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Subsequent Events
12 Months Ended
Dec. 31, 2013
Notes to Financial Statements  
14. Subsequent Events

The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the  consolidated financial statements, except as disclosed.

 

Pagosa Health division

 

On January 14, 2014, we closed Pagosa Health, our closed door pharmacy located in Lawrenceburg, Indiana and decided to focus on our core consumer prescription business. Pagosa Health had a de minimis contribution to the Company’s operations.  All inventory and personnel were consolidated into our Kentucky facility.  We are currently in discussions with the Landlord regarding termination of the lease related to the building.   The impact of the lease termination was de minimus to the consolidated financial statements as of December 31, 2013.  See Note 10.

 

Employee Stock Compensation

 

On January 15, 2014, the Company issued 21,289 shares of Common Stock to an employee in accordance with an employment agreement.  The fair market value of the shares was $10,645  based on the closing price on the date of issuance.

 

Notes Payable

 

On March 28, 2014, the Company received an additional $100,000 from a lender, which brought the face value of the March 2014 Note to $700,000 pursuant to an Amended and Restated Promissory Note (the “March 2014 Note”), effective March 28, 2014, which supersedes the September Note and March Note with the same Lender. The March 2014 Note contains financial covenants which require the Company to meet certain minimum targets for earnings before interest, taxes and non-cash expenses, including depreciation, amortization and stock-based compensation (“EBITDAS”) for the calendar quarters and years ended between March 31, 2014 and December 31, 2014. The remainder of the material March 2014 Note terms are unchanged from the September Note, including the March 1, 2015 maturity date.  In consideration of the Lender providing additional funds and entering into the September Note, the Company granted the Lender a five-year warrant to purchase 150,000 shares of Common Stock at an exercise price of $0.35 per share. The warrant contains customary anti-dilution provisions. The warrant had a relative fair value of $23,600 which was set up as debt discount and will be amortized using the effective interest method over the term of the March 2014 Note.  Including the value of warrants issued in connection with the March Note and September Note, the September Note had an effective interest rate of 36% per annum. On March 25, 2014, the lender executed a document waiving the Company’s non-compliance with the EBITDAS financial covenant as of December 31, 2013.