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SUBSEQUENT EVENTS
9 Months Ended
Mar. 31, 2012
Subsequent Events [Abstract]  
Subsequent Events [Text Block]

17.  SUBSEQUENT EVENTS

 

On April 18, 2012, the Company borrowed $50,000.  The convertible promissory note bears interest at 5% per annum and matures on October 17, 2013.  The Company has the option to pay the interest with its common stock at the closing bid price immediately prior to the due date.  The investor has the option to convert the promissory note into shares of common stock at the closing bid price immediately prior to the conversion date.  In addition, the Company has the option to convert the promissory note into shares of common stock at the closing bid price 30 days prior to the maturity date if the price per share is at least $0.01. The Company also issued the investor a five-year warrant to purchase 500,000 shares of common stock at an exercise price of $0.01 per share.  The warrant includes a cashless net exercise provision and has piggyback registration rights for the shares of common stock underlying the warrant and the shares of common stock issuable pursuant to the note.    

 

On April 24, 2012, the Company received the $5,000,000 payment pursuant to the Settlement Agreement between the Company and EOIR Holdings LLC dated October 26, 2009, upon EOIR Technologies, Inc. being awarded a contract under the Warrior Enabling Broad Sensor Services Indefinite Delivery Indefinite Quantity (ID/IQ) contract.    The Board of Directors of the Company had declared, as a return of capital distribution to its shareholders of record as of January 25, 2011, one (1) CVR for each share of the Company’s common stock outstanding as of such record date, which entitled the holders thereof to receive a pro rata share of the payment received by the Company pursuant to the Settlement Agreement, less certain expenses that were deducted from such payment. On May 8, 2012, the holders of the CVRs received a payment of $0.103739 per CVR as a return of capital distribution.

 

The terms and conditions of the CVRs are set forth in the Contingent Value Rights Agreement dated as of January 13, 2011 (the “CVR Agreement”), by and between Technest Holdings, Inc. and Mellon Investor Services LLC (“Mellon”) filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2011.  Please note that, effective as of February 1, 2011, Continental Stock Transfer & Trust Company (“Continental”) was appointed as the successor agent, replacing Mellon as the agent for the CVRs pursuant to the CVR Agreement.  The foregoing is only a summary and is qualified in its entirety by the CVR Agreement.

 

 There were no other subsequent events that required recognition or disclosure in the financial statements.