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Note 9 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

NOTE 9 — Commitments and Contingencies

Operating Lease Obligations

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 1^st of each year. The Company recognizes operating lease expense on a straight-line basis over the lease term. The operating lease expense was $103,208 and $309,625 for the three and nine-month periods ended September 30, 2019 and 2018, respectively.

Cash payments included in the measurement of our operating lease liabilities were $117,268 and $342,785 for the three and nine-month periods ended September 30, 2019, respectively, compared to $112,758 and $329,601, respectively, for the same periods a year ago.

Future minimum lease payments under the operating lease at September 30, 2019 are as shown below:

Annual minimum payments:		Amount
	2019 (October 1, 2019 to December 31, 2019)	$	117,268
	2020		478,455
	2021		497,594
	2022 (through June 30, 2022)		253,675
	Total minimum payments	$	1,346,992

Financing Lease Obligations

The new standard, ASU 2016-02 classifies lessee leases into two types, operating and finance. The Company leases certain of its equipment under finance leases. These leases are collateralized by their underlying assets. At September 30, 2019 and December 31, 2018, equipment with a cost of $100,584 was subject to such financing arrangements. The accumulated depreciation of the assets associated with the financing leases as of September 30, 2019 and December 31, 2018, amounted to $88,565 and $76,546 respectively.

Future minimum payments under financing lease and equipment financing arrangements as of September 30, 2019 are as follows:

Annual minimum payments:	Amount
2019 (October 1, 2019 to December 31, 2019)	$	4,227
2020		8,455
Total minimum payments		12,682
Less amount representing interest		(350	)
Present value of net minimum payments		12,332
Short term portion of financing leases		(12,332	)
Long term portion of financing leases	$	—

Purchase Commitments

As of September 30, 2019, the Company has non-cancelable purchase commitments for inventory to be used in the ordinary course of business of approximately $3,758,000.

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.