| Related Party Transactions |
NOTE 13 — RELATED PARTY
TRANSACTIONS
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A. |
Pallini S.p.A. (“Pallini”), as successor in interest to I.L.A.R. S.p.A., is a shareholder in the Company and one of the officers of Pallini served as a director of the Company until March 26, 2015. In January 2011, CB-USA entered into an agreement (“New Agreement”) with Pallini regarding the importation and distribution of certain Pallini brand products. The terms of the New Agreement were effective as of April 1, 2010. |
Pallini is no longer a related
party effective April 1, 2015. For the year ended March 31, 2015, the Company purchased goods from Pallini for $3,840,446.
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B. |
In November 2008, the Company entered into a management services agreement with Vector Group Ltd., a more than 5% shareholder, under which Vector Group agreed to make available to the Company the services of Richard J. Lampen, Vector Group’s executive vice president, effective October 11, 2008 to serve as the Company’s president and chief executive officer and to provide certain other financial and accounting services, including assistance with complying with Section 404 of the Sarbanes-Oxley Act of 2002. In consideration for such services, the Company agreed to pay Vector Group an annual fee of $100,000, plus any direct, out-of-pocket costs, fees and other expenses incurred by Vector Group or Mr. Lampen in connection with providing such services, and to indemnify Vector Group for any liabilities arising out of the provision of the services. The agreement is terminable by either party upon 30 days’ prior written notice. For the years ended March 31, 2017, 2016 and 2015, Vector Group was paid $110,846, $85,396 and $135,475, respectively, under this agreement. These charges have been included in general and administrative expense. |
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C. |
In November 2008, the Company entered into an agreement to reimburse Ladenburg Thalmann Financial Services Inc. (“LTS”) for its costs in providing certain administrative, legal and financial services to the Company. For the years ended March 31, 2017, 2016 and 2015, LTS was paid $128,625, $131,054 and $210,875, respectively, under this agreement. Mr. Lampen, the Company’s president and chief executive officer and a director, is the president and chief executive officer and a director of LTS and four other directors of the Company serve as directors of LTS, including Phillip Frost, M.D. who is the Chairman and principal shareholder of LTS. |
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D. |
As described in Note 8C, in March 2013, the Company entered into a Participation Agreement with certain related parties. As described in Notes 8D and 8E, in October 2013 and March 2017, the Company entered into various notes with certain related parties. |
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E. |
As described in Note 4 in March 2017, the Company issued 1,800,000 shares of Common Stock to the Sellers and paid $20,000,000 to the Sellers in connection with the GCP Acquisition. |
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