Quarterly report pursuant to Section 13 or 15(d)

Related Party

v3.10.0.1
Related Party
6 Months Ended
Jun. 30, 2018
Related Party Transactions [Abstract]  
Related Party

NOTE K – RELATED PARTY

 

Mr. Adam Stern, a director of the Company, has been Head of Private Equity Banking at Aegis Capital Corp. and CEO of SternAegis Ventures since 2012. The Company has contracted with Aegis Capital in all of its finance raises from 2013 through 2017. Each of these transactions have been disclosed in our previous 10K filings. A summary of these transactions are as follows:

 

  Ageis Capital Corp. acted as the Placement Agent for the Company’s 2013 Private Placement which raised gross proceeds of $15 million. As the Placement Agent, Ageis Capital Corp. received an agent fee of $1.5 million and a non-accountable expense allowance of $450,000. In addition, the Placement Agent was issued 750,000 warrants at an exercise price of $2.00 per share and 1,500,000 warrants at an exercise price of $1.00 per share.
     
  Ageis Capital Corp. acted as the Placement Agent for the Company’s 2015 Private Placement which raised gross proceeds of $10 million. The Placement Agent received a cash fee of $ 1 million and a non-accountable expense allowance of $300,000. The Placement agent was issued 2 million warrants to purchase shares at $ 0.50 per share and 2 million warrants to purchase shares at $0.75 a share.
     
  Ageis Capital Corp. acted as the Placement Agent for the Company’s 2016 Series A Preferred Share private placement which raised gross proceeds of $8 million. The Placement Agent was paid a cash fee of $800,000 and non-accountable expenses of $240,000. In addition, 1,600,000 warrants were issued to the Placement Agent at an exercise price of $0.50 per share.
     
  Ageis Capital Corp. was retained a our Warrant Agent for the Company’s 2017 Offer to Amend and Exercise warrants, which raised approximately gross proceeds of $ 13.5 million. The Warrant Agent received a fee of 5% of the cash exercise prices paid by the holders of the warrants, excluding placement agent warrants. In addition Aegis capital was reimbursed for reasonable out-of-pocket expenses and attorney’s fees, including a $35,000 non-accountable expense allowance.

 

Aegis Capital Corp. acted as a selected dealer for our public offering in June 2018. ThinkEquity, a division of Fordham Financial Management, Inc., acted as the Company’s exclusive placement agent in connection with this offering. The Company agreed to pay the placement agent a total cash fee equal to 7% of the public offering price for the Series B Preferred plus a non-accountable expense allowance equal to 1.0% of the gross proceeds raised in this offering. In addition, the Company agreed to issue placement agent warrants to the placement agent to purchase that number of shares of common stock equal to 1.5% of the aggregate number of shares of common stock underlying the shares of Series B Preferred sold in the offering (not including any shares payable pursuant to the contemplated dividend thereunder). The placement agent warrants will be exercisable at any time and from time to time, in whole or in part, during the four-year period commencing one year from the effective date of the offering, at a price per share equal to $0.75. The placement agent warrants provide for registration rights (including a one-time demand registration right and unlimited piggyback rights), a cashless exercise option, customary anti-dilution provisions (for stock dividends and splits and recapitalizations) consistent with FINRA Rule 5110, and further, the number of shares underlying the placement agent warrants shall be reduced if necessary to comply with FINRA rules or regulations. The Company also reimbursed the placement agent for its legal fees and expense in the amount of up to $75,000.

 

Our former CEO, as part of his separation agreement, is eligible to receive 15 months of severance at his former salary. The total severance expense of $400,000 has been accounted for as of June 30, 2018.