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SUBSEQUENT EVENTS
12 Months Ended
Dec. 31, 2014
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

On February 6, 2015, the Company acquired all rights to cyber security network vulnerability assessment software (the “Software”).  Under the purchase agreement, the Company agreed to pay the seller the base purchase price of $180,000, of which $100,000 was paid in cash at the closing and the remaining $80,000 of which was paid by delivery at the closing of the Company’s secured promissory note in the principal amount of $80,000.  The principal amount of the promissory note is due and payable on April 7, 2015, without interest.  As security for its obligations under the promissory note, the Company granted the Seller a security interest in the Software.

 

Under the purchase agreement, in addition to the base purchase price, the Company also agreed to pay the seller: (i) a percentage of the licensing fees paid to the Company within three years after the closing date; provided, that the maximum amount payable to the seller with respect to that three-year period is $800,000; plus (ii) a percentage of the licensing fees paid to the Company during the three years beginning on the date, if any, on which the aggregate amount of the licensing fees paid to seller with respect to the initial three-year period equals $800,000. The royalties are payable quarterly within 30 days after the end of each calendar quarter.

 

The purchase agreement also provides that the Company will pay the seller one half of the amount by which the total software development costs incurred by the Company in connection with upgrading the Software to include specific functional specifications is less than $500,000.

 

To finance the portion of the base purchase price paid in cash at the closing under the purchase agreement, the Company borrowed $100,000 under its LOC agreement (see Note 8).

 

In connection with closing, the Company entered into an employment agreement with one of the seller’s principals to employ him as Director of CyberSecurity for three years.

 

On February 12, 2015, an executive officer loaned the Company $25,000 with interest at 7%. The note is unsecured and matures on March 31, 2018 with principal convertible at the option of the holder into shares of common stock at $.10 per share.

 

On March 13, 2014, the PBGC modified the Company’s note payable by deferring a principal payment of $75,000 that was due on March 15, 2015 to September 15, 2018.

 

Subsequent to year end and through March 31, 2015, the Company issued to certain of its employees common stock options for an aggregate of 120,000 shares exercisable at $.05 per share which vest on June 30, 2015.