Spy Inc. will lay off 20 employees, including its EVP of sales and operation, and convert back to a distributor model in Europe in an effort to reduce its revenue breakeven point by the end of the fourth quarter.
The company will incur one-time expenses of approximately $1.2 million during the third quarter of 2012, of which $1.0 million is expected to be paid in cash. These expenses primarily consist of one-time termination benefits which include salary continuation and other benefit costs along with contract termination costs and other associated non-cash costs. We anticipate that these actions could result in annual operating cost savings of up to $6.0 million in 2013.
Among those to lose their jobs was Gregory Hagerman, executive vice president, sales and operations, who was terminated Aug. 31, 2012. Hagerman will be paid severance pay equal to his current base salary of $225,000 payable over the next 12 months, and accelerated vesting of stock options exercisable into 117,500 shares of common stock underlying the unvested stock option previously granted him on Dec. 5, 2011.
