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Subsequent Events
9 Months Ended
Jun. 30, 2019
Subsequent Events  
Subsequent Events

Note 12 – Subsequent Events

On August 7, 2019, the Company held a special meeting of stockholders (the “Special Meeting”). At the Special Meeting, the holders of a majority of the Company’s issued and outstanding shares of common stock entitled to vote approved amendments to the Company’s certificate of incorporation, as amended (the “Certificate of Incorporation”), to effect a 1-for-8,000 reverse stock split of the Company’s common stock (the “Reverse Stock Split”), followed immediately by a 8,000-for-1 forward stock split of the Company’s common stock (the “Forward Stock Split,” and together with the Reverse Stock Split, the “Transaction”).

Following the Special Meeting, the Company filed certificates of amendment to the Certificate of Incorporation with the State of Delaware to effect the Reverse Stock Split, followed immediately by the Forward Stock Split, both effective on August 7, 2019 at 5:01 and 5:02 p.m., respectively. As a result of the Transaction, each stockholder owning fewer than 8,000 shares of the Company’s common stock immediately prior to the effective time of the Reverse Stock Split became entitled to receive $1.15 per share, without interest, in cash for each share of the Company’s common stock held by such stockholder at the effective time of the Reverse Stock Split. As a result of the Transaction, based on information provided to the Company by its transfer agent, Continental Stock Transfer & Trust Company, and the Depository Trust Company (DTC), 2,825,268 pre-split shares of common stock are due to be exchanged for cash, and the aggregate amount payable by the Company to the former holders of such shares is approximately $3,249,000.

Stockholders who owned 8,000 or more shares of the Company’s common stock immediately prior to the effective time of the Reverse Stock Split were not entitled to receive any cash for their fractional share interests resulting from the Reverse Stock Split, if any. The Forward Stock Split that immediately followed the Reverse Stock Split reconverted whole shares and fractional share interests held by such stockholders back into the same number of shares of the Company’s common stock held by such stockholders immediately before the effective time of the Reverse Stock Split. As a result, the total number of shares of the Company’s common stock held by such stockholders did not change.

The Company has given notice to The Nasdaq Stock Market (“Nasdaq”) of its intent to voluntarily delist its common stock and to withdraw the registration of its common stock with the Securities and Exchange Commission (SEC). The Company intends to file a Form 25 Notification of Removal From Listing with the SEC on or about August 19, 2019. As a result, the Company expects that listing of its shares on Nasdaq will be terminated on or about August 29, 2019, at which time the Company intends to file a Form 15 with the SEC to suspend the Company’s reporting obligations under Section 15(d) of the Exchange Act. 

In connection with the events described above, on August 5, 2019, the Company entered into a Loan Modification Agreement with Middlesex, the Company’s senior lender, to modify the Loan and Security Agreement dated May 1, 2014, by and between the Company and Middlesex, to allow for the exclusion of certain transaction-related expenses from the calculation of EBITDA.

In connection with the events described above, on August 6, 2019, the Company entered into an Note Purchase Agreement with MCRC, the Company’s subordinated lender, in which the Company borrowed an additional $2,000,000 in cash and replaced the existing Note, which has an outstanding principal amount of $865,216, for an aggregate principal amount of $2,865,216, which will be due July 31, 2026 and bears eight percent interest per annum. Until August 31, 2022 this loan will require interest only payments, followed by principal and interest payments for the remaining four years of the loan. Until August 31, 2021, the Company is subject to early-payback penalties.

The Company has evaluated subsequent events through the date the financial statements were released.