-third of the RSUs eligible for vesting on each
of December 31, 2009, December 31, 2010, and December 31, 2011.  Any
RSUs that did not vest on the date that they were eligible for vesting would be
forfeited.  Subsequent to the adoption of the Option Exchange Program,
the RSUs received by each of Mr. Katz, Mr. Zaref and Mr. Greenberger were
forfeited as a result of the terminations of their respective employment with
the Company.
 
 Reasons
for the Option Exchange Program
 
 The Company granted options to Messrs.
Katz, Stollman, Zaref and Greenberger consistent with the view that long-term
compensation should align the interest of management with the interests of
stockholders.  While the compensation packages of our management team
vary, we believe equity compensation is one of the key components as it
encourages management to work toward our success and provides a means by which
management benefits from increasing the value of our common stock.  We
also believe that equity compensation plays a vital role in the retention and
recruiting of our management team.
 
 At the time of the Option Exchange
Program, the Optionees held stock options with exercise prices higher than the
market price of our common stock.  For example, on April 15, 2009, the
closing price of our common stock on the Nasdaq Global Market was $1.18, and the
weighted average exercise price of the options subject to the Option Exchange
Program was $9.04.  For each of the Optionees, the exercise price of
their respective options to purchase common stock of the company which were
subject to the Option Exchange Program was well above the market price of our
common stock.  As a result, an important component of our compensation
program was perceived by our Compensation Committee as having little
value.  The Compensation Committee adopted the Option Exchange Program
to motivate our management to achieve our strategic, operational and financial
goals and thereby align the interests of management with the interests of our
stockholders, and reduce the risk of key personnel departing for opportunities
that they deemed to be more lucrative.
 
 In
addition to the above goals, the Option Exchange Program was designed to avoid
additional dilution of our equity and to be more cost-effective than simply
issuing incremental equity awards or paying additional cash compensation to the
aforementioned individuals.  The exchange ratio (the number of
outstanding stock options that each Optionee surrendered for cancellation in
exchange for RSUs) was 3 for 1 and was determined to provide an appropriate
exchange of value based on a variety of factors considered by our Compensation
Committee, including the exercise price of stock options that were tendered for
exchange pursuant to the Option Exchange Program, the planned performance based
vesting of the RSUs that were granted and the market price of our common
stock.
  11
 
 As a result of the Option Exchange
Program, we achieved a net reduction in our overhang shares of 566,666 shares,
which represented approximately 2.7% of our then issued and outstanding common
stock (excluding shares held in treasury).  This reduction benefited
stockholders, as the potential for dilution of their economic interest in the
company was reduced.
 
 Outstanding
Equity Awards at December 31, 2009
 
 The
following table presents information regarding outstanding options held by the
company’s named executive officers as of December 31, 2009. None of the
named executive officers exercised options during the fiscal year ended December
31, 2009.
 Option
      Awards
                    
                    
                    
                    Stock
      AwardsNumber
      of Securities Underlying Unexercised Options (#)
                    
                    
                    
                    
                    
                    
                    Number
      of Shares or Units of Stock That Have Not Vested (#)
                    
                    
                    Market
      Value of Shares or Units of Stock That Have Not Vested
    ($)(3)Name
                    Grant
      Date
                    
                    Exercisable
                    
                    
                    Unexercisable
                    
                    
                    Option
      Exercise Price ($)
                    
                    Option
      Expiration DateBurton
      Katz (1)
                    08/06/2006
                    
                    
                    363,184
                    
                    
                    
                    -
                    
                    
                    
                    2.34
                    
                    10/05/201002/16/2007
                    
                    
                    81,250
                    
                    
                    
                    -
                    
                    
                    
                    6.00
                    
                    10/05/2010Andrew
      Stollman (2)
                    02/04/2008
                    
                    
                    67,607
                    
                    
                    
                    -
                    
                    
                    
                    9.98
                    
                    03/08/201002/04/2008
                    
                    
                    30,423
                    
                    
                    
                    -
                    
                    
                    
                    4.44
                    
                    04/09/201102/04/2008
                    
                    
                    30,423
                    
                    
                    
                    -
                    
                    
                    
                    3.70
                    
                    04/09/201102/04/2008
                    
                    
                    30,423
                    
                    
                    
                    -
                    
                    
                    
                    3.42
                    
                    04/09/201102/04/2008
                    
                    
                    70,987
                    
                    
                    
                    -
                    
                    
                    
                    8.43
                    
                    12/01/201102/04/2008
                    
                    
                    273,809
                    
                    
                    
                    -
                    
                    
                    
                    10.86
                    
                    06/03/201406/25/2009
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    275,000
                    
                    
                    $
                    77,68806/25/2009
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    100,000
                    
                    
                    
                    --
 
 (1)           On
August 6, 2006, Mr. Katz was granted an option to purchase 363,184 shares of
common stock at a per share exercise price of $2.34. On February 16, 2007, Mr.
Katz was granted an option to purchase 81,250 shares of common stock at a per
share exercise price of $6.00. Both of these options originally had a term of
ten years and vested as follows: 33.3% of the shares subject to the options
vested on the first anniversary of their respective grant dates, and the
remaining 66.7% of the shares subject to the options vested monthly over the
next 24 months thereafter. On October 20, 2009, Mr. Katz resigned his position
as Chief Executive Officer. Pursuant to his separation agreement with the
Company, all of the 444,434 options to purchase common stock held by Mr. Katz
are deemed to be fully vested and Mr. Katz will have until October 5, 2010 to
exercise such options, otherwise, they will expire.
 
 (2)           In
connection with the merger of Atrinsic and Traffix, Inc., Mr. Stollman’s options
to purchase shares of common stock of Traffix were converted into an aggregate
of 503,672 options to purchase shares of common stock of Atrinsic at an average
exercise price of $9.13, which options were fully vested at the time of the
merger.  On June 25, 2009, Mr. Stollman was granted 275,000 restricted
stock units that will vest after the closing of trading on the date that the
average per share trading price of the Company’s common stock during any period
of 10 consecutive trading days equals or exceeds $7.50. The fair value of these
awards reflect a 25% probability of vesting. Also on June 25, 2009, as described
under the heading “One Time Option Exchange Program” above, 300,000 of Mr.
Stollman’s options were exchanged for 100,000 restricted stock
units.  These restricted stock units were scheduled to vest in
accordance with quantitative and qualitative measures to be determined by our
board, which have not been finalized.  Therefore, these restricted
stock units have not been granted from an accounting perspective.
  12
  Other
Benefits
 
 Retirement
Benefits
 
 We
maintain a 401(k) plan in which all full-time employees, including our named
executive officers, who are at least 21 years of age and have one year of
service are eligible to participate.  We provide this plan to help our
employees save some portion of their cash compensation for retirement in a tax
efficient manner.  We do not provide an option for our employees to
invest in our stock in the 401(k) plan.
 
 Health and Welfare
Benefits
 
 We
provide health and welfare benefits for all of our full-time employees,
including our named executed officers.  The health and welfare
benefits provided to our named executive officers are further described in their
respective employment agreements, which are discussed below.
 
