Annual report pursuant to Section 13 and 15(d)

Note 23 - Subsequent Events

Note 23 - Subsequent Events
12 Months Ended
Dec. 31, 2015
Subsequent Events [Abstract]  
Subsequent Events [Text Block]
Note 23        – Subsequent Events

On January 1, 2016, the Company entered into a written employment agreement with Mark Szynkowski, the Company’s Chief Financial Officer.  Mr. Szynkowski previously was an at-will employee without an employment agreement.  Refer to the Company’s Form 8-K filed with the Securities and Exchange Commission on January 19, 2016 or further details regarding this employment agreement.

On January 14, 2016, the Company and NYGG (Asia) Ltd., and on behalf of its affiliates (the “Stockholders”), entered into a stockholders’ agreement (the “Stockholders’ Agreement”) in regards to the 35,629,883 shares of Common Stock owned by the Stockholders (the “Shares”).  Pursuant to the Stockholders’ Agreement, the Stockholders granted to Tejune Kang, Chairman and CEO of the Company, and any successor to or designee of the CEO, as Stockholders’ proxy with the full power to vote the Shares at any annual or special meeting of stockholders, or in connection with any action taken by written consent, in the same manner and in the same proportion as shares of Common Stock that are not held by the Stockholders are voted or consents are given.  Refer to the Company’s Form 8-K filed with the Securities and Exchange Commission on January 20, 2016 for further details regarding the Stockholders’ Agreement.

During 2015, the Company had entered into a Loan and Security Agreement through California Bank of Commerce for a term of one year which automatically renews yearly.  The agreement includes an Interest Rate of 3.75% plus the prime rate with a minimum of 7.00% in addition to specific performance covenants which provides California Bank of Commerce with recourse in the event that the Company is deemed to be out of covenant.

The Company had entered into a First Amendment to Loan and Security Agreement effective March 1 st, 2016.  The amendment provides succession of specific sections of the original loan agreement as follows;

· Percentage of Net Collateral available was changed from 85% to 80%.  All other terms and provisions herein are unchanged.

· Depending on the interest rate determined with respect to this First Amendment, and from and after the March 1, 2016 reference date, the “Interest Rate” shall be either the “Standard Rate” Rate of 4.75% plus the prime rate with a minimum of 8.00% or the “Preferred Rate” Rate of 3.75% plus the prime rate with a minimum of 7.00%.  To the extent the Interest Rate is calculated with reference to the Base Rate, any change in the Interest Rate shall be effective as of the date of any change in the Base Rate.  Subject to the Company satisfying the certain conditions such as the Company satisfies or exceeds each and every one of the financial ratio and covenant thresholds, suspension of trading of Guarantor’s securities as a publicly traded company is lifted and Guarantor is then actively listed as a publicly traded company, and current or new litigation is dismissed, or is settled or resolved on terms and conditions acceptable to Lender, the interest rate for any current accounting period shall be the Preferred Rate.

If the Preferred Rate Conditions set forth in the agreement are not satisfied, then the Interest Rate for any Current Accounting Period shall be the Standard Rate; provided however, imposition of interest at the Standard Rate shall be subject to the provisions of this First Amendment and the Loan Agreement related to the imposition of the Alternative Interest Rate, Special Credit Accommodation Fees, the Default Interest Rate, and/or other fees and charges imposed under the Loan Agreement.

The Company was informed by the California Bank of Commerce on May 1 st, 2016 that we are out of covenant in the following section:

The company was informed on May 1 st, 2016 that the California Bank of Commerce is entitled to and will assess interest at the Alternative Interest Rate of a 6% increase to the Interest Rate in the Loan Agreement of 3.75% plus the prime rate as provided for in the covenants.