NOTE 4 - LEGAL PROCEEDINGS

In the normal course of business, the Company may become subject to lawsuits and other claims and proceedings. Such matters are subject to uncertainty and outcomes are not predictable with assurance. Management is not aware of any pending or threatened lawsuits or proceedings which would have a material effect on the Company’s financial position, liquidity, or results of operations other than as follows:

The Swiss Proceeding

In March 2009, Intercomsoft commenced an action in the court of first instance in Geneva Switzerland for the appointment of an arbitration tribunal in connection with its claims against the Ministry of Economics of the Republic of Moldova and the Government of the Republic of Moldova (the “Moldovan Defendants”) seeking damages for breach of contract and an injunction to prohibit Moldova from further producing essential government documents for the Republic of Moldova including passports, driver’s licenses, permits and national identification documents which Intercomsoft had produced from 1996 to 2006, pursuant to the terms of the ten year Supply Agreement (the “Swiss Proceeding”). The Swiss court granted Intercomsoft’s request to establish an ad hoc arbitration panel to hear the merits of its claims in such proceeding. Such action is pending and there can be no assurances as to its outcome.

The Moldovan Proceeding

In November 2010, the Moldovan Defendants commenced an action before the courts of Moldova claiming that the Supply Agreement was properly terminated on April 29, 2006 and seeking reimbursement of legal costs (the “Moldovan Proceeding”). Intercomsoft asserted a counterclaim seeking redress for various claims and damages for breach of the Supply Agreement, including interest and penalties which continue to accrue pursuant to the terms of the Supply Agreement. A judgement issued in favor of Intercomsoft in September 2012 was annulled in 2013 and was remanded to a lower court for reconsideration. There can be no assurance as to the outcome of such legal action.