XML 33 R17.htm IDEA: XBRL DOCUMENT v3.2.0.727
Related Party Transactions
6 Months Ended
Jun. 30, 2015
Related Party Transactions [Abstract]  
Related Party Transactions

11. RELATED PARTY TRANSACTIONS

 

Mobilisa leases office space from an entity that is wholly-owned by two former directors, who are also former members of management. The Company entered into a 10-year lease for the office space ending in 2017. The annual rent for this facility is currently $85,498 and is subject to annual increases based on the increase in the CPI index plus 1%. The Company is a guarantor of the leased property. For the three and six months ended June 30, 2015, total rental payments for this office space were $23,710 and $47,012, respectively. For both the three and six months ended June 30, 2014, total rental payments for this office space were $22,075 and $44,150, respectively.

 

On September 30, 2014, the CEO and a Senior Vice President (collectively, the “Executives”), who were also board members, retired from the Company and simultaneously resigned from the board of directors. In connection with the separation, the Company entered into a separation and consulting agreement with the Executives. Included as part of the arrangement, the Company committed to payments totaling $587,500 to be made over a period of 15 months. In exchange for the consideration, the Executives agreed not to compete with the Company, solicit any employee, contractor or consultant of the Company to terminate employment or contractual relationship with the Company, as well refrain from other activities, as defined in the agreement. There is a renewal option contained in each agreement, which must be mutually agreed by for an additional nine month period commencing on January 1, 2016 in exchange for monthly payments of $27,500. At September 30, 2014, the Company recorded the future payments of the agreement as a liability and as a non-compete intangible asset totaling $587,500. The costs of the non-compete will be amortized over the 15 month term of the agreement. For the three and six months ended June 30, 2015, amortization expense recognized was $117,500 and $235,000, respectively. The Company made payments under this agreement of $87,500 on October 1, 2014 and monthly payments of $27,500 in October, November and December 2014. The Company also made a payment of $87,500 on January 1, 2015 and monthly payments of $27,500 in each of the six months from January 2015 through June 2015 and will make six monthly payments of $27,500 beginning on July 1, 2015 as a result of entering into the agreements with the Executives.