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Investment in Omnimetrix

3 Months Ended

Mar. 31, 2019

Schedule of Investments [Abstract]

Investment in Omnimetrix

NOTE 3—INVESTMENT IN OMNIMETRIX

In 2015, one of the Company’s then-current directors (the “Investor”) acquired a 20% interest in the Company’s OMX Holdings, Inc. subsidiary (“Holdings”) through the purchase of $1,000 of OmniMetrix Preferred Stock (“Preferred Stock”). Holdings is the holder of 100% of the membership interests of OmniMetrix, LLC through which the Company operates its Power Generation and Cathodic Protection monitoring activities. The $1,000 investment by the Investor was recorded as an increase in non-controlling interests.

A dividend of 10% per annum accrued on the Preferred Stock. The dividend was payable on the first anniversary of the funding of the investment and quarterly thereafter for so long as the Preferred Stock is outstanding and has not been converted to Common Stock. Through December 31, 2016, a dividend payable of $115 was recorded with respect to the Preferred Stock. On December 31, 2016, the Investor agreed to treat the $115 of accrued dividends and all subsequent accrued and unpaid dividends as a loan to Holdings which bears interest at 8% per year. In December 2016, the Investor provided Holdings with an additional $50 loan under the same terms as the abovementioned accrued dividends.

On May 14, 2018, Holdings and the Investor entered into an agreement whereby effective May 1, 2018, the dividend on the Preferred Stock was reduced to 8%. In addition, all the amounts due to the Investor (accrued dividends, loan and accrued interest) and all future dividends that shall accrue on the Preferred Stock through June 30, 2020, will be paid by Holdings pursuant to an agreed-upon payment schedule which ends on June 30, 2020. During the year ended December 31, 2018, Holdings made payments of $100 in the aggregate in accordance with the agreed upon payment schedule and accrued additional quarterly dividends of $87 in the aggregate. During the three months ended March 31, 2019, the Company accrued $20 for the quarterly dividend. At March 31, 2019, the obligation to the Investor was $303, representing unpaid accrued dividends. The amount accrued as of March 31, 2019 is expected to be paid to the Investor by Holdings quarterly as shown in the table below. This table does not include any future dividends that shall accrue over this period (five quarters) on the Preferred Stock of $20 per quarter ($100 in the aggregate):

In the year ending December 31, 2019		$	250
In the six-month period ended June 30, 2020		$	53

Dividends shall be paid only to the extent provided under Holdings’ Amended and Restated Certificate of Incorporation and as permitted under applicable law. The scheduled dividend payment of $40 was not paid in the three-month period ended March 31, 2019 because Holdings did not have funds lawfully available for the payment of such dividend as its assets did not exceed its liabilities on the scheduled payment date. The Company plans to propose a complete buy-out of the Investor’s ownership interest upon completion of the rights offering. See Note 8.

The OmniMetrix Preferred Stock may convert at the option of the holder on a one-for-one basis into OmniMetrix common stock, subject to appropriate adjustments for corporate reorganizations, mergers, stock splits, etc. The OmniMetrix Preferred Stock has full ratchet anti-dilution protection and will not be diluted by any issuances below a pre-money equity valuation of $5,500 for OmniMetrix.