 Employment
Agreements, Severance Benefits and Change in Control Provisions
 
 Consistent
with the above compensation philosophy, we entered into Employment Agreements
with each of Jeffrey Schwartz, our Chief Executive Officer, Burton Katz, our
former Chief Executive Officer, Thomas Plotts, our Interim Chief Financial
Officer, Andrew Zaref, our former Chief Financial Officer, and Andrew Stollman,
our President, which include each of the primary compensation components
outlined above. The following is a description of the employment agreements with
each of the above mentioned Named Executive Officers:
 
 Jeffrey
Schwartz
 
 Jeffrey
Schwartz is currently party to an Employment agreement executed on January 27,
2010. The employment agreement has a term of three years subject to early
termination upon the terms and conditions of the agreement.  A summary
of the material terms of Mr. Schwartz’s employment agreement
follows:
 
 Title and Salary.Mr.
Schwartz shall serve as Chief Executive Officer and will receive a base salary
of $275,000 per annum, which is subject to increase at the end of each year of
the term of his employment, at the sole discretion of the Board.
 
 Annual Bonus.Mr. Schwartz is
eligible to receive a target annual bonus equal to his base salary for each
calendar year during the term of his employment, if the Company’s business
operations meet or exceed financial performance standards to be determined by
the Board.
 
 Benefits.Mr. Schwartz and
his family will be provided with medical, hospitalization, dental, disability
and life insurance during the term of his agreement. Atrinsic will pay all
premiums and other costs associated with such policies. Mr. Schwartz will also
be able to participate in any other compensation plan or other perquisites
generally made available to executive officers of the company from time to
time.
 
 Stock Options.Mr. Schwartz
was granted an option to acquire 500,000 shares of the Company’s common stock,
par value $0.01 per share pursuant to the Company’s 2009 Stock Incentive Plan
and an option to purchase 500,000 shares of the Company’s common stock pursuant
to the Company’s 2007 Stock Incentive Plan. The first option will vest in equal
monthly installments over a period of 36 months commencing on January 31, 2010
and on the last day of each calendar month thereafter until fully vested.
The second option will vest over a period of four years, with 25% of the second
option vesting on the first anniversary of the date of the agreement and the
remaining 75% vesting thereafter in equal monthly installments over a period of
36 months commencing on January 31, 2011.  Any portion of Mr.
Schwartz’s option that remains unvested at the time of his termination will be
extinguished and cancelled, provided, however, that if a change of control (as
defined in the agreement) occurs while Mr. Schwartz is employed with us, and Mr.
Schwartz’s employment is terminated by us other than for disability, death or
cause or by Mr. Schwartz for good reason within three (3) months before or six
(6) months after the effective date of the change of control, all of the options
granted to Mr. Schwartz will automatically vest immediately prior to the
termination of Mr. Schwartz’s employment and will remain exercisable for a
period of one (1) year after such termination.
  13
  Vacation.Mr. Schwartz is
entitled to 4 weeks paid vacation during each year of his
employment.
 
 Payments upon
termination.If
Mr. Schwartz’s employment is terminated by Mr. Schwartz for good reason, or by
us other than for cause, we will pay to Mr. Schwartz: (a) all base salary and
benefits which have accrued through the termination date and (b) an amount equal
to his base salary.  If Mr. Schwartz’s employment is terminated by Mr.
Schwartz other than for good reason, or by us for cause, we will pay to Mr.
Schwartz all base salary and benefits which have accrued through the termination
date and if Mr. Schwartz’s employment is terminated as a result of his death or
disability, we will pay or provide to Mr. Schwartz (i) all base salary and
benefits which have accrued through the termination date and (ii) a sum equal to
a prorated portion of the annual bonus to which Mr. Schwartz would have been
entitled if his employment had continued until the end of the employment year in
which his death or disability occurred.
 
 Thomas
Plotts
 
 On
January 29, 2010, we entered into a letter agreement with Thomas Plotts in
connection with his appointment as our Interim Chief Financial Officer on
December 16, 2009.  Pursuant to the agreement, Mr. Plotts serves as
our Interim Chief Financial Officer on an “at will” basis and receives a salary
of $250,000 per annum.  Pursuant to the agreement, Mr. Plotts received
a bonus of $25,000 upon our filing of our annual report on Form
10-K.  Upon the execution of the agreement, Mr. Plotts was granted
25,000 restricted stock units pursuant to our 2009 Stock Incentive Plan and a
Restricted Stock Unit Agreement. The restricted stock units fully vested as of
March 31, 2010.
 
 Andrew
Stollman
 
 Andrew
Stollman is currently a party to an Employment Agreement executed in connection
with our closing of the Merger on February 4, 2008. The employment agreement has
a term of three years, and may be terminated by Atrinsic or Mr. Stollman any
time and without any reason. A summary of the material terms of Mr. Stollman’s
employment agreement follows:
 
 Title and Salary.Mr.
Stollman's title is President and he will receive a base salary of $425,000 per
annum during the term of his agreement.
 
 Signing Bonus.Upon the
execution of his employment agreement, Mr. Stollman received a signing bonus of
$250,000, and all options held by Mr. Stollman to purchase equity securities of
Atrinsic (aside from the options discussed below) automatically
vested.
 
 Annual Bonus.Mr. Stollman is
eligible to receive an annual bonus for each calendar year during the term of
his agreement if Atrinsic's business operations meet or exceed certain financial
performance standards to be determined by Atrinsic's Compensation Committee. For
the fiscal year ending December 31, 2008, the Compensation Committee determined
the performance of Mr. Stollman against two quantitative measures, EBITDA and
revenues, and one qualitative measure, the Integration of Traffix, Inc. into
Atrinsic. A cash bonus ranging from $0 to $637,500 could have been earned by Mr.
Stollman for the fiscal year ending December 31, 2008 depending on Mr.
Stollman’s performance against the aforementioned performance
metrics.  For our fiscal year ended December 31, 2008, none of the
quantitative measures was achieved; however, Mr. Stollman earned $21,250 for
successfully integrating Traffix and Atrinsic.  For the fiscal year
ending December 31, 2009, as described above, none of our named executive
officers received a bonus.
 
 Benefits.Mr. Stollman and
his family will be provided with medical, hospitalization, dental, disability
and life insurance during the term. Atrinsic will pay all premiums and other
costs associated with such policies. Mr. Stollman will also be able to
participate in any other compensation plan or other perquisites generally made
available to executive officers of the company from time to time.
 
