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12. Commitments
 12 Months Ended
Dec. 31, 2012
Commitments  
NOTE 12. Commitments

Operating Leases

 

The Company leases office and production facilities and equipment under agreements that expire at various dates through 2018. Certain leases contain renewal provisions and escalating rental clauses and generally require us to pay utilities, insurance, taxes and other operating expenses. Lease expense under operating leases totaled $579,000 and $647,000 in 2012 and 2011, respectively.

 

The estimated aggregate lease payments under operating leases for each of the five succeeding years is as follows:

  

Years Ending December 31,     Lease
Payment		  
2013     $ 686,000  
2014       693,000  
2015       710,000  
2016       687,000  
2017       624,000  
Thereafter       581,000  
  Total     $ 3,981,000  
             

  

Capital Leases

 

The Company has capital lease obligations, one of which is a $1,000,000 equipment lease facility entered into with an equipment leasing company in October 2009. The terms of this agreement allow for use of the facility for 24 months and for use of the facility in multiple tranches with each individual tranche having a 24 month term. As of December 31, 2012, the Company had utilized $743,000 of this facility, which has been accounted for as a capital lease. As of December 31, 2012, $67,000 remained outstanding for those tranches that have not yet expired under this facility. Pursuant to the terms of the agreements related to this facility, the Company has given the equipment leasing company notice of its intent to terminate each individual lease that was reaching the 24 month term as well as its intent to purchase the equipment under the expiring lease at fair market value.

 

As of December 31, 2012 and 2011, property held under current capital leases was as follows:

  

    For the Years Ended  
    December 31,  
    2012     2011  
Broadcast equipment   $ 277,000     $ 711,000  
Other equipment     69,000       148,000  
      346,000       859,000  
Accumulated depreciation     (217,000 )     (439,000 )
                 
Total   $ 129,000     $ 420,000  

  

Total depreciation expense under capital leases was $271,000 and $441,000 for the years ended December 31, 2012 and 2011, respectively.

  

As of December 31, 2012, future minimum payments under all capital leases are as follows:

 

Years Ending December 31,     Lease
Payment		  
2013     $ 111,000  
2014       26,000  
2015       26,000  
2016       20,000  
2017       6,000  
Thereafter       –  
Total minimum payments       189,000  
Less amounts representing interest       (22,000 )
Present value of net minimum payments       167,000  
Less current portion       (100,000 )
Long-term capital lease obligations     $ 67,000  
             

Note Payable

 

In July 2011, the Company entered into an equipment financing agreement with a bank in the amount of $123,000, which is recorded in other current liabilities and other liabilities in the accompanying consolidated balance sheet. The proceeds of the note payable were used to finance certain equipment purchases and other services related to the relocation of the Company’s Carlsbad, California office. The note payable bears interest at 5.85% and is collateralized by a first priority security interest in the equipment purchased with the proceeds. The Company will make 36 equal monthly payments in the amount of $3,705, which includes interest, until fully paid in August 2014. As of December 31, 2012, $70,000 remained outstanding under this financing agreement.