|6 Months Ended|
Feb. 28, 2021
Note 10: Subsequent Events
On March 8, 2021, we were served with a Complaint filed in the United States District Court for the Southern District of New York by Benchmark Investments, Inc. d/b/a Kingswood Capital Markets, asserting a single claim for breach of contract arising from a non-binding engagement letter pursuant to which plaintiff offered to provide certain investment banking services to an affiliate of the Company. The Complaint seeks damages in an unspecified amount. On April 8, 2021, we filed an Answer to Plaintiff's Complaint denying its claims for relief, and asserting various affirmative defenses.
On March 19, 2021, we were served with a Complaint filed in the Circuit Court for the 11th Judicial Circuit, Manatee County, Florida, by our former workers’ compensation insurance carrier, Sunz Insurance Solutions, LLC. The Complaint asserts claims for breach of contract, alleging that the Company owes payments for loss reserve funds totaling approximately $10 million. The Company denies plaintiff’s allegations and intends to defend the lawsuit vigorously.
Vensure Note Receivable
Effective January 1, 2020, the Company entered into an Asset Purchase Agreement (the “APA”) with a wholly-owned subsidiary of Vensure, pursuant to which Vensure agreed to purchase certain of the Company’s assets for total consideration of $19 million in cash, with $9.5 million to be paid at closing, and the remainder to be paid in 48 equal monthly installments (the “Installment Sum”). The Installment Sum is subject to certain adjustments to account for various post-closing payments made by the parties to the APA. The APA provides a framework for the resolution of any disputes concerning the calculation of the Installment Sum, which includes submission of the matter to binding arbitration in the event that the parties are unable to resolve their differences themselves. By letter dated March 12, 2021, Vensure notified the Company for the first time that it believes it owes nothing under the APA, and that the Company owes Vensure approximately $1.5 million. We responded to Vensure by letter dated April 6, 2021, stating our belief that Vensure's calculations lack any basis, are unsupported by sufficient documentation, and are directly contradicted by the Company’s internal records. We further advised Vensure that, based on the information currently within the Company’s possession, we calculate the Installment Sum that Vensure owes to be within the range of approximately $7 million to $9.5 million, not including any recoveries to which the Company may be entitled based upon Vensure’s conduct in connection with the APA. The Company has also requested that Vensure produce various financial records that would support its calculations, and which we are entitled to examine under the terms of the APA. Now that the parties have exchanged their respective calculations with respect to the Installment Sum, we are attempting to negotiate a resolution of this dispute with Vensure in good faith, as required by certain provisions of the APA. If these negotiations fail to yield an agreement, then we intend to pursue our claim for payment through the binding arbitration and other procedures outlined in the APA.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef