NOTE 12—SUBSEQUENT EVENTS

On February 11, 2016 (the “Closing Date”), Countrywide, P&F, Nationwide and Argosy NWI Holdings, LLC, a Delaware limited liability company (“Argosy”), entered into a Stock Purchase and Redemption Agreement (the “Stock Purchase and Redemption Agreement”), pursuant to which, among other things, after giving effect to certain contributions and redemptions of Nationwide’s common shares, (“Nationwide Shares”) Argosy acquired all of the outstanding Nationwide Shares from Countrywide (the “Acquisition”). The Acquisition was effective as of 11:59 p.m. on the Closing Date.

Pursuant to the Stock Purchase and Redemption Agreement, the purchase price for the Nationwide Shares acquired in the Acquisition was approximately $22.2 million, before giving effect to: (i) an estimated working capital adjustment of approximately $877,000, which is subject to further adjustment post-closing, and (ii) an escrowed amount of $1,955,000. In addition, the Stock Purchase and Redemption Agreement provides that, under certain circumstances, up to an additional $400,000 may be contributed into escrow by Countrywide.

Effective as of the Closing Date, the Company and the president of Nationwide, entered into a purchase agreement (the “Purchase Agreement”), pursuant to which, among other things the Company acquired (i) 30,000 shares of the Company’s Common Stock at the aggregate purchase price of $254,940 and (ii) options to acquire 6,667 shares of the Company’s Common Stock at an aggregate price of $16,597. The Purchase Agreement contains certain covenants, including certain limited standstill restrictions imposed on the president of Nationwide with respect to shares of the Company’s Common Stock for a three-year period. The Purchase Agreement also contains customary representations and warranties.

Contemporaneously with the Acquisition and the Repurchase, the Company entered into the Consent and Second Amendment to the Amended and Restated Loan and Security Agreement, effective as of February 11, 2016 (the “Amendment”), with Capital One. The Amendment amended the Restated Loan Agreement, dated as of August 13, 2014 (the “Loan Agreement”). The Amendment, among other things: (i) provided CONA’s consent to the transactions contemplated by the Stock Purchase and Redemption Agreement and the Repurchase and (ii) amended the Restated Loan Agreement by: (a) reducing the aggregate Commitment (as defined in the Restated Loan Agreement) to $11,600,000; (b) reducing the Term Loan A to $100,000; (c) reducing the Revolver Commitment to $10,000,000 (less the new Term Loan A balance of $100,000); (d) reducing the Capex Loan Commitment to $1,600,000; (e) modifying certain financial covenants, interest rate margins and fee obligations; and (f) extending the expiration of the credit facility under the Restated Loan Agreement from December 19, 2017 to February 11, 2019.

In connection with the Acquisition, effective as of the Closing Date, Countrywide, as landlord, and Nationwide, as tenant, entered into a new lease (the “Lease”) relating to the Tampa, Florida real property (the “Premises”). The Lease provides for, among other things, a seven-year term commencing on the Closing Date and an annual base rent of approximately $252,000 with annual escalations. The Lease also provides that the tenant will pay certain taxes and operating expenses associated with the Premises. The Lease replaces the previous lease between Countrywide and Nationwide.

Lastly, effective as on the Closing Date, Countrywide and Nationwide entered into an Option and Right of First Refusal Agreement relating to the Premises, pursuant to which Countrywide granted a purchase option to Nationwide relating to the Premises if such option is initiated within 60 days following the Closing Date, in addition to the right of first refusal relating to certain offers made by third parties during the five-year period following the Closing Date.

The following unaudited pro-forma financial information gives effect to the sale of Nationwide as if it were consummated January 1, 2014. This unaudited pro-forma financial information is presented for information purposes only, and is not intended to present actual results that would have been attained had the sale been completed as of January 1, 2014, (the beginning of the earliest period presented) or to project potential operating results as of any future date or for any future periods.

	Year ended December 31,
	2015		2014
	(Unaudited)		(Unaudited)

Net revenue	$	60,313,000	$	56,114,000

Income before income taxes	$	2,681,000	$	1,181,000
Income tax expense		822,000		1,023,000
Net income	$	1,859,000	$	158,000

Earnings per share-basic	$	0.52	$	0.04
Earnings per share-diluted	$	0.49	$	0.04

During 2014, the Company was required to recognize a gain for tax purposes due to the expiration of various state statute of limitations pertaining to approximately $1,200,000 of unpaid vendor invoices belonging to a formerly deconsolidated subsidiary (see Note 8-INCOME TAXES). This reversal of liabilities had a significant impact on the 2014 income tax expense rate being applied in the unaudited pro forma calculation above.

On March 8, 2016, the Company’s Board of Directors announced that it declared a special, one-time cash dividend of $0.50 per share payable on April 4, 2016, to stockholders of record at the close of business on March 21, 2016. The total amount of this special dividend payment will be approximately $1,800,000 based on the current number of shares outstanding. Further, the Company’s Board of Directors also announced that it approved the initiation of a dividend policy under which the Company intends to declare a cash dividend to the Company’s stockholders in the amount of $0.20 per share per annum, payable in equal quarterly installments. In conjunction therewith, the Company’s Board of Directors declared an initial quarterly cash dividend of $0.05 per share to stockholders of record at the close of business on March 31, 2016. This dividend is payable on April 14, 2016.