RELATED PARTY DISCLOSURES

12 Months Ended

Dec. 31, 2013

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE K – Related Party Disclosures

Edmund M. Jaskiewicz

During Fiscal 2013 and Fiscal 2012, the Company paid an aggregate of $5,000 and $10,000, respectively, to Edmund M. Jaskiewicz, the Company’s President and Chairman of the Board of Directors (“Jaskiewicz”) in consideration of his services as patent and trademark counsel to the Company, services as a member of its Board of Directors, and for reimbursement of expenses related to same. At December 31, 2013, there were invoices totaling $32,000 payable to Jaskiewicz.

As a condition to the Rosenthal Line of Credit closing, in June 2009, Jaskiewicz was required to execute an Agreement of Subordination and Assignment (“Subordination Agreement”) related to $124,000 owed to Jaskiewicz by the Company as of June 29, 2009 (the “Jaskiewicz Debt”). Under the Subordination Agreement, the Jaskiewicz Debt is not payable, is junior in right to the Rosenthal Line of Credit and no payment may be accepted or retained by Jaskiewicz unless and until the Company has paid and satisfied in full any obligations to Rosenthal. Furthermore, the Jaskiewicz Debt was assigned and transferred to Rosenthal as collateral for the Rosenthal Line of Credit.

As compensation for his execution of a Subordination Agreement, on July 1, 2009, July 1, 2010 and July 1, 2011, Jaskiewicz was awarded an option grant representing 50,000 common shares each year for a total of 150,000 common shares of the Company under the Company’s 2001 Plan, at an exercise price of $0.20, $0.07 and $0.13 respectively. The exercise price represents the closing price of the Company’s common shares on the date of the grant. All option grants were immediately exercisable on the date of the grant.

Jaskiewicz was also required to sign the same Subordination Agreement in connection with the Medallion Line of Credit and the Imperium Line of Credit. As compensation for his execution of these subsequent Subordination Agreements, on April 20, 2012, Jaskiewicz was awarded an option grant representing 150,000 common shares of the Company under the Company’s Fiscal 2001 stock option plan, at an exercise price of $0.18, the closing price of the Company’s common shares on the date of the grant. The option grant vests over 36 months as follows: 49,500 common shares on April 20, 2013, 49,500 common shares on April 20, 2014 and 51,000 common shares on April 20, 2015.

ALEC CIPKOWSKI

During Fiscal 2013, the Company paid an aggregate of $52,000, and in Fiscal 2012, the Company paid an aggregate of $60,000 to Alec Cipkowski. In August 2013, the Company reduced his compensation by 20%, or to $48,000 on an annualized basis. Alec Cipkowski is the son of the Company’s former Chief Executive Officer, Stan Cipkowski. Alec Cipkowski performs information technology services for the Company updating and maintaining the Company website as well as supporting the Rapid Reader products that are currently being used by customers. He receives normal employee benefits in accordance with the Company’s standard policies. Due to the timing of pay periods, at December 31, 2013 the Company owed Alec Cipkowski approximately $1,000, however, this amount was subsequently paid in the first regularly scheduled payroll in the year ending December 31, 2014.