 Stock Options.Upon the
closing of the Merger, Mr. Stollman was granted an option to purchase 300,000
shares of Atrinsic's common stock. The option was exercisable at an exercise
price equal to $10.92 and was scheduled to expire on February 4, 2018. Except in
the event Mr. Stollman was terminated without cause and except in the event of a
termination of Mr. Stollman's employment for good reason, any portion of such
executive's option that remained unvested at the time of termination was to be
extinguished and cancelled. Mr. Stollman’s options were subject to accelerated
vesting upon a change of control.  On June 25, 2009, stockholders
approved our 2009 Stock Incentive Plan and our one-time option exchange
program.  As a result of the option exchange program, the options
Mr. Stollman held to purchase 300,000 shares of our common stock were cancelled,
and Mr. Stollman received 100,000 restricted stock units in exchange for such
options which are to vest based on performance metrics to be established by our
board.  As described above, these performance metrics have yet to be
established.
  14
  Restricted Stock Units.Upon
the closing of the Merger, Atrinsic agreed to issue Mr. Stollman restricted
stock units (“RSUs”) having a term of ten years covering 275,000 shares of
common stock conditioned upon the delivery by Mr. Stollman to the company of a
Restricted Stock Unit Agreement. Pursuant to the terms of his employment
agreement, once issued, Mr. Stollman’s RSUs were to first vest, with respect to
100,000 RSUs after the closing of trading on the date that the average per share
trading price of our common stock during any period of 10 consecutive trading
days equaled or exceeded $15. The remaining 175,000 RSUs were to vest after the
closing of trading on the date that the average per share trading price of our
common stock during any period of 10 consecutive trading days equaled or
exceeded $20. Except in the event Mr. Stollman is terminated without cause and
except in the event of a termination of Mr. Stollman 's employment for good
reason, any portion of Mr. Stollman’s restricted stock units that remain
unvested at the time of termination will be forfeited, extinguished and
cancelled. Mr. Stollman’s restricted stock units are subject to accelerated
vesting upon a change of control.  The vesting terms of Mr. Stollman’s
restricted stock units were amended prior to their issuance on June 25,
2009 so that each of the aforementioned RSUs would vest after the closing of
trading on the date that the average per share trading price of our common stock
during any period of 10 consecutive trading days equaled or exceeded
$7.50.
 
 Long Term Performance Unit Plan.Atrinsic agreed to establish and maintain a long term executive
compensation plan for the benefit of each of Mr. Stollman and the other
executive officers of the company. Due to the recent volatility in the stock
market, the terms of the plan were not established by the company's Compensation
Committee.
 
 Vacation. Mr. Stollman will
be entitled to four weeks of vacation per annum.
 
 Payments upon termination. If
Mr. Stollman’s employment with us is terminated because of death or disability
or cause or if Mr. Stollman voluntarily terminates his employment with us other
than for good reason, we will pay or provide to Mr. Stollman all base salary and
benefits which have accrued through the termination date. In addition, if Mr.
Stollman’s employment is terminated as a result of death or disability, Mr.
Stollman will receive a sum equal to a prorated portion of the annual bonus to
which Mr. Stollman would have been entitled if his employment had continued
until the end of the employment years in which his death or disability
occurred.
 
 If
Mr. Stollman’s employment is terminated by Mr. Stollman for good reason (which
includes a material adverse change in the nature and scope of the duties,
obligations, rights or powers of Mr. Stollman’s employment, including those
resulting from a change in control of the company), or by us other than for
cause, we will pay to Mr. Stollman: (a) all base salary and benefits which have
accrued through the termination date, (b) a one time payment equal to the sum of
(i) two times his base salary and (ii) two times an amount equal to the average
of the annual bonus amounts received by Mr. Stollman under the Employment
Agreement for the 2 years prior to such termination, and (c) coverage under the
employee benefit plans described above until the earlier of the end of the
second anniversary of such termination or Mr. Stollman’s eligibility to receive
similar benefits from a new employer. In addition, if Mr. Stollman’s employment
is terminated by Mr. Stollman for good reason, or by us other than for cause,
all stock options and other equity awards granted to Mr. Stollman pursuant to
the Employment Agreement (other than options and awards that vest upon the
achievement of performance objectives) shall automatically vest, and remain
exercisable for a period of one year after such termination.
 
 Burton
Katz
 
 Separation
Agreement.
 
 On
October 20, 2009, we entered into a Separation and Mutual Release Agreement with
Burton Katz.  The agreement provides that the certain Employment
Agreement entered into by and between the Company and Mr. Katz dated February 1,
2008, as amended, pursuant to which the Company retained Mr. Katz is terminated
and of no further force or effect as of October 6, 2009, the date of Mr. Katz’s
resignation from the Company, except in respect of the Company’s indemnification
and director and officer liability insurance obligations under the Employment
Agreement.  The agreement further provides that the Company will pay
Mr. Katz an amount equal to $850,000 in connection with his separation and that
all 375,000 restricted stock units held by Mr. Katz and all rights of Mr. Katz
to receive shares of common stock of the Company pursuant to such restricted
stock units are terminated.  In addition, the agreement provides that
Mr. Katz will have until October 5, 2010 to exercise his 444,434 options to
purchase common stock of the Company.
  15
  Employment
Agreement.
 
 Prior to
his resignation, Burton Katz was party to an Employment Agreement with
us.  The employment agreement had a term of three years, and could be
terminated by Atrinsic or Mr. Katz at any time and without any reason. A summary
of the material terms of Mr. Katz’s employment agreement follows:
 
 Title and Salary.Mr. Katz's
employment agreement provided that he would serve as our Chief Executive Officer
and receive a base salary of $425,000 per annum during the term of his
agreement.
 
 Signing Bonus.As a signing
bonus, Mr. Katz’s employment agreement provided that upon the execution of his
employment agreement, all of the options to purchase equity securities of
Atrinsic held by Mr. Katz (other than stock options to purchase 81,250 shares of
common stock of Atrinsic which were issued to Mr. Katz in February 2007, and the
options discussed below) automatically vested.
 
 Annual Bonus.Mr. Katz was
eligible to receive an annual bonus for each calendar year during the term of
his agreement if Atrinsic's business operations met or exceeded certain
financial performance standards to be determined by Atrinsic's Compensation
Committee. For the fiscal year ending December 31, 2008, the Compensation
Committee determined the performance of Mr. Katz against two quantitative
measures, EBITDA and revenues, and one qualitative measure, the Integration of
Traffix, Inc. into Atrinsic. A cash bonus ranging from $0 to $637,500 could have
been earned by Mr. Katz for the fiscal year ending December 31, 2008 depending
on Mr. Katz’s performance against the aforementioned performance
metrics.  For our fiscal year ended December 31, 2008, none of the
quantitative measures was achieved; however, Mr. Katz earned $21,250 for
successfully integrating the merger of Traffix and Atrinsic.
 
 Benefits.Mr. Katz and his
family were provided with medical, hospitalization, dental, disability and life
insurance during the term of his agreement. Atrinsic paid all premiums and other
costs associated with such policies. Mr. Katz also participated in all other
compensation plan or other perquisites generally made available to executive
officers of the company while employed by the company.
 
 Stock Options.Upon the closing of
the Merger, Mr. Katz was granted an option to purchase 300,000 shares of
Atrinsic's common stock. The option was exercisable at an exercise price equal
to $10.92 and was scheduled to expire on February 4, 2018. The option further
provided that except in the event Mr. Katz was terminated without cause and
except in the event of a termination of Mr. Katz's employment for good reason,
any portion of the option that remained unvested at the time of termination
would be extinguished and cancelled. Mr. Katz’s options were also subject to
accelerated vesting upon a change of control.  On June 25, 2009,
stockholders approved our 2009 Stock Incentive Plan and our one-time option
exchange program, pursuant to which the options held by Mr. Katz to purchase
300,000 shares of our common stock were cancelled and exchanged for 100,000
restricted stock units. Upon Mr. Katz’s resignation from the company, these
restricted stock units were cancelled.
 
