RELATED PARTY TRANSACTIONS

9 Months Ended

Apr. 30, 2022

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

As of April 30, 2022, SPHG Holdings and its affiliates, including Steel Holdings, Handy & Harman Ltd. and Steel Partners Ltd., beneficially owned approximately 53.5% of our outstanding capital stock, including the if-converted value of the SPHG Note and shares of Series C Convertible Preferred Stock that vote on an as-converted basis together with our common stock. Warren G. Lichtenstein, our Interim Chief Executive Officer and the Executive Chairman of our Board, is also the Executive Chairman of Steel Holdings GP Inc. ("Steel Holdings GP"), the manager of Steel Holdings. Jack L. Howard, the President and a director of Steel Holdings GP, was appointed to the Board upon the closing of the Preferred Stock Transaction described below.

SPHG Note Transaction

On February 28, 2019, the Company entered into a SPHG Note Purchase Agreement with SPHG Holdings, whereby SPHG Holdings agreed to loan the Company $14.9 million in exchange for the SPHG Note. As of both April 30, 2022 and July 31, 2021, SPHG Holdings held $14.9 million principal amount of the SPHG Note. As of April 30, 2022 and July 31, 2021, the net carrying value of the SPHG Note was $10.6 million and $9.3 million, respectively.

Preferred Stock Transaction

On December 15, 2017, the Company entered into a Preferred Stock Purchase Agreement with SPHG Holdings, pursuant to which the Company issued 35,000 shares of the Company's newly created Series C Convertible Preferred Stock to SPHG Holdings at a price of $1,000 per share, for an aggregate purchase consideration of $35.0 million. The terms, rights, obligations and preferences of the Series C Convertible Preferred Stock are set forth in the Series C Certificate of Designations, which has been filed with the Secretary of State of the State of Delaware.

Management Services Agreement

On June 14, 2019, the Company entered into an agreement (the "Management Services Agreement") with Steel Services Ltd. ("Steel Services"), an indirect wholly-owned subsidiary of Steel Holdings. The Management Services Agreement was effective as of June 1, 2019. In connection with the IWCO Direct Disposal, the monthly fee under the Management Services Agreement was reduced effective on the Disposal Date by the portion of the fee attributable to IWCO Direct. Total expenses incurred related to the Management Services Agreement for the three months ended April 30, 2022 and 2021 were $0.8 million and $0.9 million, respectively. Total expenses incurred related to the Management Services Agreement for the nine months ended April 30, 2022 and 2021 were $2.5 million and $2.5 million, respectively. As of April 30, 2022 and July 31, 2021, amounts due to Steel Services were $0.4 million and $0.9 million, respectively.

Steel Holdings Expression of Interest

On March 24, 2022 and May 27, 2022, Steel Holdings delivered revised expressions of interest to acquire all of the outstanding shares of common stock not already owned by Steel Holdings or its affiliates. See Note 1 for further discussion regarding such enhanced proposals.