16.	Subsequent Events

Management performs an evaluation of events that occur after the balance sheet date but before the condensed consolidated financial statements are issued for potential recognition or disclosure of such events in its condensed consolidated financial statements.

Acquisition of Delphax Senior Credit Agreement

Pursuant to an Assignment and Acceptance Agreement dated

January

2017

between the Senior Lender and the Company, on

January

2017

the Company acquired all rights, and assumed all obligations, of the Senior Lender under the Senior Credit Agreement, including obligations, if any, to fund future borrowings under the Senior Credit Agreement. In connection with this transaction, the Company paid to the Senior Lender an amount equal to approximately

$1.26

million for the outstanding borrowing balance, plus accrued and unpaid interest and fees. Also in connection with this transaction, the Company, Delphax and Delphax Canada entered into an amendment to the Senior Credit Agreement to reduce the maximum amount of borrowings permitted to be outstanding under the Senior Credit Agreement from

$7.0

million to

$2.5

million, to revise the borrowing base to include in the borrowing base

100%

of purchase orders from customers for products up to

$500,000,

to provide that the interest rate on all borrowings outstanding until all loans under the Senior Credit Agreement are repaid in full will be a default rate equal to

2.5%

per month to be paid monthly, and to provide for the payment to the Company from Delphax Canada and Delphax of fees equal to

$25,000

upon execution of the amendment and of

$50,000

upon repayment in full of all loans under the Senior Credit Agreement. On

January

2017,

the Company notified Delphax and Delphax Canada of certain “Events of Default” (as defined under the Senior Credit Agreement) existing under the Senior Credit Agreement and that the Company was reserving all rights to exercise remedies under the Senior Credit Agreement and that no delay in exercising any such remedy is to be construed as a waiver of any of its remedies.

January

2017,

the Company and Delphax Canada entered into a Forbearance and Amendment Agreement dated as of

January

2017,

which amended the Senior Subordinated Note to increase the default rate of interest from an annual rate of

10.5%

to an annual rate of

18%,

to be in effect until all amounts under the Senior Subordinated Note are paid in full, and which provides that so long as no Event of Default (as defined in the Senior Subordinated Note) occurs under the Senior Subordinated Note, other than Events of Default that existed as of

January

2017,

the Company will forbear from exercising its remedies under the Senior Subordinated Note until

May

31,

2017

and further provided for the payment by Delphax Canada to the Company of a forbearance fee equal to approximately

$141,000.

Insignia Special D

ividend

As discussed in Note

Insignia’s Board of Directors announced on

November

28,

2016

a special dividend of

$0.70

per share. The Company received the cash dividend for owned shares on

January

2017.

The aggregate special dividend received by the Company was approximately

$1,200,000.

On the date of payment, the aggregate fair value of the Company’s Insignia investment declined by a materially similar amount. The Company is still in the process of finalizing its accounting treatment for this dividend, including consideration of the related decline in fair value the Insignia investment during the

fourth

fiscal quarter.

The net effect of the Insignia special dividend will be reflected in the Company’s

fourth

quarter consolidated statement of income (loss). Furthermore, because the further developments in the share price of Insignia during the quarter ended

March

31,

2017

cannot be predicted, there can be no certainty that there will not be other consolidated statement of income (loss) effects associated with the Company’s Insignia investment.