Quarterly report pursuant to sections 13 or 15(d)

Related Party Transactions

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Related Party Transactions
9 Months Ended
Sep. 30, 2013
Related Party Transactions
10. Related Party Transactions:

Investment Agreements – The Company has entered into three separate investment agreements with RVL, an affiliate of Aston Capital and our Chairman and Chief Executive Officer, whereby the Company issued to RVL Series B, C, E and F Convertible Preferred stock for cash aggregating $26 million. The terms of the Series B, C, E and F Convertible Preferred stock are described in Note 8. In addition, an affiliate of RVL purchased 75,000 shares of common stock from the Company for $ 192,150 at the closing market price of the stock on the date purchased.

Customer Financing – In 2013, Aston Capital provided $9.9 million in financing to a related group of customers 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 with respect to the financing arrangements between the customer and Aston Capital. The Company’s obligations to the customer are limited to the standard warranty obligation on the products sold.

Management Agreement – On April 9, 2013, the Company ratified a management services agreement with Aston Capital (the “Management Agreement”) to memorialize certain management services that Aston Capital 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 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 under the Management Agreement, the Company issued 500,000 shares of restricted common stock to Aston Capital 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 of the Board evaluates director compensation) whether additional compensation to Aston Capital, 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, Connecticut 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 $84,591 and $249,262 for the three months and nine months ended September 30, 2013.

RVL Transaction Fees – Pursuant to the Series E and Series F Investment Agreement with RVL, the Company agreed to pay certain transaction costs incurred by RVL in connection with its investment. For the nine months ended September 30, 2013, the Company incurred $32,610 related to these costs.