XML 46 R15.htm IDEA: XBRL DOCUMENT v2.4.1.9
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2014
Commitments and Contingencies [Abstract]  
Commitments and Contingencies
9. 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		      
  2015   $ 42,187  
  2016     17,578  
  Total   $ 59,765  

 

Monthly base rental payments approximate $3,500. The lease agreement also provides for additional rents based on increases in building operating costs and real estate taxes. Rent expense for the years ended December 31, 2014 and 2013, was $52,301 and $55,430, 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 9,375,000 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 up to 15% (with no individual having more than 5%) 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 December 31, 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, and in March 2014, a settlement was reached with these parties in the amount of $386,000. Legal settlement proceeds of $210,000, net of related legal costs of $176,000 (see note 10), are recorded in the accompanying statement of operations for the year ended December 31, 2013. During the year ended December 31, 2013, the Company received net proceeds of $78,000 and the balance, $132,000 net of related legal costs, is recorded as legal settlement proceeds receivable in the accompanying balance sheet as of December 31, 2013. The Company received the balance due at December 31, 2013, $132,000 net of related legal costs, in March 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 2014.