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11. Commitments
 12 Months Ended
Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]  
11. 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 the Company to pay utilities, insurance, taxes and other operating expenses. Lease expense under operating leases totaled $621,000 and $581,000 in 2014 and 2013, 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		 
2015  $722,000 
2016   734,000 
2017   710,000 
2018   582,000 
Total  $2,748,000 

 

Sublease

 

In February 2013, the Company began subleasing approximately 2,700 square feet of its office space. The term of the sublease expired in July 2014. The tenants did not renew the sublease at the end of its term. Total sublease income for the year ended December 31, 2014 was approximately $31,000.

 

Capital Leases

 

As of December 31, 2014 and 2013, property held under current capital leases was as follows:

 

   For the Years Ended 
   December 31, 
   2014   2013 
Office equipment  $84,000   $84,000 
Accumulated depreciation   (41,000)   (21,000)
Total  $43,000   $63,000 

 

Total depreciation expense under capital leases was $20,000 and $83,000 for the years ended December 31, 2014 and 2013, respectively.

 

As of December 31, 2014, future minimum payments under all capital leases are as follows:

 

Years Ending December 31,  Lease
Payment		 
2015  $32,000 
2016   24,000 
2017   7,000 
Total minimum payments   63,000 
Less amounts representing interest   (5,000)
Present value of net minimum payments   58,000 
Less current portion   (28,000)
Long-term capital lease obligations  $30,000 

 

Notes Payable

 

In May 2013, the Company entered into a financing agreement with a lender under which the Company may borrow up to $500,000 to purchase certain equipment. Over time, the lender has increased the maximum amount the Company may borrow, and as of December 31, 2014, the maximum amount was $9,853,000. The Company may borrow up to the maximum amount in tranches as needed. Each tranche bears interest at 8.32% per annum. With respect to the first $1,000,000 in the aggregate borrowed, principal and interest payments are due in 36 equal monthly installments. With respect to amounts borrowed in excess of the first $1,000,000 in the aggregate, the first monthly payment will be equal to 24% of the principal amount outstanding, and the remaining principal and interest due are payable in 35 equal monthly installments. The Company granted the lender a first security interest in the equipment purchased with the funds borrowed. Through December 31, 2014, the Company borrowed approximately $7,652,000 of the $9,853,000 maximum amount available. As of December 31, 2014, $5,319,000 remained outstanding, which reflects payments made through December 31, 2014.

 

In July 2011, the Company entered into an equipment financing agreement with a bank in the amount of $123,000 plus 5.85% interest per annum, which was recorded in short-term and long-term notes payable on the accompanying consolidated balance sheet. The amounts borrowed were used to finance certain equipment purchases and other services related to the relocation of the Company’s Carlsbad, California office. The amount was collateralized by a first priority security interest in the equipment purchased. The amount borrowed was payable over a 36 month period in equal payments of $3,705, which included interest, until fully paid in August 2014. As of December 31, 2014, this note payable was paid in full.

  

Future minimum payments under notes payable as of December 31, 2014 are as follows:

 

Years Ending December 31,  Payment 
2015  $2,525,000 
2016   2,253,000 
2017   1,103,000 
2018   4,000 
Thereafter   – 
Total minimum payments   5,885,000 
Less amounts representing interest   (566,000)
Total notes payable   5,319,000 
Less current portion   (2,176,000)
Long-term portion  $3,143,000 

 

Interest expense related to notes payable for the years ended December 31, 2014 and 2013 was $210,000 and $9,000, respectively.