 Restricted Stock Units.Upon
the closing of the Merger, Atrinsic agreed to issue Mr. Katz restricted stock
units (“RSUs”) having a term of ten years covering 275,000 shares of common
stock conditioned upon the delivery by Mr. Katz to the company of a Restricted
Stock Unit Agreement. Pursuant to the terms of his employment agreement, once
issued, Mr. Katz’s RSUs were to first vest, with respect to 100,000 RSUs after
the closing of trading on the date that the average per share trading price of
our common stock during any period of 10 consecutive trading days equaled or
exceeded $15. The remaining 175,000 RSUs were to vest after the closing of
trading on the date that the average per share trading price of our common stock
during any period of 10 consecutive trading days equaled or exceeded $20. Except
in the event Mr. Katz was terminated without cause and except in the event of a
termination of Mr. Katz's employment for good reason, any portion of Mr. Katz’s
restricted stock units that remained unvested at the time of termination were to
be forfeited, extinguished and cancelled. Mr. Katz’s restricted stock units were
also subject to accelerated vesting upon a change of control.  The
vesting terms of Mr. Katz’s restricted stock units were amended prior to their
issuance on June 25, 2009 so that each of the aforementioned RSUs would
vest after the closing of trading on the date that the average per share trading
price of our common stock during any period of 10 consecutive trading days
equaled or exceeded $7.50.  Upon Mr. Katz’s resignation from the
company, the 275,000 restricted stock units issued to Mr. Katz on June 25, 2009
were cancelled.
  16
  Long Term Performance Unit Plan.Pursuant to Mr. Katz’s employment agreement, Atrinsic agreed to establish
and maintain a long term executive compensation plan for the benefit of each of
Mr. Katz and the other executive officers of the company. The objective of the
plan was to provide for the payment of additional compensation to Mr. Katz and
the other executives of the Company based upon the Company’s achievement of
certain performance standards. Such performance standards were to be based upon
a three to five year strategic plan for the Company. In addition, the terms of
the plan were to include the nature of the compensation to be awarded, the
number of units to be awarded and vesting. Due to the recent volatility in the
stock market, the terms of the plan were not established by the company's
Compensation Committee.
 
 Vacation.Mr. Katz
was entitled to four weeks of vacation per annum pursuant to the terms of his
agreement.
 
 Payments upon termination.Mr. Katz’s employment agreement provided that if Mr. Katz’s employment
with us was terminated because of death or disability or cause or if Mr. Katz
voluntarily terminated his employment with us other than for good reason, we
would pay or provide to Mr. Katz all base salary and benefits which accrued
through the termination date. In addition, if Mr. Katz’s employment was
terminated as a result of death or disability, Mr. Katz was to receive a sum
equal to a prorated portion of the annual bonus to which Mr. Katz would have
been entitled if his employment had continued until the end of the employment
year in which his death or disability occurred.
 
 The
employment agreement further provided that if Mr. Katz’s employment was
terminated by Mr. Katz for good reason (which included a material adverse change
in the nature and scope of the duties, obligations, rights or powers of Mr.
Katz’s employment, including those resulting from a change in control of the
company), or by us other than for cause, we were to pay to Mr. Katz: (a) all
base salary and benefits which accrued through the termination date, (b) a one
time payment equal to the sum of (i) two times his base salary and (ii) two
times an amount equal to the average of the annual bonus amounts received by Mr.
Katz under the Employment Agreement for the 2 years prior to such termination,
and (c) coverage under the employee benefit plans described above until the
earlier of the end of the second anniversary of such termination or Mr. Katz’s
eligibility to receive similar benefits from a new employer. In addition, the
agreement provided that if Mr. Katz’s employment was terminated by Mr. Katz for
good reason, or by us other than for cause, all stock options and other equity
awards granted to Mr. Katz pursuant to the Employment Agreement (other than
options and awards that vest upon the achievement of performance objectives)
were to automatically vest, and remain exercisable for a period of one year
after such termination.
 
 Andrew
Zaref
 
 Separation
Agreement.
 
 On
December 18, 2009, we entered into a Separation and Mutual Release Agreement in
connection with Mr. Zaref’s resignation from the Company.  The
agreement terminates the employment agreement entered into by and between the
Company and Mr. Zaref dated July 14, 2008, as amended, pursuant to which the
Company retained Mr. Zaref.   The agreement further provides that all
266,667 restricted stock units held by Mr. Zaref and all rights of Mr. Zaref to
receive shares of common stock of the Company pursuant to such restricted stock
units are terminated.
 
 Employment
Agreement.
 
 Prior to
his resignation, Andrew Zaref was party to an employment agreement with us
which was entered into on July 14, 2008, pursuant to which Mr. Zaref became our
new Chief Financial Officer effective July 14, 2008.  The employment
agreement had a term of three years, subject to earlier termination in
accordance with the terms of the employment agreement. A summary of the material
terms of Mr. Zaref’s employment agreement follows:
 
 Title and
Salary. Pursuant to the terms of his agreement, Mr. Zaref served as
our Chief Financial Officer and received a base salary of $400,000 per annum,
which was subject to increase at the end of each year of the term at the sole
discretion of our board of directors; provided, however, that such increase
would be in an amount no less than 5%.
 
 Signing Bonus. Upon the
execution of the employment agreement, Mr. Zaref received a signing bonus of
$100,000, which could be partially recouped by us in the event Mr. Zaref’s
employment was terminated for cause by us or voluntarily by Mr. Zaref prior to
the expiration of the term.
  17
  Annual Bonus. Mr. Zaref was
eligible to receive an annual bonus in an amount not to exceed his base salary
for each calendar year during the term if our business operations met or
exceeded certain financial performance standards to be determined by our
Compensation Committee. For the fiscal year ending December 31, 2008, the
Compensation Committee determined the performance of Mr. Zaref against two
quantitative measures, EBITDA and revenues. A cash bonus ranging from $0 to
$200,000 could have been earned by Mr. Zaref for the fiscal year ending December
31, 2008 depending on Mr. Zaref’s performance against the aforementioned
performance metrics.  For our fiscal year ended December 31, 2008,
none of the quantitative measures was achieved, and as a result Mr. Zaref did
not receive a cash bonus for our fiscal year ended December 31,
2008.
 
 Benefits. Mr. Zaref and his
family were provided with medical, hospitalization, dental, disability and life
insurance while Mr. Zaref was employed by the Company and the Company paid all
premiums and other costs associated with such policies. The employment agreement
also provided that Mr. Zaref would be able to participate in any other
compensation plan or other perquisites generally made available to our executive
officers from time to time.
 
