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Related Party Transactions
12 Months Ended
Dec. 31, 2016
Related Party Transactions [Abstract]  
Related Party Transactions

13. RELATED PARTY TRANSACTIONS

 

On September 30, 2014, the CEO and a Senior Vice President (collectively, the “Executives”), who were also board members, retired from the Company and simultaneously resigned from the board of directors. In connection with the separation, the Company entered into a separation and consulting agreement with the Executives. Included as part of the arrangement, the Company committed to payments totaling $587,500 to be made over a period of 15 months. In exchange for the consideration, the Executives agreed not to compete with the Company, solicit any employee, contractor or consultant of the Company to terminate employment or contractual relationship with the Company, as well refrain from other activities, as defined in the agreement. At September 30, 2014, the Company recorded the future payments of the agreement as a liability and as a non-compete intangible asset totaling $587,500. The costs of the non-compete were amortized over the 15-month term of the agreement. For the years ended December 31, 2015 and 2014, amortization expense recognized was $470,000 and $117,500, respectively. The Company made payments under this agreement in 2015 and 2014 of $417,500 and $170,000, respectively and the balance was paid in full as of December 31, 2015.

 

Mobilisa leased office space from a company (“Lessor Company”) that is wholly-owned by two former directors, who were also members of management. The Company entered into a 10-year lease for the office space ending in 2017. The base annual rent for this facility was $96,010 was subject to annual increases based on the increase in the CPI index plus 1%. On February 24, 2016, the Company and the Lessor Company entered into a lease amendment agreement reducing the space under this lease that took effect on March 31, 2016 thereby closing its office facility and occupied storage space that expired on December 31, 2016. As a result of this amended agreement, the Company made a $100,000 termination payment to the Lessor in full satisfaction the Company’s remaining obligations under its original lease. For the years ended December 31, 2016 and 2015, total rent payments for this facility was $124,001 (including this termination payment) and $94,783, respectively.

 

On February 24, 2016, the Company entered into a stock repurchase agreement with the Executives for the repurchase of all 979,114 shares owned by the Executives of the Company’s common stock for $1,096,608. The transaction was finalized on March 4, 2016.