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6. Commitments and Contingencies

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

6. Commitments and Contingencies

Operating Leases

The Company, through its subsidiaries, has non-cancelable operating leases for office space in Cupertino and India. Future minimum operating lease payments as of September 30, 2015 are as follows:

Twelve months ended September 30,		Future Rent Payments
2016		$	443
2017			458
2018			475
2019			491
2020			335
Total		$	2,202

For the three months ended September 30, 2015 and 2014, the Company recognized lease and rent expense of $134 thousand and $108 thousand, respectively, under existing operating leases. For the nine months ended September 30, 2015 and 2014, the Company recognized lease and rent expense of $356 thousand and $320 thousand, respectively, under existing operating leases.

Legal Proceedings

On March 10, 2011, UBPL received a demand notice from the State Bank of India under the Agreement of Loan for Overall Limit dated as of June 26, 2008. The notice informed UBPL that an event of default had occurred for failure to make an installment payment on the loan commencing June 2009 and demanded repayment of the entire outstanding indebtedness of 19.60 crore rupees (approximately $3.2 million) together with all accrued interest thereon and any applicable fees and expenses. Upon the occurrence and during the continuance of an Event of Default, interest accrues at the default interest rate of 2% above the State Bank of India Advance Rate. The default period began on July 1, 2009 when the principal payment was deemed past due; and we have accrued interest at the default rate since the beginning of the default period. On August 22, 2015, UBPL received from the State Bank of India, a One Time Settlement Sanction Letter allowing for, among other things, four payments over a 360 day period amounting to $4.3 million, an interest rate holiday for 15 days after which the interest rate is payable at 13.7% per annum, and certain releases by both parties. Upon performance under the agreement, including the payment of all stipulated amounts, UBPL will receive relief for prior accrued interest in the amount of approximately $2.1 million.

On August 4, 2013, GS Cleantech Corporation, a subsidiary of Greenshift Corporation (“Greenshift”), filed a complaint in the United States District Court for the Eastern District of California – Fresno Division against the Company and its subsidiary, AAFK. The case was transferred to the Southern District of Indiana and joined to a pending Multidistrict Litigation. The complaint alleges infringement of patent rights assigned to Greenshift and pertaining to corn oil extraction processes the Company employs, and seeks royalties, treble damages, attorney’s fees, and injunctions precluding the Company from further infringement. The corn oil extraction process we use is licensed to us by Valicor Separation Technologies LLC. Valicor has no obligations to indemnify us. On October 23, 2014, the Court ruled that all the claims of all the patents at issue in the case are invalid and, therefore, not infringed and adopted this finding in our case on January 16, 2015. GS Cleantech has said it will appeal this decision when the remaining claim in the suit has been decided. We believe the likelihood of Greenshift succeeding on appeal of the invalidity findings is small since the Court’s findings included several grounds for invalidity of each allegedly infringed patent. If Greenshift successfully appeals the findings of invalidity, damages may be $1 million or more. The only remaining claim in the suit alleges that GS Cleantech obtained the patents at issue by inequitably conducting itself before the United States Patent Office. A trial in the District Court for the Southern District of Indiana on that issue was concluded and awaits judicial decision. If the patents at issue are found invalid due to GS Cleantech’s inequitable conduct, it would receive no damage award. If the Court determines this is an “exceptional case” it may award the Company and its subsidiary the attorneys’ fees expended to date for defense in this case. It is unknown whether GS Cleantech would appeal such a ruling.

The Company is a named defendant in the lawsuit filed by Gibraltar SSI, LLC. In addition to the Company, the lawsuit names McAfee Capital, LLC, P2 Capital, LLC, Eric McAfee and Marguerite McAfee as defendants. Plaintiff Gibraltar SSI, LLC alleges causes of action for fraudulent conveyances and related claims alleging that the Company participated in a scheme to issue at least 6 million shares of Company stock to McAfee Capital without consideration and so as to put the shares outside the reach of Gibraltar, SSI. The lawsuit alleges damages of “over $6.5 million.” This lawsuit was filed in April 2014 but was not pursued by Gibraltar and was effectively dormant until this quarter. The allegations are vigorously disputed by the Company.