 Stock Options. Upon the
execution of his employment agreement, Mr. Zaref was granted an option to
purchase 200,000 shares of our common stock. Except in the event Mr. Zaref was
terminated without cause and except in the event of a termination of Mr. Zaref’s
employment by Mr. Zaref for good reason (in which case all options were to
automatically vest and remain exercisable for a period of one year after such
termination), any portion of Mr. Zaref’s option that remained unvested at the
time of termination were to be extinguished and cancelled. Mr. Zaref’s options
were subject to accelerated vesting upon a change of control.  On June
25, 2009, stockholders approved our 2009 Stock Incentive Plan and our one-time
option exchange program, pursuant to which the options held by Mr. Zaref to
purchase 200,000 shares of our common stock were cancelled and exchanged
for 66,667 restricted stock units. Upon Mr. Zaref’s resignation from the
company, these restricted stock units were cancelled.
 
 Restricted Stock Unit Award.
Pursuant to his employment agreement with us, we agreed to grant to Mr. Zaref
restricted stock units having a term of ten years to acquire 200,000 shares of
common stock (the “RSUs”). Once issued, Mr. Zaref’s RSUs were to first vest,
with respect to 100,000 RSUs after the closing of trading on the date that the
average per share trading price of our common stock during any period of 10
consecutive trading days equaled or exceeded $15. The remaining 100,000 RSUs
were to vest after the closing of trading on the date that the average per share
trading price of our common stock during any period of 10 consecutive trading
days equaled or exceeded $20. Except in the event Mr. Zaref was terminated
without cause and except in the event of a termination of Mr. Zaref's employment
for good reason, any portion of Mr. Zaref’s restricted stock units that remained
unvested at the time of termination were to be forfeited, extinguished and
cancelled. Mr. Zaref’s restricted stock units were subject to accelerated
vesting upon a change of control.  The vesting terms of Mr. Zaref’s
restricted stock units were amended prior to their issuance on June 25,
2009 so that each of the aforementioned RSUs would vest after the closing of
trading on the date that the average per share trading price of our common stock
during any period of 10 consecutive trading days equaled or exceeded
$7.50.  Upon Mr. Zaref’s resignation from the company, the 200,000
restricted stock units issued to Mr. Zaref on June 25, 2009 were
cancelled.
 
 Vacation. Mr. Zaref received
four weeks of vacation per annum pursuant to the terms of his employment
agreement.
 
 Payments upon termination. Mr.
Zaref’s employment agreement provided that if Mr. Zaref’s employment with us was
terminated because of death or disability or cause or if Mr. Zaref voluntarily
terminated his employment with us other than for good reason, we would pay or
provide to Mr. Zaref all base salary and benefits which accrued through the
termination date.
 
 In
addition, Mr. Zaref’s employment agreement provided that if Mr. Zaref’s
employment was terminated by Mr. Zaref for good reason (which included a
material adverse change in the nature and scope of the duties, obligations,
rights or powers of Mr. Zaref’s employment, including those resulting from a
change in control of the company), or by us other than for cause, we would pay
to Mr. Zaref: (a) all base salary and benefits which accrued through the
termination date, (b) a one time payment equal to the sum of (i) the base salary
payable to Mr. Zaref for the greater of (x) the remaining term of the employment
agreement or (y) twelve (12) months (the “Severance Period”), and (ii) an amount
equal to the average of the annual bonus amounts received by Mr. Zaref under the
employment agreement for the 2 years prior to such termination, and (c) coverage
under the employee benefit plans described above until the earlier of the end of
the Severance Period or Mr. Zaref’s eligibility to receive similar benefits from
a new employer. In addition, the agreement provided that if Mr. Zaref’s
employment was terminated by Mr. Zaref for good reason, or by us other than for
cause, all stock options and other equity awards granted to Mr. Zaref pursuant
to the employment agreement (other than options and awards that vest upon the
achievement of performance objectives) were to automatically vest, and remain
exercisable for a period of one year after such termination.
  18
  Change
in Control Provisions
  The
prospect of a change in control of the Company can cause significant distraction
and uncertainty for executive officers and, accordingly, the Committee believes
that appropriate change in control provisions in the employment agreements
and/or equity awards of our named executive officers are important tools for
aligning executives’ interests in change in control scenarios with those of
stockholders.  Please see the above summaries of each executive’s
employment agreement with us for a discussion of change of control provisions
included within their respective agreements.
 
 Tax
and Accounting Implications
 
 Deductibility
of Executive Compensation
 
 Section
162(m) of the Internal Revenue Code limits to $1 million the annual tax
deduction for compensation paid to each of the chief executive officer and any
of the four highest paid other executive officers.  However,
compensation that qualifies as performance-based compensation is deductible even
in excess of $1 million.  The Board considers these requirements when
designing the compensation program for the named executive
officers.  The Company believes that the compensation paid to the
named executive officers generally is fully deductible for federal income
tax purposes.  However, in certain situations, the Compensation
Committee may approve compensation that will not meet these requirements in
order to ensure competitive levels of total compensation for its executive
officers or for other reasons.
 
 Nonqualified
Deferred Compensation
 
 On
October 22, 2004, the American Jobs Creation Act of 2004 was signed into law,
adding section 409A to the Internal Revenue Code, which changed the tax rules
applicable to nonqualified deferred compensation arrangements.  A
violation of these new rules could result in the imposition of a 20% federal
penalty tax on the affected executives (in addition to possible state penalties
as well).  The Company believes it is operating in compliance with the
statutory provisions and, through its legal counsel, monitors compliance with
section 409A.
 
 Director
Compensation for the Fiscal Year Ended December 31, 2009
 
 During
our fiscal year ended December 31, 2009, our non-employee directors received
cash compensation for their services on our board and will be issued 37,610
restricted stock units valued at $42,500 for their services as board members in
2009.  In 2009, we paid each of our non-employee directors a cash
retainer of $22,500 for their service as board members.  In addition,
the following board related compensation was paid to our non-executive board
members in 2009:
 
 ·
              Each
      non-executive member of our board of directors received a board meeting
      fee of $1,500 for each in-person meeting of our board of directors, and
      $500 for each telephonic meeting of our board of
  directors.
 
 ·
              Each
      of our non-executive directors who was a member of a committee of our
      board of directors received a committee meeting fee of $1,000 for each in
      person committee meeting and $500 for each telephonic committee
      meeting.
 
 ·
              The
      chairs of each of our audit and compensation committees received a cash
      retainer of $5,000 and the chair of our governance committee received a
      cash retainer of $2,500.  Members of these committees received
      cash retainers of $2,000 and $1000
respectively.
 
