XML 33 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
Related Party Transactions
12 Months Ended
Jul. 31, 2017
Related Party Transactions [Abstract]  
Related Party Transactions

Note 12—Related Party Transactions

 

Legal Fees 

The Company retained the services of a law firm to perform legal services. One of the partners of the firm is a non-employee director of the Company. Legal fees incurred amounted to approximately $1,406,000 in Fiscal 2017, $596,000 in Fiscal 2016 and $420,000 in Fiscal 2015. At July 31, 2017 and 2016, the accounts payable balance owed to the law firm amounted to approximately $29,000 and $25,000, respectively. Accrued expenses incurred to the law firm at July 31, 2017 and 2016 totaled approximately $900,000 and $65,000, respectively.

 

The Company retained the services of another law firm to perform legal services. One of the partners of the firm is another non-employee director of the Company. Legal fees incurred amounted to approximately $207,000 in Fiscal 2017. There were no fees incurred in Fiscal 2016 and Fiscal 2015. At July 31, 2017, the Company owed the law firm $0.

  

IDT

In connection with the Spin-Off, the Company and IDT entered into a Separation and Distribution Agreement and a Tax Separation Agreement to complete the separation of the Company’s businesses from IDT, to distribute the Company’s common stock to IDT’s stockholders and set forth certain understandings related to the Spin-Off. These agreements govern the relationship between the Company and IDT after the distribution and also provide for the allocation of employee benefits, taxes and other liabilities and obligations attributable to periods prior to the distribution. These agreements reflect terms between affiliated parties established without arms-length negotiation. The Company believes that the terms of these agreements equitably reflect the benefits and costs of the Company’s ongoing relationships with IDT.

 

Pursuant to the Separation and Distribution Agreement, the Company has agreed to indemnify IDT and IDT has agreed to indemnify the Company for losses related to the failure of the other to pay, perform or otherwise discharge, any of the liabilities and obligations set forth in the agreement. The Separation and Distribution Agreement includes, among other things, that IDT is obligated to reimburse the Company for the payment of any liabilities of the Company arising or related to the period prior to the Spin-Off. No payments were received in Fiscal 2016 or through January 31, 2017. On April 9, 2017, the Company and IDT entered into the IDT Term Sheet, providing for the settlement and mutual release of certain potential indemnification claims asserted by each of the Company and IDT, and to sell the Company’s interest in Straight Path IP Group to IDT. For further discussion, please see Note 3 - Settlement of Claims with IDT and Sale of Straight Path IP Group.

 

At the Spin-Off, the Company entered into a Transition Services Agreement (“TSA”) with IDT, pursuant to which IDT has provided certain services, including, but not limited to information and technology, human resources, payroll, tax, accounts payable, purchasing, treasury, financial systems, investor relations, legal, corporate accounting, internal audit, and facilities for an agreed period following the Spin-Off. As of January 1, 2015, all of these services are provided by other vendors. The Company and IDT extended the TSA enabling the Company to seek input from IDT on an ad hoc basis if the Company deemed it necessary. No services were provided under the TSA in Fiscal 2017 and Fiscal 2016.

 

In July 2015, legal expenses totaling $513,481 that were paid by IDT on behalf of the Company were forgiven. The Company recognized the transaction as an increase of additional paid-in capital.