14. Related Party Transactions
|9 Months Ended|
Jun. 30, 2018
|Related Party Transactions [Abstract]|
|Related Party Transactions||
Note 14: Related Party Transactions
In connection with its purchase of Marquis, Marquis entered into a mezzanine loan in the amount of up to $7,000,000 with ICF. The ICF mezzanine loan bears interest at a rate of 12.5% per annum with payment obligations of interest each month and all principal due in January 2021. As of June 30, 2018, and September 30, 2017, respectively, there was $2,000,000 outstanding on this mezzanine loan. During the three months ended June 30, 2018 and 2017, the Company recognized total interest expense of $63,194, associated with the ICF notes. During the nine months ended June 30, 2018 and 2017, we recognized total interest expense of $189,583, associated with the ICF notes.
Customer Connexx LLC, a wholly-owned subsidiary of Appliance Recycling Centers of America, Inc. (“ARCA”), rents approximately 9,879 square feet of office space from the Company at its Las Vegas office which totals 11,100 square feet. ARCA paid the Company $29,929 in rent and other common area reimbursed expenses for the three months ended June 30, 2018. ARCA paid the Company $149,336 in rent and other common area reimbursed expenses for the nine months ended June 30, 2018. Tony Isaac, a member of the Board of Directors of the Company and Virland Johnson, Chief Financial Officer of the Company, are Chief Executive Officer and Board of Directors member and Chief Financial Officer of ARCA, respectively.
Warrants for 10,914, 12,383, 54,396 and 17,857 shares of Series B Convertible Preferred Stock were set to expire on September 10, 2017, December 11, 2017, March 27, 2018 and March 28, 2018, respectively. On January 16, 2018, the Company memorialized an agreement reached prior to any of the warrants expiring, to extend the expiration date for two years, just prior to expiration for all warrants listed. Warrants outstanding and exercisable as of June 30, 2018 and September 30, 2017 reflect the time extended warrants in addition to 22,479 warrants for shares of Series B Convertible Preferred Stock with an original expiration date of December 3, 2019.
On December 30, 2017, ASH, a wholly owned subsidiary of the Company, entered into a Stock Purchase Agreement (the “Agreement”) with ARCA and ApplianceSmart, a subsidiary of ARCA. Pursuant to the Agreement, the Purchaser purchased from ARCA all of the issued and outstanding shares of capital stock (the “Stock”) of ApplianceSmart in exchange for $6,500,000 (the “Purchase Price”). Effective April 1, 2018, ASH issued an interest-bearing promissory note, with interest at 5% per annum, with a three-year term in the original amount of $3,919,494 for the balance of the purchase price. ApplianceSmart paid ARCA transition services fees of $67,500 and $135,000 for the three months and nine months ended June 30, 2018.
In connection with the acquisition of Vintage Stock on November 3, 2016, Rodney Spriggs, President of Vintage Stock, holds a 41.134752% interest in the $10,000,000 Seller Subordinated Acquisition Note payable by VSAH. The terms of payment are interest only, payable monthly on the 1st of each month, until maturity 5 years and 6 months from the date of the note – November 3, 2016. Interest paid to Mr. Spriggs for the three months ended June 30, 2018 and 2017, was $84,098 and $84,098, respectively. Interest paid to Mr. Spriggs for the nine months ended June 30, 2018 and 2017, was $249,552 and $191,049, respectively. Interest unpaid and accrued as of June 30, 2018 and September 30, 2017 is $27,423 and $27,423, respectively.
Also see Note 5, 8, 9, 10 and 11.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef