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Commitments and Contingencies
 9 Months Ended
Sep. 30, 2014
Commitments and Contingencies [Abstract]  
Commitments and Contingencies

8.        Commitments and Contingencies

 

Leases

 

The Company leases a plant in Kentucky under an operating lease which expires May 31, 2016. Future minimum base rental payments required under the lease are as follows:

 

Year ending December 31   
    
2014 (3 months) $10,546 
2015  42,187 
2016  17,578 
Total $70,311 

 

Monthly base rental payments approximate $3,400. The lease agreement also provides for additional rents based on increases in building operating costs and real estate taxes. Rent expense for the three month periods ended September 30, 2014 and 2013, was $15,286 and $16,619, respectively. Rent expense for the nine month periods ended September 30, 2014 and 2013, was $42,110 and $35,179, respectively.

 

Employment and Consulting Agreements

 

The Company has entered into various agreements with officers, directors, employees and consultants that expire in one to five years. The agreements provide for annual compensation of up to $145,000 and the issuance of stock options, at exercise prices ranging from $0.20 to $5.00, underlying 8,875,000 shares of common stock issuable upon the Company’s revenue exceeding amounts ranging from $2,000,000 to $100,000,000, as defined. In addition, the agreements provide for bonus compensation to these individuals aggregating 16.5 percent of the Company’s pretax income.

 

Legal Matters

 

In the normal course of business operations the Company may become involved in various legal matters. At September 30, 2014, the Company’s management does not believe that there are any potential legal matters that could have an adverse effect on the Company’s financial position.

 

In October 2013, the Company agreed to a judgment against the estate of a former officer and related individuals. The parties subsequently reached a settlement in the amount of $210,000 which was recorded as revenue by the Company during the year ended December 31, 2013. The Company collected $78,000 prior to December 31, 2013 and the $132,000 balance was collected by the Company during the three months ended March 31, 2014.

 

In November 2009, the Company entered into a settlement agreement to resolve all aspects of litigation relating to a patent suit. As part of that settlement agreement, the Company received $440,000 as reimbursement for litigation costs. The Company also was awarded $200,000 in eight installments of $25,000 every six months beginning on January 15, 2011, in return for an exclusive patent license. The term of the license agreement is consistent with the term of the $25,000 semiannual payments. The $25,000 installments have been recorded as revenue upon receipt of the funds. The Company received the final installment during the three months ended September 30, 2014.