What do we know so far: From the FORM 10-Q March 31, 2007
Page 9
3) On September 20, 2004, the Company completed the sale of substantially all of the assets of its contract manufacturing subsidiary, Nexus Custom Electronics, Inc. (“Nexus”), to Sagamore Holdings, Inc. for consideration of up to $13,000,000, subject to closing adjustments, and the assumption of certain liabilities. The Company received $9,250,000 of the purchase consideration in cash on the closing date. The balance of the purchase consideration was satisfied through the delivery of a $2,750,000 subordinated note issued by the purchaser. This note has a maturity date of September 1, 2009 and bears interest at the lower of the prime rate or 7%. The note is payable by the purchaser in quarterly cash installments ranging from $156,250 to $500,000 commencing September 2006 and continuing for each quarter thereafter until maturity. No payments have been received as of May 15, 2007. Prepayment of the principal of and accrued interest on the note is permitted. In accordance with the purchase agreement, the Company determined that it was owed an additional $500,000 pursuant to a working capital adjustment provided for in the agreement, which has been recorded in the Company’s financial statements. The purchaser has disputed the Company’s claim to the working capital adjustment and has informed the Company that it believes that the Company owes a $500,000 working capital adjustment to the purchaser. Since this dispute remains unresolved, there has to date been no purchase price adjustment between the Company and Sagamore. Additionally, the Company is entitled to receive additional consideration in the form of a six-year earn-out based on 5% of the annual net sales of Nexus after the closing date, up to $1,000,000 in the aggregate. As of May 15, 2007, the Company had not earned any of the additional consideration.
On September 19, 2006, Nexus Nano Electronics, Inc. (“NNE”), as successor to Sagamore, and its subsidiary filed suit against the Company in the U.S. District Court for the Southern District of New York alleging fraud and misrepresentations by the Company in connection with the sale of Nexus and seeking an unspecified amount of damages. The Company believes that the plaintiffs’ claims are without merit and intends to contest them vigorously as well as assert counterclaims for amounts owed to it in connection with such sale, if this matter is not settled. Subsequent to the filing of this suit, the parties entered into settlement discussions and have reached an agreement in principle to settle this matter for, among other things, a mutual release of all disputed claims relating to this transaction and the cancellation of the purchaser’s $2,750,000 subordinated note held by the Company in consideration for NNE’s issuance to the Company of shares of its preferred stock of an equivalent value. The documentation relating to this proposed settlement has not yet been finalized or approved by the parties’ respective boards of directors and, therefore, the Company cannot assure you that this settlement will be completed upon the terms described above or at all.
So we know that a settlement meeting took place in New york before Judge Richard J. Holwell:
Docket Text
09/07/2007 Minute Entry for proceedings held before Judge Richard J. Holwell : Initial Pretrial Conference held on 9/7/2007. Defendants' shall file their answer by 10/5/07. Discovery due by 12/7/2007., Final Pretrial Conference set for 12/14/2007 at 11:00 AM before Judge Richard J. Holwell. Trial shall commence on January 7, 2008 at 10:00 am. (tro) (Entered: 09/20/2007)
It is safe to assume that NXNO do not want to settle 2,700,000$.
We know that Jerry Panos the new CEO of NXNO came from EMS mass tech. A similar company to NXNO. Is it safe to assume that he brough with him business and contacts? I'll let you folks awnser that one.
AI
