INVESTMENT

12 Months Ended

Dec. 31, 2014

Investments, Debt and Equity Securities [Abstract]

INVESTMENT

During 2014 and 2013, the Company purchased 300,000 shares of the authorized but unissued shares of Series A Convertible Preferred Stock (“Series A stock”), $.001 par value, of Sudo.me Corporation (goSudo) for an aggregate purchase price of $300,000 pursuant to the terms and conditions of a preferred stock purchase agreement.  goSudo is a customer of the Company.  As a result, at December 31, 2014, the Company owns approximately 9.4% of the total outstanding shares of goSudo.  The initial and subsequent investments during 2013 included settlement of accounts receivable of $114,167 which is considered a non-cash investing activity.

The investment is accounted for using the equity method since Company management exercises significant influence over the operating and financial policies of goSudo.  Beginning in 2012 certain officers and directors of the Company made loans to goSudo and converted loans to Series A stock.  In addition, one former Company employee, whose employment extended through June 30, 2014, is one of four members of the board of directors of goSudo and, was active in managing goSudo's business.  The Company’s chief executive officer is a member of the board of directors and is President of goSudo.  As a result of the foregoing, the Company is deemed to have significant influence upon goSudo's policy and operating decisions.  During the year ended December 31, 2014, the investment was written down by $168,000 consisting of $68,000 equity interest in the loss of goSudo and an impairment loss of $100,000 ($23,000 equity interest in the loss of goSudo - 2013).  The investment has a carrying value of $109,000 at December 31, 2014 ($247,000 - 2013).

The Series A stock votes together with all other classes of stock as a single class on all actions to be taken by the stockholders.  Series A stock dividends accrue at the rate of $.10 per year on each share from the date of issuance.  Each Series A share entitles the holder to such number of votes per share based on the number of shares of common stock it is convertible into.  At the option of the holder, each share and accrued and unpaid dividends are convertible into shares of common stock at a rate of the quotient of (i) preferred shares plus unpaid dividends divided by (ii) the number of preferred shares.  Shares of Series A stock are automatically converted to shares of common stock upon a firm commitment underwritten public offering of common stock yielding gross proceeds of at least $10 million at a minimum price of $3 per share.

Unaudited financial information for goSudo as of and for the year ended December 31, 2014 reflects total assets of $10,639, total liabilities of $753,305, and a net loss of $781,300.  goSudo is a development stage enterprise and has no revenues for the years ended December 31, 2014 and 2013.