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14. Legal Proceeding
12 Months Ended
Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]  
14. Legal Proceeding

 

Note 14. Legal Proceedings

 

SmartCard Marketing Systems, Inc.

 

As previously disclosed in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed with the Securities and Exchange Commission on November 14, 2012, the Company’s wholly-owned subsidiary, FiCentive, Inc. commenced legal action against its former customer, SmartCard Marketing Systems, Inc., in the 57th Judicial District Court of Bexar County, Texas on September 17, 2012. In the complaint, the Company alleged, among other things, that SmartCard Marketing Systems breached the terms of the sales agreement executed by the parties. The Company sought to recover economic damages of approximately $72,000 and attorneys’ fees.

 

On November 25, 2012, FiCentive entered into a confidential compromise settlement agreement and full and final release with SmartCard Marketing Systems (the “Settlement Agreement”). Under the terms of the Settlement Agreement, SmartCard Marketing Systems agreed to pay FiCentive the sum of $35,000 in immediately available funds on or before November 27, 2012. On November 27, 2012, FiCentive received the payment of $35,000.

Additionally, pursuant to the terms of the Settlement Agreement, SmartCard Marketing Systems agreed to issue 500,000 unrestricted shares of its common stock to the Company by December 20, 2012. Upon receipt of both the payment of $35,000 and the receipt of the 500,000 unrestricted common stock shares, FiCentive has agreed to dismiss the pending litigation filed on September 17, 2012 in the 57th Judicial District Court of Bexar County, Texas, with prejudice. The terms of the Settlement Agreement allowed us to declare Smart Card Marketing Systems in breach of the Settlement Agreement, without notice and/or an opportunity to cure, and to proceed with the lawsuit if the $35,000 payment or the 500,000 unrestricted common stock shares were not paid, not delivered, not paid timely, returned or recalled by SmartCard Marketing Systems, their representatives, their transfer agent, or their financial institution.

 

On December 17, 2012, the 500,000 unrestricted common stock shares of SmartCard Marketing Systems were tendered to the Company. On that same date, pursuant to the terms of the Settlement Agreement, FiCentive dismissed the pending litigation filed in the 57th Judicial District Court of Bexar County, Texas, with prejudice.