XML 47 R16.htm IDEA: XBRL DOCUMENT v2.4.0.8
Commitments and Contingencies
 9 Months Ended
Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 11 — Commitments and Contingencies

 

Operating Lease

The Company operates its headquarters under a non-cancelable operating lease which provides for the lease by the Company of approximately 37,100 square feet of space in Newark, California. On December 28, 2012, the Company amended its commercial building lease agreement to extend the term of the lease to June 30, 2022. The lease agreement specifies an increase in the monthly base rent of four percent per year annually on July 1st for the remaining term of the lease. The base rent under the facilities lease was $29,705 per month for the period from January 1, 2013 through June 30, 2013, $30,893 per month for the period from July 1, 2013 through June 30, 2014, and on July 1, 2014 the base rent increased to $32,129 per month.

 

Future minimum lease payments under all operating leases are as shown below:

 

Annual minimum payments:  Amount
 2014 (October 1, 2014 to December 31, 2014) $96,387 
 2015    393,255 
 2016    408,986 
 2017    425,345 
 2018 to 2022    2,132,136 
 Total minimum payments   $3,456,109

 

   

Rental expense under all operating leases was $107,249 and $321,717, for the three and nine month periods ended September 30, 2014, respectively. Rental expense under all operating leases for the three and nine month periods ended September 30, 2013 was $106,439 and $320,289, respectively. The amount of related deferred rent at September 30, 2014 and December 31, 2013 was $256,653 and $228,773, respectively.

 

Capital Lease Obligations

The Company leases certain of its equipment under capital leases. The leases are collateralized by the underlying assets. At September 30, 2014 and December 31, 2013, property and equipment with a cost of $87,945 were subject to such financing arrangements. Related accumulated amortization at September 30, 2014 and December 31, 2013, amounted to $44,803 and $28,898, respectively.

 

Future minimum payments under capital lease and equipment financing arrangements as of September 30, 2014, are as follows:

 

Annual minimum payments:  Amount
2014 (October 1, 2014 to December 31, 2014)   $6,883 
2015   27,531 
2016   12,449 
     Total minimum payments    46,863 
Less amount representing interest    (3,720)
     Present value of net minimum payments    43,143 
Short term portion of capital leases    (24,538)
Long term portion of capital leases   $18,605

 

 

Purchase Commitments

As of September 30, 2014, the Company has non-cancelable purchase commitments for inventory to be used in the ordinary course of business of approximately $2,360,000.

 

Legal Matters

The Company is subject to disputes, claims, requests for indemnification and lawsuits arising in the ordinary course of business. Under the indemnification provisions of the Company’s customer agreements, the Company routinely agrees to indemnify and defend its customers against infringement of any patent, trademark, copyright, trade secrets, or other intellectual property rights arising from customers’ legal use of the Company’s products or services. The exposure to the Company under these indemnification provisions is generally limited to the total amount paid for the indemnified products. However, certain indemnification provisions potentially expose the Company to losses in excess of the aggregate amount received from the customer. To date, there have been no claims against the Company by its customers pertaining to such indemnification provisions, and no amounts have been recorded.