Annual report pursuant to Section 13 and 15(d)

Note 19 - Subsequent Events

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Note 19 - Subsequent Events
12 Months Ended
Dec. 31, 2016
Subsequent Events [Abstract]  
Subsequent Events

Note 19. Subsequent Events

 

GAAP requires an entity to disclose events that occur after the balance sheet date but before financial statements are issued or are available to be issued (“subsequent events”) as well as the date through which an entity has evaluated subsequent events. There are two types of subsequent events. The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, (“recognized subsequent events”). The second type consists of events that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date (“non-recognized subsequent events”).

 

Recognized Subsequent Events

 

Arnold Schwarzenegger

 

On December 17, 2016, the Company entered into the Settlement Agreement with the AS Parties, effective January 4, 2017. Pursuant to the Settlement Agreement, and to resolve and settle all disputes between the parties and release all claims between them, the Company agreed to pay the AS Parties (a) $1.0 million, which payment was released to the AS Parties on January 5, 2017, and (b) $2.0 million within six months of the effective date of the Settlement Agreement. In addition, in connection with the transaction, the 780,000 shares of Company common stock held by Marine MP were sold to a third party on January 4, 2017 in exchange for an aggregate payment by such third party of $1,677,000 to the AS Parties. See additional information in Note 10.

 

Unrecognized Subsequent Events

 

Related-Party Convertible Notes

 

In January 2017, the maturity of the 2015 Convertible Note with Mr. Drexler was extended from January 2017 to November 2017. In addition, the interest rate for the 2015 Convertible Note was increased from 8% to 10% per annum and from 10% to 12% per annum if there is an event of default.