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On
June 8, 2017, the Company and Florida Precision Aerospace, Inc. (FPA), its wholly owned subsidiary, completed the Technology Purchase
Agreement dated March 13, 2017 with Schlumberger Technology Corporation, a Texas corporation,
Schlumberger
Canada Limited, a Canadian entity, and Schlumberger B.V., an entity organized under the laws of the Netherlands (collectively,
(“Schlumberger”). At closing, the Company sold its intellectual property (the “Purchased Intellectual Property”),
substantially consisting of the Company’s Voraxial patents, marks, software and copyrights, to Schlumberger in consideration
of up to $4,000,000, of which $3,000,000 was paid to the Company at closing and $1,000,000 was payable upon the satisfaction of
the following conditions: (i) the complete transfer of the Purchased Intellectually Property to Schlumberger; and (ii) the provision
to transfer information, assets and services to Schlumberger. The Company recognized a gain on the sale of its intellectual property
of $3,000,000, less direct cost of $80,000. In August 2018, The Company satisfied the conditions and the remaining $1,000,000 was
received and recognized as revenue during the three months ended September 30, 2018. The Company’s cost of goods increased
to $499,546 for the three months ended September 30, 2018 as compared to $0 for the three months ended September 30, 2017, directly
related to the increase in revenues.
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