10-Q (Filed: 09-04-2009)

Crossflo

On September 1, 2008, we acquired all of the outstanding shares of Crossflo. The results of Crossflo’s operations have been included in our condensed consolidated financial statements since that date. Crossflo markets data sharing services and products primarily to the public safety/government sector. Crossflo’s flagship product is the Crossflo DataExchange (“CDX”). CDX is a commercial off-the-shelf middleware designed for interagency and cross-domain data sharing which allows end users to selectively share information and rapidly connect disparate data sources across multiple platforms. Crossflo is expected to be a leading provider of data sharing solutions for the markets it targets.

The aggregate purchase price was $10,257,604, including $2,850,790 of cash, $824,600 of convertible notes and common stock valued at $6,582,214. The value of the 26,988,455 shares issued was based on the average closing price of our common stock on the Electronic Bulletin Board as reported by NASDAQ over the ten trading days immediately preceding September 1, 2008.

…..The terms of the merger agreement provided that additional purchase consideration of 2,844,630 shares of our common stock (“Escrow Shares”) be deposited with a third party escrow agent. Per the Escrow Agreement, one year following the closing date, the Escrow Shares shall be disbursed first to: Patriot to cover transaction expenses incurred in excess of estimated transaction expenses at closing and for damages incurred as a result of any breach of Crossflo’s representations, warranties and covenants made at closing, next to Crossflo stockholders in accordance with terms of the Escrow Agreement, lastly any shares remaining in the account shall be returned to Patriot. In the event that there is not an adequate number of shares remaining in the escrow account one year from closing to satisfy distribution to Crossflo stockholders in accordance with the terms of the Escrow Agreement, Patriot is required to make up any difference in cash.