XML 42 R26.htm IDEA: XBRL DOCUMENT v3.3.1.900
Subsequent Events
12 Months Ended
Dec. 31, 2015
Subsequent Events [Abstract]  
Subsequent Events
Subsequent Events.

(a) On March 14, 2016, the Company granted an eight-year option to Richard J. Kurtz, chairman of the board and principal stockholder, for the right to acquire 800,000 shares of the Company's common stock, par value $.01, at an exercise price per share equal to the fair market value of a share of the Company’s common stock on the date of grant, determined based on the per share closing price on such date, or $0.40 per share, which options vest monthly on a pro rata basis over 3 years, subject to continued satisfactory board services. The transaction was valued at $306,487, which was estimated using the Black-Scholes option pricing model and will be expensed over the requisite vesting period.

(b) On March 14, 2016, the Company granted an eight-year option to Douglas J. Kramer, ceo and president, for the right to acquire 2,000,000 shares of the Company's common stock, par value $.01, at an exercise price per share equal to the fair market value of a share of the Company’s common stock on the date of grant, determined based on the per share closing price on such date, or $0.40 per share, which options vest monthly on a pro rata basis over 3 years, subject to continued satisfactory employment. The transaction was valued at $766,217, which was estimated using the Black-Scholes option pricing model and will be expensed over the requisite vesting period.

(c) On March 18, 2016, the Company and Bank of America, N.A. entered into a Fourteenth Amendment (the “Fourteenth Amendment”) to the Loan Agreement. Pursuant to the Fourteenth Amendment, among other things: (i) to reduce cost of debt, a new tiered level applicable margin section was created which provides for varying interest rates based on varying fixed charge coverage ratios, interest, effective March 31, 2016; (ii) the basic reserve was reduced to zero; (iii) a new inventory formula amount was created allowing, if the Company elects to have an inventory appraisal performed, the lesser of, 65% of eligible inventory or 85% of the net orderly liquidation value percentage of the value of eligible inventory, up to $6,000,000, (iv) the revolver commitment was reduced to $12 million (to save on unused revolver loan fees), (v) the revolver termination date was changed to be the earlier of March 31, 2019 or 90 days prior to the maturity date of the Enhanced Note, (vi) to reduce the unused line fee, a new varying percentage unused line fee was created based on the amount by which the revolver commitment exceeds the average daily balance of the revolver loans and stated amount of letters of credit, (vii) the borrowing base reporting frequency was changed from daily to weekly, subject to meeting an availability requirement, and (viii) a new section was added allowing the repayment of principal amounts by the Company on the Enhanced Note, subject to meeting certain borrowing base limitations.

(d) The Company has evaluated subsequent events through the date of this report.