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COMMITMENTS AND CONTINGENCIES
 12 Months Ended
Dec. 31, 2012
Legal Matters and Contingencies [Abstract]  
Commitments and Contingencies Disclosure [Text Block]
11. COMMITMENTS AND CONTINGENCIES

 

Operating Leases

 

The Company has entered into various leases for office space. The Company leases offices in New York, Virginia and Washington states. Those leases expire in March, 2018, January, 2015, and July, 2017, respectively. The Washington office is owned by a related party and is discussed in Note 12. Future minimum lease payments under these lease agreements are as follows for the years ended December 31:

  

2013   $ 506,067  
2014     519,748  
2015     406,248  
2016     405,297  
2017     377,153  
Thereafter     82,327  
Total   $ 2,296,840  

 

Rent expense for the years ended December 31, 2012 and 2011 amounted to $534,047 and $581,546, respectively.

 

Royalty and License Agreements

 

The Company entered into an agreement with a former officer of the Company during 1996 to license certain software. The agreement stipulated, among other provisions, that the officer would receive royalties equal to a percentage of the Company’s gross sales. This agreement was terminated in May 1999 and was superseded by a new agreement which calls for payment of royalties of .005% on gross sales from $2,000,000 to $52,000,000 and .0025% on gross sales in excess of $52,000,000 pertaining to those patents on which Mr. Messina was identified as an inventor. As of December 31, 2012, total fees paid under this agreement amounted to approximately $1,367.

 

Consulting Agreements

 

In March 2009, the Company entered into an agreement with an investor relations firm. The engagement period was for twelve months commencing March 16, 2009. In exchange for its services, the Company paid the firm $13,500 per month for the first 24 months of the agreement. In addition, each month for the first 24 months of the agreement, the Company delivered to the investor relations firm 10,417 shares of restricted stock. The stock is restricted from sale for a period of two years from the date of grant.

 

The agreement is automatically renewed for successive twelve month periods unless either party gives written notice no later than 30 days prior to the expiration period. Afterwards, the fee may be subject to change by mutual agreement of the parties.

 

As of April 11, 2011, the fee was reduced to $10,000 per month. No additional shares were issued after February 2011.

 

Legal Proceedings

 

The Company is not aware of any infringement by our products or technology on the proprietary rights of others.

 

The Company is not currently involved in any legal or regulatory proceeding, or arbitration, the outcome of which is expected to have a material adverse effect on its business.

 

Severance and Change-in-Control Agreements

 

On November 16, 2010, the Company entered into an Executive Severance Agreement with Mr. Mundy, the Company’s former Chief Financial Officer. Under the agreement, if Mr. Mundy was terminated without cause, if he resigned with “good reason” (as defined in the agreement), or if he was terminated as a result of a change of control, he would have been entitled to 1.99 years of his then base salary, a gross amount equal to any quarterly bonus target applicable during the quarter, accelerated vesting of all outstanding stock options and coverage of health benefits for a period of up to 12 months. The agreement had a term of two years. On April 1, 2012, Mr. Mundy resigned from the Company. In lieu of the above mentioned agreement, the Company entered into a consulting agreement with Mr. Mundy which had a term of nine months at $15,250 per month. The final payment was made pursuant to this agreement on January 4, 2013.

 

401(k) Plan

 

The Company has a retirement savings 401(k) plan. The plan permits eligible employees to make voluntary contributions to a trust, up to a maximum of 35% of compensation, subject to certain limitations. The Company has elected to contribute a matching contribution equal to 50% of the first 6% of an eligible employee’s deferral election. The Company may also make discretionary contributions, subject to certain conditions, as defined in the plan. The Company’s matching contributions were $52,972 and $48,494 for 2012 and 2011, respectively.