 In
addition, we reimburse directors for travel expenses associated with attendance
at Board meetings; during our fiscal year ended December 31, 2009 such expenses
were immaterial.
  19
  The
following table sets forth information concerning director compensation earned
by non-employee directors for the 2009 fiscal year:
  Name
                  
                  Fees Earned
                    or
                    Paid in Cash
                  
                  
                  Stock
                    Awards
      (1)
                  
                  
                  All Other
                    Compensation
                  
                  
                  TotalJerome
      Chazen (2)
                  
                  $
                  64,250
                  
                  
                  $
                  12,873
                  
                  
                  $
                  -
                  
                  
                  $
                  77,123Lawrence
      Burstein (3)
                  
                  $
                  49,500
                  
                  
                  $
                  4,398
                  
                  
                  $
                  -
                  
                  
                  $
                  53,898Robert
      Ellin (4)
                  
                  $
                  37,000
                  
                  
                  $
                  4,398
                  
                  
                  $
                  -
                  
                  
                  $
                  41,398Mark
      Dyne (5)
                  
                  $
                  34,000
                  
                  
                  $
                  4,398
                  
                  
                  $
                  147,535
                  
                  
                  $
                  185,933
  (1)  On
June 25, 2009, we issued 3,892 shares of common stock to each of our
non-employee directors as compensation for their service on our Board prior to
such date, with the exception of Mr. Chazen, who received 11,392 shares of
common stock for his service as our Chairman.  The compensation in the
table reflects the grant date fair value computed in accordance with FASB ASC
Topic 718.  We plan to issue 37,610 restricted stock units valued at
$42,500 to our non-executive board members for their services as board members
in 2009.
 (2)  Mr.
Chazen held an aggregate of 11,392 stock awards and 50,000 option awards to
purchase shares of our common stock as of December 31, 2009.
 (3)  Mr.
Burstein held an aggregate of 3,892 stock awards and 88,725 option awards to
purchase shares of our common stock as of December 31, 2009.
 (4)  Mr.
Ellin held an aggregate of 3,892 stock awards and no option awards to purchase
shares of our common stock as of December 31, 2009.
 (5)  Mr.
Dyne held an aggregate of 3,892 stock awards and no option awards to purchase
shares of our common stock as of December 31, 2009.  Mr. Dyne
currently serves as the Chief Executive Officer and Chairman of Europlay Capital
Advisors, LLC, a merchant banking and advisory firm.  On July 23, 2009
we retained Europlay Capital Advisors to provide consulting services in relation
to our ShopIt service.  Pursuant to the terms of the agreement and as
reported as other compensation above, we paid Europlay Capital Advisors an
aggregate of $99,135 for its services in 2009 and issued to Europlay Capital
Advisors 40,000 shares of our common stock having an aggregate grant date fair
value of $48,400.
  20
 
 ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
 
 The
following table presents information regarding the beneficial ownership of
Atrinsic’s common stock as of April 15, 2010. The number of shares in the table
represents the number of shares of common stock owned by:
 
 ·
                each
      person who is known to us to be the beneficial owner of more than 5% of
      our outstanding common stock;·
                each
      of our directors;
 ·
              each
      of our named executive officers;
and
 ·
              all
      of our directors and executive officers as a
  group.
  Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission that deem shares to be beneficially owned by any person who
has or shares voting or investment power with respect to such
shares.  Shares of common stock under warrants or options currently
exercisable or exercisable within 60 days of April 15, 2010 are deemed
outstanding for purposes of computing the percentage ownership of the person
holding such warrants or options but are not deemed outstanding for computing
the percentage ownership of any other person.  As a result, the
percentage of outstanding shares of any person as shown in this table does not
necessarily reflect the person’s actual ownership or voting power with respect
to the number of shares of common stock actually outstanding at April 15,
2010.  Unless otherwise indicated, the persons named in this table
have sole voting and sole investment power with respect to all shares shown as
beneficially owned, subject to community property laws where
applicable.
  The
information presented in this table is based on 20,853,933 shares of our common
stock outstanding on April 15, 2010, which excludes 2,741,318 shares held in
treasury. Unless otherwise indicated, the address of each of the executive
officers and directors and 5% or more shareholders named below is c/o Atrinsic,
Inc., 469 7th Avenue, 10th Floor, New York, NY 10018.
 
 Name
      of Beneficial Owner
                
                Number
      of Shares
                  Beneficially
      Owned
                
                
                Percentage
      of
                  Shares
      OutstandingNamed
      Executive Officers and Directors:Jeffrey
      Schwartz (1)
                
                
                59,445
                
                
                
                *Andrew
      Stollman (2)
                
                
                882,389
                
                
                
                4.2
                %Thomas
      Plotts (3)
                
                
                31,675
                
                
                
                *Mark
      Dyne (4)
                
                
                3,508,620
                
                
                
                16.8
                %Robert
      Ellin (5)
                
                
                1,792,695
                
                
                
                8.6
                %Raymond
      Musci (6)
                
                
                435,821
                
                
                
                2.1
                %Lawrence
      Burstein (7)
                
                
                94,308
                
                
                
                *Jerome
      Chazen (8)
                
                
                103,234
                
                
                
                *Stuart
      Goldfarb
                
                
                -
                
                
                
                -Burton
      Katz (9)
                
                
                444,434
                
                
                
                2.1
                %Andrew
      Zaref (10)
                
                
                -
                
                
                
                -All
      Named Executive Officers and Directors as a Group (11 persons)
      (11)
                
                
                7,352,621
                
                
                
                35.3
                %5%
      ShareholdersMPLC
      Holdings, LLC (3)
                
                
                2,738,359
                
                
                
                13.1
                %Trinad
      Capital Master Fund, Ltd. (5)
                
                
                1,792,695
                
                
                
                8.6
                %Destar,
      LLC (12)
                
                
                1,237,116
                
                
                
                5.9
                %Leon
      G. Cooperman (13)
                
                
                1,246,700
                
                
                
                6.0
                %Mercury
      Fund IX, Ltd (14)
                
                
                1,084,155
                
                
                
