Item 1.01. Entry into a Material Definitive Agreement.
DPH Supplements, Inc. ("DPH"), a company of which Douglas P. Heldoorn, an
officer and director of the Company, is the sole shareholder, leased the
building that is partially occupied by the Company from its owner under a master
lease, dated August 27, 2018, which had a term of 2 years that expired on August
31, 2020, at a rental of $11,108 per month. This lease was extended for a 2-year
term, so as to expire on August 31, 2022, at a rental of $9,791 per month. DPH
subleased 8,000 square feet of the building to the Company under a 1-year
sublease expiring on August 31, 2019, at a monthly rent of $8,640 per month and
on the other terms set forth in Item 2 and subleased the remaining 2,000 square
feet to an unrelated party at a rent of $2,467 per month. On September 1, 2019,
the Company and DPH extended its term for one year, such that its term expired
on August 31, 2020, at a monthly rent of $8,967. On September 1, 2020, DPH
leased these premises to Med X Technologies Inc., a wholly owned subsidiary of
the Company which operates its Medtainer® business ("Med X") for a monthly rent
of $9,007, for a term that expired on August 31, 2021. Under a sublease entered
into on September 9, 2021, and dated as of September 1, 2021, DPH leased these
premises to Med X for a monthly rent of $9,791, for a term that will expired on
August 31, 2022. Under each of these subleases, the Company or Med X, as the
case may be, agreed to assume and all of the obligations of DPH under the master
lease, including the payment in full of certain capital expenses and the sharing
of others; the payment of "common area operating expenses," as defined (which
includes real property taxes paid by master lessor); the maintenance of the
property; and payment of insurance premium increases.
Under the immediately prior subleases, the Company and Med X subleased 80% of
the area of the building and paid 77.8% and 72.5% of the total rent paid by DPH
for the building under the earlier and later of these subleases, respectively.
Under the current sublease, Med X leases 80% of the total area of the building
and pays 78.1% of the total rent paid by DPH for the building. Under all of
these subleases, the amounts of rent payable by the Company to DPH were equal to
the rent that DPH paid to the owner of the building under the master lease, such
that DPH netted and will net no income after it paid rent to the master lessor.
The Company believes that the rent for these premises approximates the market
rate for space in the area in which they are located and that the current
sublease is fair to the Company and in its best interest.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
10.1 Sublease Agreement, dated as of September 1, 2021, by and among KST Family
Trust, as landlord, DPH Supplements, Inc., as sublessor, and Med X
Technologies Inc., as sublessee. Filed herewith.
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