|
Subsequent Events
|
9 Months Ended |
|---|---|
|
Aug. 31, 2014
|
|
| Subsequent Events [Abstract] | |
| Subsequent Events |
SUBSEQUENT EVENTS
On September 5, 2014, the Company entered into a Loan and Security Agreement (the “Agreement”) with Capital Preservation Solutions, LLC (“Capital”) for a $5,000,000 working capital line of credit and a term loan for working capital purposes not to exceed $1,000,000. The line of credit and term loan have an interest rate of 6% and mature on December 5, 2015. The advances made under these loan agreements are subject to a borrowing base calculation that includes 80% of the eligible accounts receivable plus 50% of the value of the eligible inventory. All amounts outstanding under these agreements are secured by a first priority security interest in all of the assets of the Company. On the closing date, the Company received the $1,000,000 from the term loan and advanced $600,000 on the line of credit.
Contemporaneously with the signing of the Agreement, the Company issued a Warrant to Purchase Common Stock (the “Warrant”) to Capital whereby Capital may acquire upon exercise of the Warrant up to 24% of the Company’s total outstanding Common Stock and Class A Common Stock as of the date of exercise. The Warrant may be exercised in whole or in part at any time during the exercise period which is five years from the date of the Warrant. The Warrant bears a purchase price of $3.17 per share, subject to adjustments. The Company has thirty days to have the stock issuable under the Warrant registered on the NYSE MKT otherwise the Company will be considered in default of its Agreement. Upon default, Capital may declare that the entire principal and interest outstanding at that time to be immediately due and payable. The lender has extended the date for the stock issuable under the Warrant to be registered, and no events of default exist.
On September 5, 2014, the Company entered into Separation Agreements with its two founding shareholders, David Edell and Ira Berman, (the “Founders”) whereby they are no longer required to perform any consulting services pursuant to their Amended and Restated Employment Agreements. The Company made a payment of $1,000,000 to the Founders on the separation date and is required per the Separation Agreements to make an additional payment of $200,000 to the Founders on October 1, 2015 and pay $794,620 in fifteen equal monthly installments of $52,975 commencing on October 3, 2014. In a related transaction, the Founders entered into a Stock Purchase Agreement with Capital Preservation Holdings, LLC in which they sold 100% (967,702 shares) of their Class A Common Stock and 200,000 shares of Common Stock. Capital Preservation Holdings, LLC may be deemed to have a controlling interest in the Company since they are the holders of the Class A Common Stock which has the right to elect four of the seven directors to the Board and it holds a 16.67% ownership interest. Richard Kornhauser, President and Chief Executive Officer
and Stephen A. Heit, Executive Vice President and Chief Financial Officer, have a minority interest in Capital Preservation Holdings, LLC.
On the closing date of these transactions, David Edell and Drew Edell resigned from their positions on the Company’s Board. David Edell was elected to the Board by the Class A Common Stockholders and Drew Edell was elected by the Common Stockholders. In accordance with the Company’s Amended and Restated Bylaws, the Board appointed Richard Kornhauser as the Class A Common Stock Director and Stephen A. Heit and Josephine Belli as Common Stock Directors. They will each serve as directors of the Company until the next annual meeting of the stockholders.
|