COMMITMENTS AND CONTINGENT LIABILITIES

12 Months Ended

Dec. 31, 2015

COMMITMENTS AND CONTINGENT LIABILITIES [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

NOTE 5 - COMMITMENTS AND CONTINGENT LIABILITIES

R&D GRANTS:

During the year 2007 through year 2010, the Company received governmental research and development grants of approximately $1,905 from the Office of the Chief Scientist of Israel, or the OCS. Of this amount, a total of $1,800 was received in connection with the research and development of the Company’s RFID product, which the Company discontinued in November 2010. The remaining $105 was allocated to the Company’s ScanSure line of products. This royalties-bearing research and development grants partially covered the Company’s research and development RFID project expenses. Royalties would become due to OCS only if the RFID or the ScanSure research and development projects funded by the grant were successfully commercialized and resulted in sales revenues based on the know-how developed during the RFID or the ScanSure projects. The royalty rate is 3%-4% of sales revenue based on the RFID or the ScanSure research and development projects funded by the grant, and is capped at the grant amount actually received from the OCS plus interest (total theoretical debt of $2,130).

Following the submission of the Company’s last research and development grant program report to the OCS (for the period from April 1, 2009 through March 31, 2010), and following an OCS audit in September 2010, on March 26, 2012, the Company received from the OCS a final demand to return a total amount of $84. In its demand, the OCS claimed that some of the expenses included in the last grant were not approved. The Company paid the amount to the OCS in two installments in April and May 2012.

The Company’s ScanSure products and services, developed by the Company with grant funding of $105 from the OCS, were acquired by Spectra in February 2014. At the Closing, all ScanSure products were transferred from the Company to Spectra without any restrictions or limitations whatsoever. To effectuate this transfer, the Company filed with the OCS an application complying with all applicable legal requirements that were approved by the OCS before the closing date. In addition, the Company paid the OCS $120, the initial grant of $105 off-set by royalties payments of $7, and LIBOR interest of $22  required by the OCS in connection with the transfer by Closing.