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Note 14 - Subsequent Event
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12 Months Ended |
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Dec. 31, 2012
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| Subsequent Events [Text Block] |
NOTE
14 – SUBSEQUENT EVENTS
Nasdaq
Compliance
On
February 15, 2013, the Company was notified by the Nasdaq
Stock Market that it is not in compliance with the
continued listing requirements for the Nasdaq Capital
Market because shares of the Company’s Common Stock
had closed at a per share bid price of less than $1.00
for at least 30 consecutive trading
days. Under Nasdaq rules, the Company was
given a 180-day grace period to regain compliance, which
extends to August 14, 2013. In order to regain
compliance, shares of the Company’s Common Stock
would need to close at a price of $1.00 per share or more
for at least ten consecutive trading days at any time
prior to August 14, 2013. The Company may be granted an
additional 180-day grace period to regain compliance, if,
at that time, it meets the initial listing criteria of
the Nasdaq Capital Market, other than the minimum bid
price requirement. In the event that the
Company does not regain compliance within the requisite
time period, it would have the right to appeal any
delisting. The failure to maintain listing on the Nasdaq
Capital Market may have an adverse effect on the price
and/or liquidity of the Company’s Common
Stock.
Bonus
Arrangement
On
April 2, 2013, the special committee approved a bonus
arrangement for Joseph Park, the Company’s Chief
Executive Officer, that had been recommended by the
Company’s compensation committee. The bonus
arrangement is intended to incentivize Mr. Park to
secure the best possible price in any sale of the
Company. Under the arrangement, Mr. Park will receive
five per cent of the net proceeds, which would
otherwise have been payable to the shareholders of the
Company, of any transaction constituting a sale of the
Company approved by the Board. The special committee
reserved the right to make any determinations requiring
the interpretation of the incentive, in its sole
discretion.
Salus
Agreement
The
Salus agreement was amended on April 11, 2013 to modify
certain borrowing availability formulas. It is
currently estimated that these amendments will increase
borrowing availability by up to
$650,000. The Company paid a $100,000 fee in
connection with the amendment. Salus also waived
covenant violations caused by the late delivery of 2012
audited financial statements and the explanatory
paragraph regarding a going concern uncertainty
contained in the auditor’s opinion for such
financial statements.
Strategic
Transaction
The
Company is currently in active discussions regarding a
strategic transaction under the direction of a special
committee consisting of independent members of the
Board of Directors, together with the assistance of an
independent financial advisor (“Proposed
Strategic Transaction”). The Company
expects that such transaction will be at a
price substantially below the current market
price of the Company’s common stock. We currently
have sufficient funds to support our operations until
the anticipated signing date of a definitive agreement
regarding the Proposed Strategic Transaction, at which
time we believe bridge financing will be available
until the transaction can be
consummated. Management believes that the
Proposed Strategic Transaction, if and when
consummated, will provide the necessary liquidity to
eliminate the factors that resulted in the going
concern qualification.
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