                5.2
                %
  21
  * Less
than 1% of our outstanding shares
 
 (1)           Includes
3,892 shares of Common Stock and 55,553 shares of Common Stock issuable upon the
exercise of options held by Mr. Schwartz.
  (2)           Includes
446,324 shares of common stock and 436,065 shares of Common Stock issuable upon
the exercise of options held by Mr. Stollman.
  (3)           Includes
5,009 shares of Common Stock, 25,000 shares of vested restricted stock units and
1,666 shares of vested restricted stock held by Mr. Plotts.
  (4)           Includes
3,892 shares of Common Stock held directly by Mr. Dyne, 2,738,359 shares of
Common Stock held by MPLC Holdings, LLC of which Mr. Dyne is
 Manager,
and 766,369 shares held by Europlay Capital Advisors, LLC, of which Mr. Dyne is
the Chief Executive Officer and Chairman.  Mr. Dyne disclaims
beneficial ownership of the shares of common stock directly beneficially owned
by MPLC Holdings, LLC and Europlay Capital Advisors, LLC except to the extent of
his pecuniary interests therein. The address of each of Mr. Dyne, MPLC Holdings,
LLC and Europlay Capital Advisors, LLC are 15260 Ventura Boulevard, 20th Floor,
Sherman Oaks, CA 91403.
  (5)           Trinad
Capital Master Fund, Ltd. is the beneficial owner of 1,792,695 shares of Common
Stock. Trinad Management, LLC (as the manager of the Trinad Capital Master
Fund, Ltd. and Trinad Capital LP) and Robert S. Ellin, the managing director of
and portfolio manager for Trinad Management, LLC and the managing director of
Trinad Advisors II LLC are deemed the beneficial owners of 1,792,695 shares of
the Common Stock held by Trinad Capital Master Fund, Ltd.Trinad Capital LP (as the owner of 84.53% of the shares of
Trinad Capital Master Fund, Ltd. as of November 30, 2009) and Trinad Advisors
II, LLC (as the general partner ofTrinad Capital LP),are each deemed the beneficial owner of 1,515,365 (representing 84.53%
of the shares of the 1,792,695 shares of the Common Stock held by Trinad Capital
Master Fund, Ltd.). Each of Trinad Management, LLC and Trinad Advisors II,
LLC disclaim beneficial ownership of the shares of Common Stock directly and
beneficially owned by Trinad Capital Master Fund, Ltd. Robert S. Ellin
disclaims beneficial ownership of the shares of Common Stock directly and
beneficially owned byTrinad Capital Master Fund, Ltd. except
to the extent of his pecuniary interests therein.Robert S. Ellin has the power to direct the vote and the
power to direct the disposition of these shares of common stock. The address of
Trinad Management is 2121 Avenue of the Stars, Suite 2550, Los Angeles,
CA 90067.
  (6)           Consists
of 435,821 shares of Common Stock.
  (7)           Includes
14,033 shares of Common Stock and 80,275 shares of Common Stock issuable upon
the exercise of options held by Mr. Burstein.
  (8)           Includes
53,234 shares of Common Stock and 50,000 shares of Common Stock issuable upon
the exercise of options held by Mr. Chazen.
  (9)           Consists
of 444,434 shares of Common Stock issuable upon the exercise of options held by
Mr. Katz.  Mr. Katz resigned from the company on October 6,
2009.
  (10)           Mr.
Zaref resigned from his position as Chief Financial Officer on December 16,
2009.
  (11)           Includes
6,259,628 shares of Common Stock, 1,666 shares of Restricted Common Stock,
25,000 shares of restricted stock units and 1,066,327 shares of Common Stock
issuable upon the exercise of options held by our executive officers and
directors. See footnotes (1) through (10) above.
  (12)           David
E. Smith exercises voting and dispositive power over these shares. While Trinad
Management, LLC has an economic interest in Destar, LLC, it has no power to vote
or dispose of the shares held by Destar, LLC and, accordingly, disclaims
beneficial ownership of the shares held by Destar, LLC except to the extent of
its pecuniary interest therein. The address of Destar, LLC is 2450 Colorado
Avenue, Suite 100, East Tower, Santa Monica, CA 90404.
  (13)           Consists
of 46,700 shares owned by Mr. Cooperman and 1,200,000 shares held by Watchung
Road Associates.  Mr. Cooperman is the general partner of Watchung
Road Associates, a limited partnership organized under the laws of the State of
New Jersey, and in such capacity has the sole power to vote and dispose of the
shares held by Watchung Road Associates.  The address of the principal
business office of Mr. Cooperman is 88 Pine Street, Wall Street Plaza,
31st  Floor, New York, NY 10005.  The address of the
principal business office of Watchung Road Associates is 820 Morris Turnpike,
Short Hills NJ 07078.
  (14)           Consists
of 1,084,155 shares of Common Stock.  Kevin C. Howe exercises voting
and disposition power over such shares on behalf of Mercury Management, L.L.C.,
the General Partner of Mercury Ventures II, Ltd. ("Mercury Ventures II"), which
is the General Partner of Mercury Fund IX, Ltd. ("Mercury IX").  The
principal business office of Mercury IX, Mercury Ventures II, Mercury Management
and Mr. Howe is 501 Park Lake Drive, McKinney, Texas 75070.
 
 Changes
in Control
  We do not
have any arrangements which may at a subsequent date result in a change in
control.
  22
  Securities Authorized for Issuance
Under Equity Compensation Plans
 
 The
following table sets forth certain information regarding our equity compensation
plans as of December 31, 2009.
  Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
                    
                    
                    Weighted-average
      exercise price of outstanding options, warrants and rights
                    
                    
                    Number
      of securities remaining available for future issuance under equity
      compensation plansEquity
      compensation plans approved by security holders
                    
                    
                    1,514,060
                    
                    
                    $
                    7.28
                    
                    
                    
                    3,431,966Equity
      compensation plans not approved by security holders
                    
                    
                    677,627
                    
                    
                    $
                    3.74
                    
                    
                    
                    --Total
                    
                    
                    2,191,687
                    
                    
                    
                    
                    
                    
                    
                    3,431,966
 
 Material
Features of Individual Equity Compensation Plans not Approved by
Stockholders
 
 On August
3, 2006, Burton Katz was granted an option to purchase 250,000 shares of common
stock of New Motion Mobile, Inc., our wholly-owned subsidiary, at a per share
exercise price of $3.40. Subsequent to the exchange transaction in which we
acquired New Motion Mobile, Inc., this option entitles Mr. Katz to purchase
363,184 shares of our common stock at a per share exercise price of $2.34. This
option is fully vested and is exercisable by Mr. Katz prior to October 5,
2010.
 
 In 2006,
we issued Secured Convertible Notes to Scott Walker, our former Chief Executive
Officer, and SGE, a corporation owned by Allan Legator, our former Chief
Financial Officer.  These Secured Convertible Notes were repaid in full
with interest in September 2006.  Pursuant to the terms of the Secured
Convertible Notes, on January 26, 2007, Scott Walker was granted a warrant to
purchase 14,382 shares of common stock at an exercise price of $3.44 per share
and SGE was granted a warrant to purchase 9,152 shares of common stock at an
exercise price of $3.44 per share.  The per share fair market value of the
company’s common stock on January 26, 2007 was $3.44.
 
 In
connection with the company’s Series A, B and D Preferred Stock financings which
occurred in late 2006 and early 2007, Sanders Morris Harris, Inc. acted as
placement agent.  For its services, the company paid Sanders Morris Harris
a cash fee equal to 7.5% of the gross proceeds from the financing and five year
warrants to purchase 290,909 shares of common stock at an average exercise price
of $5.50 per share, which was equivalent to the average per share valuation of
the company for the Series A, B and D Preferred Stock financings.
 
  23
  ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
  Other
than the employment arrangements described elsewhere in this report and the
transactions described below, since January 1, 2008, there has not been, nor is
there currently proposed, any transaction or series of similar transactions to
which we were or will be a party:
  ·
                in
      which the amount involved exceeds $120,000; and
 ·
              in
      which any director, executive officer, stockholder who beneficially owns
      5% or more of our common stock or any member of their immediate family had
      or will have a direct or indirect material
  interest.
  Mr. Dyne
has served as a director of the company since November 11, 2008.  Mr.
Dyne currently serves as the Chief Executive Officer and Chairman of Europlay
Capital Advisors, LLC, a merchant banking and advisory firm.  Europlay
Capital Advisors acted as our non-exclusive financial advisor in connection with
our merger with Traffix, Inc., a Delaware corporation, which closed on February
4, 2008.  Europlay Capital Advisors received a fee of $150,000 for its
financial advisory and investment banking services which it provided to
us during the course of the transaction.  As a result of the
merger, Traffix, Inc. became our wholly-owned subsidiary. In addition, we
retained Europlay Capital Advisors on July 23, 2009 to provide consulting
services in relation to our ShopIt service.  The agreement expired on
January 31, 2010.  Pursuant to the terms of the agreement, we paid
Europlay Capital Advisors an aggregate of $99,135 for its services and issued to
Europlay Capital Advisors 40,000 shares of our common stock.
 
