NOTE

14:

RELATED PARTY TRANSACTIONS

September

2016,

the Company entered into a Securities Purchase Agreement with Philou, and Telkoor pursuant to which the Philou purchased all of the Telkoor’s

2,714,610

shares of the common stock in the Company, constituting approximately

40.06%

of the Company’s then outstanding shares of common stock. In consideration for such shares, the Philou paid Telkoor

$1.5

million.

Pursuant to the Securities Purchase Agreement, the Company entered into a Rescission Agreement with the Telkoor in order to resolve all financial issues between the parties, including the repurchase by the Telkoor of

1,136,666

shares of common stock in Telkoor owned by the Company for

$90,

which was equal to the carrying amount of the investment.

The closing of the transactions under the Securities Purchase Agreement and the Rescission Agreement occurred on

September

22,

2016.

Philou is the Company’s largest stockholder. Kristine Ault, a director of the Company, is managing member of MCKEA, which in turn, is the member of Philou. Kristine Ault’s spouse is Milton Ault who is Executive Chairman of the Board of the Directors of the Company.

In addition, on

March

2017,

the Company entered into a Preferred Stock Purchase Agreement with Philou. Pursuant to the terms of the Preferred Stock Purchase Agreement, Philou

may

invest up to

$5,000

in the Company through the purchase of Series B Preferred Stock over a specified term

In anticipation of the acquisition of MTIX by AVLP and the expectation of future business generated by the Company from a strategic investment into AVLP, the Company entered into

three

12%

Convertible Promissory Note agreements with AVLP in the principal amount of

$525

each, including a

original issue discount. After

six

months, the Company has a right, at its option, to convert all or any portion of the principal and accrued interest into shares of common stock of AVLP at

$0.74536

per share

During the last quarter of

2016,

the Company invested

$950

pursuant to

12%

Convertible Promissory Notes and another

$507

was invested on the

first

quarter of

2017.

(The remaining balance to invest is

$43).

Further, the Company has acquired

250,900

shares of AVLP Common Stock in the open market for

$85

AVLP, a Nevada corporation, is a holding company currently engaged in acquiring and/or developing businesses in which AVLP maintains a controlling interest. AVLP anticipates that its subsidiaries will be engaged in a number of diverse business activities. AVLP currently has

two

subsidiaries, Smith and Ramsay Brands, LLC (“SRB”) and Restaurant Capital Group, LLC (“RCG”). SRB was formed on

May

19,

2014,

and RCG was formed on

October

22,

2015.

AVLP is quoted under the symbol “AVLP” on the OTC Pink sheets operated by OTC Markets Group, Inc.

Philou is AVLP’s controlling shareholder. Mr. Ault is Chairman of AVLP’s Board of Directors and Mr. William B. Horne is the Chief Financial Officer of AVLP. Mr. Horne is also the audit committee chairman of the Company.

October

24,

2016,

AVLP entered into a letter of intent to acquire MTIX, an advanced materials and processing Technology Company located in Huddersfield, West Yorkshire, UK. On

October

26,

2016,

pursuant to the term of the letter of intent, AVLP made an initial payment of

$50

towards the purchase of MTIX.

March

2017,

AVLP entered into a Share Exchange Agreement with MTIX and the

three

current shareholders of MTIX

. Upon the terms and subject to the conditions set forth in the Share Exchange Agreement, AVLP will acquire MTIX from the MTIX shareholders through the transfer of all issued and outstanding ordinary shares of MTIX (the “MTIX Shares”) by the MTIX shareholders to AVLP in exchange for the issuance by AVLP of: (a)

secured convertible promissory notes in the aggregate principal face amount of

$9,500

to the MTIX shareholders in pro rata amounts commensurate with their current respective ownership percentages of MTIX’s ordinary shares, (b) (i)

$500

in cash,

$50

of which was paid on

October

26,

2016,

and (ii)

100,000

shares of AVLP’s newly designated shares of Class B Convertible Preferred Stock to the principal shareholder of MTIX.

On the closing date, the fully-diluted AVLP shares shall be

52,128,325

shares of common stock, assuming that (i) the MTIX promissory notes are convertible into shares of AVLP Common Stock at a conversion price of

$0.50

per share, (ii) the shares of AVLP Class B Convertible Preferred Stock are convertible into shares of AVLP Common Stock at a conversion rate of

$0.50

per share and (iii) the issuance of stock options to purchase an aggregate of

531,919

shares of AVLP Common Stock to the members of the MTIX management group

During

March

2017

, the Company was awarded a

-year,

$50

million purchase order by MTIX to manufacture, install and service the MLSE plasma-laser system

December

29,

2016,

the Company received a

$250

short term loan from MCKEA, the member of Philou. Ms. Ault, a director of the Company, is the managing member of MCKEA

. On

March

24,

2017,

the

$250

loan was cancelled in consideration for the issuance of

25,000

shares of Series B preferred stock of the Company to Philou.

September

22,

2016,

the Company entered into consulting agreement with Mr. Ault to assist the Company in developing a business strategy, identifying new business opportunities, developing a capital raising program and implementing of a capital deployment program. For his services Mr. Ault will be paid a monthly fee of

$15

from

November

2016

through

June

30,

2017

and

may

be renewed

October

21,

2016,

the Company entered into a

12%

convertible secured note in the principal amount of

$530

with Mr. Barry Blank, an existing stockholder of the Company, for

$500

due on

October

20,

2019.

The principal amount of

12%

convertible secured note

may

be convertible into shares of the Company’s common stock at

$0.55

per share, subject to certain beneficial ownership limitations Mr. Blank

may

convert the principal amount of the convertible note at any time into common stock

Mr. Blank owns

419,900

shares of the common stock of the Company, constituting approximately

5.02%

of the Company’s outstanding shares of common stock. The

12%

convertible secured note will convert into

963,636

shares of common stock which represent

20.5%

of the Company’s outstanding shares of common stock without regard to an beneficial ownership limitation.

As additional consideration, Mr. Blank received a

three

-year warrant to purchase

265,000

shares of common stock each at an exercise price of

$0.80

and a

three

-year warrant to purchase

265,000

shares of common stock each at an exercise price of

$0.90.

March

2017,

the Company entered into a Preferred Stock Purchase Agreement with Philou. Pursuant to the terms of the Preferred Stock Purchase Agreement, Philou

may

invest up to

$5,000,000

in the Company through the purchase of Series B Preferred Stock over the

months

March

24,

2017,

Philou purchased

25,000

shares of Series B Preferred Stock (Note

16).