As part of the CIS Agreement there is a transition services agreement to allow both parties to share resources for a certain period of time, generally less than twelve months, in order to effectuate an orderly separation of the internal systems and operations.

Sale of Sycamore Specialty Underwriters, LLC

On August 30, 2024, the Company completed the sale of its 50% ownership interest in Sycamore Specialty Underwriters, LLC (“SSU”) to an entity owned by Andrew Petcoff, the son of James Petcoff, the Company's former Executive Chairman and Co-Chief Executive Officer and beneficial owner of more than 5% of the Company’s common stock, pursuant to the Membership Interest Purchase Agreement, dated as of August 30, 2024 (the “SSU Agreement”) among Sycamore Financial Group, LLC, Andrew Petcoff and VSRM Insurance Agency, Inc.  The total purchase price was $6.5 million with $3.0 million paid in cash at the time of the closing and $3.5 million due throughout the balance of 2024.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective August 30, 2024, Brian Roney, President, was appointed to the role of Chief Executive Officer.  Brian Roney, 60, has served as Company President since 2010.  Mr. Roney oversees the Company's finance and investor relations functions, as well as general operations. Mr. Roney has a B.A. from the University of Notre Dame and a M.B.A. from the University of Detroit.  There are no family relationships between Mr. Roney and any director or executive officer of the Company. In addition, Mr. Roney has no direct or indirect material interest in any transaction or proposed transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.  The Company did not enter into a revised employment agreement with Mr. Roney in connection with his appointment as Chief Executive Officer.

On September 3, 2024, the Company issued a news release announcing the completion of the sale of CIS. The news release is being furnished as Exhibit 99.1 to this Form 8-K.

The information and exhibit being furnished pursuant to this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section 18, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in any such filing.

 

As previously reported, on August 16,  2024, the Company received written notice from the Nasdaq Stock Market LLC (“Nasdaq”) stating that the Company no longer complied with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1) (the “Rule”)  for continued listing on The Nasdaq Stock Market LLC because the Company’s stockholders’ equity, as reported in the Company’s Quarterly Report on Form 10-Q for the second quarter ended June 30, 2024, had fallen below $2.5 million. and because it did not satisfy the alternative continued listing standards. Based on the sale of CIS, and as of the date of this Current Report, the Company believes it satisfies the Rule because it now has stockholders’ equity of at least $2.5 million. Nasdaq will continue to monitor the Company’s ongoing compliance with the Rule and, if the Company’s next periodic report does not evidence compliance with the Rule, the Company may be subject to delisting. There can be no assurance that the Company will be able to maintain compliance with the Rule.

 

#         Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish a copy of any omitted schedule or exhibit to the SEC upon its request.