 Transactions
with Promoters and Control Persons
 
 Prior to
February 12, 2007, MPLC (now called Atrinsic, Inc.) existed as a “shell company”
with nominal assets whose sole business was to identify, evaluate and
investigate various companies to acquire or with which to merge. On February 12,
2007, we consummated an exchange transaction in which we acquired all of the
outstanding ownership interests of New Motion Mobile, Inc. (formerly called New
Motion, Inc.), a Delaware corporation from its stockholders in exchange for an
aggregate of 500,000 shares of our Series C Preferred Stock. At the closing of
the exchange transaction, New Motion Mobile became our wholly owned subsidiary.
The exchange transaction was accounted for as a reverse merger
(recapitalization) with New Motion Mobile deemed to be the accounting acquirer,
and MPLC the legal acquirer.
 
 On
October 24, 2006, MPLC and certain of its stockholders entered into a common
stock Purchase Agreement with Trinad, pursuant to which MPLC agreed to redeem
23,448,870 shares of common stock (on a pre-reverse stock split basis) from the
stockholders and sell an aggregate of 69,750,000 shares of our common stock (on
a pre-reverse stock split basis), representing 93% of our issued and outstanding
shares of common stock on the closing date, to Trinad in a private placement
transaction for aggregate gross proceeds to us of $750,000, $547,720 of which
was used for the redemption described above, and $202,280 was used to repay all
loans to MPLC from Isaac Kier, a former director and the former president,
treasurer and secretary of MPLC.  Mr. Ellin was the former Chief
Executive Officer of MPLC, Inc. and resigned from this position on February 12,
2007 upon the closing of the exchange transaction.
 
 ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  On
January 30, 2009, we appointed KPMG, LLP as our new independent registered
public accounting firm following the resignation of McGladrey and Pullen LLP,
our former auditors, on January 21, 2009.  We originally engaged
McGladrey & Pullen LLP as our independent registered public accountant on
May 7, 2008.  Prior to their resignation, McGladrey and Pullen LLP had
not commenced any procedures with regard to the December 31, 2008 audit nor did
they report on our consolidated financial statements during their
engagement.
  Prior to
May 7, 2008, Windes & McClaughry was engaged as our principal independent
accounting firm and reported on our December 31, 2007 consolidation financial
statements.  Prior to February 12, 2007, our principal auditors were
Carlin, Charron & Rosen, LLP.
  The
following table sets forth fees billed to us by our auditors, KPMG, LLP during
fiscal year ending December 31, 2009 and 2008:
  24
 
 
 December
      31, 2009
                  
                  
                  December
      31, 2008Audit
      Fees (1)
                  
                  $
                  $375,000
                  
                  
                  $
                  $285,000Audit-related
      fees (2)
                  
                  $
                  5,000
                  
                  
                  
                  -Tax
      fees (3)
                  
                  
                  -
                  
                  
                  
                  -All
      other fees
                  
                  
                  -
                  
                  
                  
                  -Total
                  
                  $
                  $380,000
                  
                  
                  $
                  $285,000
 
 (1)           Audit
fees include the audit of our annual financial statements and review of
financial statements included in our Form 10-Q quarterly reports, and services
that are normally provided by the independent registered public accounting firm
in connection with statutory and regulatory filings or engagements for those
fiscal years. This category also includes advice on accounting matters that
arose during, or as a result of, the audit or the review of interim financial
statements.
  (2)           Audit
related fees consist of assurance and related services that are reasonably
related to the performance of the audit or review of our financial statements
and are not reported above under audit fees. No such fees were incurred for
fiscal 2008.  Audit related fees incurred in 2009 related to the
company’s preparation and filing of its Registration Statement on Form
S-8.
  (3)           Tax
fees consist of tax services for tax compliance and tax preparation plus tax
services relating to a study to determine the extent that research and
development credits can be claimed on our corporate tax returns.  No
such fees were incurred for fiscal 2008 or 2009.
 
 Our Audit
Committee is directly responsible for interviewing and retaining our independent
accountant, considering the accounting firm’s independence and effectiveness,
and pre-approving the engagement fees and other compensation to be paid to, and
the services to be conducted by, the independent accountant. During each of the
fiscal years ended December 31, 2009 and December 31, 2008, respectively, our
Audit Committee pre-approved 100% of the services described above.
 
  25
  
 Part IV
  ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
  (a)(3)           Exhibits.
 Exhibit
                  Number
                
                Exhibit
      Title31.1
                
                Certification
      by Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)
      under the Securities Exchange Act of 1934, as amended.31.2
                
                Certification
      by Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)
      under the Securities Exchange Act of 1934, as
  amended.
 
  26
  SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
 
 Atrinsic,
      Inc./s/
      Thomas PlottsBy: Thomas
      Plotts
                Its: Chief Financial Officer (Interim)Date: April
      30, 2010
  POWER
OF ATTORNEY
  In
accordance with the Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
  Name
                          
                          Title
                          
                          Date/s/
      Jeffrey Schwartz
                          
                          Chief
      Executive Officer
                          
                          April
      30, 2010Jeffrey
      Schwartz
                          
                          (Principal
      Executive Officer)/s/
      Thomas Plotts
                          
                          Chief
      Financial Officer (Interim)
                          
                          April
      30, 2010Thomas
      Plotts
                          
                          (Principal
      Financial and AccountingOfficer)*
                          
                          Director
                          
                          April
      30, 2010Raymond
      Musci*
                          
                          Director
                          
                          April
      30, 2010Lawrence
      Burstein*
                          
                          Director
                          
                          April
      30, 2010Robert
      S. Ellin*
                          
                          Director
                          
                          April
      30, 2010Mark
      Dyne
 
 *
                  
                  Director
                  
                  April
      30, 2010Jerome
      Chazen*
                  
                  Director
                  
                  April
      30, 2010Stuart
      Goldfarb
 
 * By:  /s/ Jeffrey
Schwartz
 Jeffrey Schwartz
 As Attorney-In-Fact
 
 27
  EXHIBIT
INDEX
  ExhibitNo.
              
              Title31.1
              
              Certification
      of Principal Executive Officer pursuant to Securities Exchange Act Rules
      13a-14(a) and 15d-14(a) as adopted pursuant to section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
              
              Certification
      of Principal Financial Officer pursuant to Securities Exchange Act Rules
      13a-14(a) and 15d-14(a) as adopted pursuant to section 302 of the
      Sarbanes-Oxley Act of 2002.
 
 28