Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. IMPERIAL INDUSTRIES INC (49930) 10-Q published on Aug 08, 2012 at 5:00 pm
Reporting Period: Jun 29, 2012
There can be no assurance that the above actions will be successful, and we do not have sufficient cash or line of credit to sustain operations for any significant period beyond the date of the special meeting of stockholders if we were to remain an independent public company. Based on historical experience, it is doubtful that we would be able to obtain new debt financing in an amount sufficient to repay our line of credit, as well as to provide the amount of additional funds necessary to sustain operations for any significant period thereafter. Accordingly, if the merger agreement is not approved by our stockholders, we would have to quickly seek strategic alternatives, including trying to find other potential investors, possibly a new buyer, as well as the possibility of renegotiating the terms of our line of credit with OEP, or ultimately being forced to liquidate our operations.
In November 2008, we sold our Winter Springs, Florida manufacturing facility under the terms of a sale-leaseback agreement. In connection with such closing, we entered into a five year lease for this property. The lease contains two five year renewal options, and also provides us with an option to repurchase the facility at a price defined in the agreement at any time after two years, during the term of its lease period. Since we have an option to repurchase the property, the sale has been treated as a financing and the net sales proceeds of $1,134,000 were recorded as secured financing as of the date of the transaction, with certain adjustments to be recorded from period to period. The secured financing amount recorded was $1,146,000 as of June 30, 2012 and December 31, 2011, respectively, and will remain as a long-term obligation until the lease expires or the option to purchase is exercised. As a result, the property will remain an asset and will continue to be depreciated for financial statement purposes.
Consummation of the Merger is subject to various conditions, including, but not limited to, (i) the affirmative vote by the holders of a majority of the outstanding shares of our common stock, (ii) the absence of any law, injunction, judgment or ruling prohibiting the Merger, (iii) the accuracy of the representations and warranties made by the parties, (iv) the performance of the parties in all material respects of their covenants, obligations and agreements in the Merger Agreement, (v) the absence of an adverse material effect on our operations or otherwise and (vi) certain other customary conditions.
We are obligated to pay to QEP a termination fee of $38,500 and reimbursement of QEP’s expenses not to exceed $150,000 if the merger agreement is terminated under certain circumstances.
We are focusing our efforts on increasing Premix sales through geographic expansion, developing new product offerings, eliminating overhead where possible, and preserving liquidity. There can be no assurance that these actions will be successful, and we do not have sufficient cash or line of credit to sustain operations for any significant period beyond the date of the special meeting of stockholders if we were to remain an independent public company. Based on historical experience, it is doubtful that we would be able to obtain new debt financing in an amount sufficient to repay our line of credit, as well as to provide the amount of additional funds necessary to sustain operations for any significant period thereafter. Accordingly, if the merger agreement is not approved by our stockholders, we would have to quickly seek strategic alternatives, including trying to find other potential investors, possibly a new buyer, as well as the possibility of renegotiating the terms of our line of credit with QEP, or ultimately being forced to liquidate our operations.
As a result, we do not have sufficient cash to sustain operations for any significant period beyond the proposed date of the special meeting of stockholders to be held in October 2012 to approve the Merger described in Note 19 to our Condensed Consolidated Financial Statements contained in Item 1 of this Form 10-Q. Based on historical experience, if our stockholders do not approve the Merger, it is doubtful that we would be able to obtain new debt financing in an amount sufficient to repay our bridge loan with QEP, as well as to provide additional funds necessary to sustain operations for any significant period thereafter. Accordingly, if the Merger is not approved by our stockholders, we would have to quickly seek strategic alternatives, including trying to find other potential investors, possibly a new buyer, as well as the possibility of renegotiating the terms of our bridge loan with QEP, or ultimately being forced to liquidate our operations. There can be no assurance that we would be successful completing a strategic alternative to the Merger which would provide sufficient cash to maintain operations. Any curtailment of operations would materially and adversely affect our future revenue prospects.