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Note 5 - Commitments and Contingencies
 12 Months Ended
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 5 — Commitments and Contingencies

 

Operating Lease

The Company leases office space under a non-cancelable operating lease that provides the Company approximately 37,100 square feet in Newark, California. The lease agreement expires on June 30, 2022. Monthly base rent increases four percent per year annually on July 1st of each year.

 

Future minimum lease payments under the operating lease at December 31, 2016 are shown below:

 

 

Annual minimum payments:   Amount
  2017     $ 425,345  
  2018       442,359  
  2019       460,053  
  2020       478,455  
  2021 to 2022       751,269  
  Total minimum payments     $ 2,557,481  

 

 

Rental expense under all operating leases for the years ended December 31, 2016 and 2015 was $435,668 and $430,648, respectively. The amount of deferred rent at December 31, 2016 and December 31, 2015 was $286,901 and $283,053, respectively.

 

Capital Lease Obligations

The Company leases certain of its equipment under capital leases. The leases are collateralized by the underlying assets. At December 31, 2016 and 2015, property and equipment with costs of $100,584 and $124,427, respectively, were subject to such financing arrangements. The accumulated depreciation of the assets associated with the capital leases as of December 31, 2016 and December 31, 2015, amounted to $20,173 and $80,150 respectively.

 

Future minimum payments under capital lease and equipment financing arrangements as of December 31, 2016 are as follows:

 

 

Annual minimum payments:   Amount
     2017   $ 30,048  
     2018     27,607  
     2019     18,635  
     2020     9,545  
     Total minimum payments     85,835  
Less amount representing interest     (6,482 )
     Present value of net minimum payments   $ 79,353  
Short term portion of capital leases     (26,663 )
Long term portion of capital leases   $ 52,690  

 

Purchase Commitments

At December 31, 2016, the Company’s non-cancelable purchase commitments for inventory to be used in the ordinary course of business during the first nine months of 2017 were approximately $2,724,000.

 

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. The Company is currently not a party to any material legal proceedings.