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Related Party Transactions
9 Months Ended
Sep. 30, 2016
Related Party Transactions [Abstract]  
Related Party Transactions
Related Party Transactions
 
During the fourth quarter of 2015, the Company renewed a Reimbursement of Services Agreement for a minimum of one year with Richmont Holdings - a closely held company owned by the Company's Chairman and CEO. The Company has begun to establish an infrastructure of personnel and resources necessary to identify, analyze, negotiate and conduct due diligence on direct-to-consumer acquisition candidates. However, the Company continues to need advice and assistance in areas related to identification, analysis, financing, due diligence, strategic planning, accounting, tax, and legal matters associated with such potential acquisitions. Richmont Holdings and its affiliates have experience in these areas and the Company wishes to draw upon such experience. In addition, Richmont Holdings had already developed a strategy of acquisitions in the direct-to-consumer industry and has assigned and transferred to us the opportunities it has previously analyzed and pursued.

The Company has agreed to pay Richmont Holdings a reimbursement fee (the “Reimbursement Fee”) each month and the Company agreed to reimburse or pay the due diligence, financial analysis, legal, travel, and other costs Richmont Holdings incurred in identifying, analyzing, performing due diligence, structuring, and negotiating potential transactions. During the three months ended September 30, 2016 and 2015, the Company recorded approximately $480,000 and $480,000, respectively, of Reimbursement Fee expenses that are included in 'general and administrative expenses' on the condensed consolidated statements of operations. The Company incurred reimbursement fees of approximately $1.4 million and $1.5 million during the nine months ended September 30, 2016 and 2015, respectively.

On February 26, 2015 the Company received a loan from Richmont Capital Partners V (“RCP V”) in the amount of $425,000. The loan does not currently bear interest and has no set maturity date. The balance of the loan is included in the Richmont Holdings related party payable. As of September 30, 2016 and December 31, 2015, there was a related party payable balance of approximately $911,000 and $576,000, respectively, due to Richmont Holdings that is included in 'related party payables' within current liabilities on the condensed consolidated balance sheets.
 
On September 25, 2012, upon acquisition of HCG, the Company inherited a related party shareholder payable of $25,000 related to a loan made by HCG’s former shareholder, Rochon Capital, to HCG for working capital. This amount is included in 'related-party payables' within current liabilities. The loan does not currently have a set maturity date.

On June 27, 2014, Tamala L. Longaberger lent TLC $42,000 and in connection therewith TLC issued her a promissory note in the principal amount of $42,000. The note bears interest at the rate of 10.0% per annum and matured on June 27, 2015. This amount is included in 'related-party payables' within current liabilities.

On July 1, 2014, Tamala L. Longaberger lent AEI $158,000 and in connection therewith AEI issued her a promissory note in the principal amount of $158,000. The note bears interest at the rate of 10.0% per annum and matured on July 1, 2015 and is guaranteed by us. This amount is included in 'related-party payables' within current liabilities.

On July 11, 2014, Tamala L. Longaberger lent AEI $800,000 and in connection therewith AEI issued her a promissory note in the principal amount of $800,000. The note bears interest at the rate of 10.0% per annum and matured July 11, 2015 and is guaranteed by us. This amount is included in 'related-party payables' within current liabilities.

The Company determined not to service the loans related to Tamala L. Longaberger. As a result, in connection with these notes, Ms. Longaberger on August 12, 2015 filed an action in Franklin County Common Pleas Court of Columbus, Ohio (“State Court Action”) seeking re-payment of the notes. However, it is the Company’s position that her claims are inextricably tied to broader issues related to her terminated employment and the claims asserted against her by the Company and The Longaberger Company, including breach of fiduciary duty, fraud, negligence, conversion, misappropriation of company funds, civil theft, breach of contract, and misappropriation of trade secrets, in an arbitration action in Columbus Ohio. Therefore, on October 12, 2015, the Company filed a motion to compel arbitration and dismiss claims in the State Court Action. On July 5, 2016, the Court overruled the Company’s motion and on July 26, 2016, Ms. Longaberger filed a motion for judgment on the pleadings against Agel.  On August 9, 2016 the Company filed both a memorandum contra of Ms. Longaberger’s motion on the pleadings and its first amended answer, affirmative defenses and counterclaims. On August 17, 2016, the Court eliminated the trial setting and further stated it will issue a new case schedule upon conclusion of the arbitration scheduled for May 15, 2017.  On August 18, 2016 Ms. Longaberger withdrew her motion for judgment on the pleadings.

The Company utilizes third party manufacturers for majority of the products offered. One manufacture in particular, Actitech, is owned by Michael Bishop, a member of our Board of Directors. The Company utilizes Actitech to produce products for Agel that are distributed globally. The Company paid Actitech $1.0 million and $684,000, during the nine months ended September 30, 2016 and 2015, respectively. On September 30, 2016 and December 31, 2015, Actitech was owed $1.9 million and $98,000, respectively, which is included in 'accounts payable' on the condensed consolidated balance sheets.