Quarterly report pursuant to Section 13 or 15(d)

Note 16 - Subsequent Events

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Note 16 - Subsequent Events
6 Months Ended
Jun. 30, 2017
Subsequent Events [Abstract]  
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

 

On July 28, 2017, the Company approved a Settlement Agreement (“Settlement Agreement”) with CFG effective July 7, 2017. The Settlement Agreement represents a full and final settlement of all litigation between the parties. Under the terms of the agreement, the Company has agreed to pay CFG a sum of $3 million, consisting of a $1 million payment that was advanced by a related party on July 7, 2017, and subsequent $1 million installments to be paid by July 7, 2018 and July 7, 2019, respectively.

 

The Company recorded a charge in its Statement of Operations for the quarter ended June 30, 2017 for approximately $1.5 million, representing the discounted value of the unrecorded settlement amount. The Company has now concluded the finalization of all its major legacy endorsement deals.

 

See the Company’s Current Report on Form 8-K filed with the SEC on August 2, 2017 for additional information.

 

Unrecognized Subsequent Events

 

On July 27, 2017, the Company entered into a promissory note agreement with Mr. Drexler, pursuant to which he loaned the Company $1.0 million, which is payable on demand. Proceeds from the Note were used to fund the settlement with CFG. The note carries interest at a rate of 15% per annum. Any interest not paid when due shall be capitalized and added to the principal amount of the Note and bear interest on the applicable interest payment date along with all other unpaid principal, capitalized interest, and other capitalized obligations. The Company may prepay the note without penalty any time prior to a demand request from the Holder.

 

See the Company’s Current Report on Form 8-K filed with the SEC on July 31, 2017 for additional information.