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COMMITMENTS AND CONTINGENCIES | 9 Months Ended
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Sep. 30, 2018
Commitments And Contingencies |
COMMITMENTS AND CONTINGENCIES | Operating Leases AOC Key Solutions leases office space in Chantilly, Virginia under the terms of a ten-year lease expiring October 31, 2019. The lease contains one five-year renewal option. The lease terms include an annual increase in base rent and expenses of 2.75%, which have been amortized ratably over the lease term. AOC Key Solutions also leases office space in New Orleans, Louisiana under the terms of a three-year lease which expired on May 31, 2018, and lease payments are currently being made on a month-to-month basis. Firestorm leases office space in Roswell, Georgia under the terms of a lease expiring on January 31, 2022 and in Grand Rapids, Michigan under a seven-year lease expiring in October 2023. Brekford leases office space from Global Public Safety, LLC on a month-to-month basis. Brekford also leases space under an operating lease expiring on December 31, 2018. Global leases office space in Fort Worth, Texas under the terms of a lease expiring on January 31, 2022. Rent expense for the three months ended September 30, 2018 and 2017 was $210,148 and $193,985, respectively, and for the nine months ended September 30, 2018 and 2017 was $608,943 and $575,181, respectively, and is included in selling, general and administrative expenses. As of September 30, 2018, the future obligations over the primary terms of Novume’s long-term leases expiring through 2023 are as follows:
2018 (remainder of year) |  | $ | 192,046 |
2019 |  |  | 624,228 |
2020 |  |  | 190,599 |
2021 |  |  | 101,386 |
2022 |  |  | 38,873 |
Thereafter |  |  | 30,393 |
Total |  | $ | 1,177,525 |
The Company is the lessor in an agreement to sublease office space in Chantilly, Virginia with an initial term of two years with eight one-year options to renew the sublease through October 31, 2019. The lease provides for an annual increase in base rent and expenses of 2.90%. The initial term ended October 31, 2011 and the Company exercised the renewal options through 2015. On April 7, 2015, the month-to-month lease was amended to sublease more space to the subtenant and change the rental calculation. The sublease agreement provided for an offset of $45,634 to rent expense for each of the three months ended September 30, 2018 and 2017, and $136,901 for each of the nine months ended September 30, 2018 and 2017. NeoSystems The Company planned to acquire NeoSystems LLC (“NeoSystems”) through a forward merger under an agreement entered into on November 16, 2017. The consummation of the merger was subject to, among other things, the completion of the Qualifying Offering by February 28, 2018, the proceeds of which were expected to be used in connection with the contemplated acquisition of NeoSystems. The Company has not yet completed this offering. On March 7, 2018, we received notice of termination of the Agreement and Plan of Merger (the “NeoSystems Merger Agreement”). The stated basis of termination by NeoSystems was due to the Company’s failure to complete a Qualifying Offering, as defined in the NeoSystems Merger Agreement, by February 28, 2018. The terms of the NeoSystems Merger Agreement provide that upon termination, the Company is required to pay certain fees and expenses of legal counsel, financial advisors, investment bankers and accountants, which shall not exceed in the aggregate $450,000. The Company reserves all rights under applicable law with respect to the NeoSystems Merger Agreement. OpenALPR On September 17, 2018, the Company entered into a Letter of Intent with OpenALPR which sets forth the parties’ intent to consummate a transaction pursuant to which the Company will acquire the assets of OpenALPR. The consideration for the transaction will be approximately $15 million, comprised of cash, or cash and the Company’s common stock (up to $5,000,000 based on a price per share of $5.00), at the election of OpenALPR. OpenALPR is a privately-held Boston, Massachusetts-based company that provides automated license plate reader (ALPR) technology used by both law enforcement and commercial clients. This transaction is subject to closing conditions, including satisfactory completion of due diligence, entry into definitive agreements, and consummation of a financing transaction. The Company contemplates closing the transaction on or before February 28, 2019.

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