Annual report pursuant to Section 13 and 15(d)

9. Commitments and Contingencies

9. Commitments and Contingencies
12 Months Ended
Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
9. Commitments and Contingencies


We are involved in certain legal proceedings that arise from time to time in the ordinary course of our business. Except for income tax contingencies, we record accruals for contingencies to the extent that our management concludes that the occurrence is probable and that the related amounts of loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. There is no current or pending litigation of any significance with the exception of the matters that have arisen under, and are being handled in, the normal course of business.




On August 1, 2013, the Company entered into a non-cancellable lease at a Santa Barbara Facility with a 5-year term, expiring July 31, 2018 at a monthly rent of $6,000 as amended in February 2014. Effective May 1, 2016, the Company vacated the Santa Barbara Facility and subleased the space through the term of the master lease, terminating July 31, 2018 at $4,500 per month. The Company subsequently terminated both the master lease and sublease effective March 1, 2017.


In June 2016, the Company relocated its Santa Barbara office to an office space located at 5266 Hollister Avenue, Suite 219, Santa Barbara, CA 93111, under a twelve-month lease at a lease rate of $751 per month. The Company vacated the Hollister Avenue facility and terminated the lease in August 2017.


In April 2017, the Company relocated its headquarters to a Tomball Texas facility under a month-to-month lease at a monthly rent of $1,500.


Total rent expense during the years ended December 31, 2017 and 2016, was $20,000 and $45,000, respectively which are included as part of Operating Expenses in the attached consolidated statements of operations.


Contractual Commitments


The Company’s contractual commitments for future periods, including office leases, minimum guaranteed compensation payments and other agreements as described in the following table and associated footnotes:


Year ending December 31,     Office Lease (1)     License Agreements (2)     Compensation Agreements (3)     Total Obligations  
  2018             187,500       598,400       785,900  
  2019             187,500       149,600       337,100  
  2020             187,500             187,500  
  2021             187,500             187,500  
  2022             187,500             187,500  
  Total     $     $ 937,500     $ 748,000     $ 1,685,500  


  (1) Company moved its headquarters to Tomball Texas under a month-to-month lease.
  (2) Consists of license maintenance fees to Temple University in the amount of $187,500 paid annually through the life of the underlying patents or until otherwise terminated by either party.
  (3) Consists of base salary and certain contractually-provided benefits, to i) a former executive officer, pursuant to an severance in the amount of $580,000 that will be paid through March 31, 2019 pursuant to a separation agreement effective April 1, 2017; ii) an executive officer, pursuant to a two-year employment agreement effective April 1, 2017 at a base annual salary of $150,000 per year; and iii) an executive officer, pursuant to a two-year agreement effective April 1, 2017 at a base annual salary of $158,400 per year.