Quarterly report pursuant to sections 13 or 15(d)

Related Party Transactions

v2.4.0.8
Related Party Transactions
6 Months Ended
Jun. 30, 2013
Related Party Transactions

10. Related Party Transactions:

Investment Agreements – The Company has entered into three separate investment agreements with RVL 1 LLC (“RVL”), an affiliate of Aston Capital, LLC and our Chairman and Chief Executive Officer, whereby the Company issued to RVL Series B, Series C and Series E convertible preferred stock for cash aggregating $21 million. The terms of the Series B, C and E convertible preferred stock are described in Note 8.

 

Customer Financing – In June 2013, Aston Capital provided $4.0 million in financing to a customer of the Company who used the proceeds to repay its obligations to the Company for the purchase of Company products. The Company has no obligations to Aston Capital, LLC with respect to the financing arrangements between the customer and Aston Capital, LLC. The Company’s obligations to the customer are limited to the standard warranty obligation on the products sold. Aston Capital, LLC informed the company that it intends to assign this loan to its announced affiliated fund, LightCap Fund I.

Management Agreement – On April 9, 2013, the Company ratified a management services agreement with Aston Capital, LLC (the “Management Agreement”) to memorialize certain management services that Aston Capital, LLC has been providing to the Company since RVL acquired majority control of the Company’s voting securities in September 2012. Pursuant to the Management Agreement, Aston Capital, LLC provides consulting services in connection with financing matters, budgeting, strategic planning and business development, including, without limitation, assisting the Company in (i) analyzing the operations and historical performance of target companies; (ii) analyzing and evaluating the transactions with such target companies; (iii) conducting financial, business and operational due diligence, and (iv) evaluating related structuring and other matters. In consideration of the services provided by Aston Capital, LLC under the Management Agreement, the Company issued 500,000 shares of restricted common stock to Aston Capital, LLC to vest in three equal annual increments, with the first such vesting date being September 25, 2013. The Audit Committee of the Board will consider from time to time (at a minimum at such times when the Compensation Committee evaluates director compensation) whether additional compensation to Aston Capital, LLC is appropriate given the nature of the services provided.

Relocation of Corporate Headquarters – During the first quarter of 2013, the Company relocated its corporate headquarters to Stamford, CT to a space also occupied by affiliates of our Chairman and Chief Executive Officer. The terms and conditions of the arrangement have not been finalized but the Audit Committee of the Board agreed to an allocation of the costs of the Stamford headquarters between Aston and the Company. Costs allocated to the Company amounted to $96,341 and $164,671 for the three months and six months ended June 30, 2013.

RVL Transaction Fees – Pursuant to the Series E investment agreement with RVL, the Company agreed to pay certain transaction costs incurred by RVL in connection with its investment. For the six months ended June 30, 2013, the Company incurred $28,525 related to these costs.

Assumption of Lease from Related Party – In conjunction with the Seesmart acquisition, the Company assumed a lease entered into by Progress 44, Inc., a company affiliated with Seesmart’s President Raymond Sjolseth, and agreed to reimburse Progress 44, Inc. for any lease payments made subsequent to the acquisition date.

Revenues from Related Party – Seesmart’s chief operating officer provides services to the Company and one of its distributors. The Company recorded revenue totaling $497,799 and $698,737 from this distributor for the three months and six months ended June 30, 2013. At June 30, 2013, the Company had trade accounts receivable due from the distributor totaling $166,996.