Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

Commitments and Contingencies
6 Months Ended
Jun. 30, 2013
Commitments and Contingencies [Text Block]

Note 6. Commitments and Contingencies

Employment Agreements

     We have employment agreements with our executive officers and some consultants, the terms of which expire at various times. Such agreements provide for minimum compensation levels, as well as incentive bonuses that are payable if specified management goals are attained. Under each of the agreements, in the event the officer’s employment is terminated (other than voluntarily by the officer or by us for cause, or upon the death of the officer), if all provisions of the employment agreements are met, we are committed to pay certain benefits, including specified monthly severance.

Operating Leases

     We entered into an agreement to lease office space under the terms of a sublease with a term of 65 months commencing August 1, 2008. Under the terms of the sublease, the lease payments are inclusive of pass-through costs. We are not charged additional amounts for real estate taxes and standard operating expenses. We paid the security deposit related to this sublease agreement in the amount of approximately $120,000 (security deposit balance approximately $40,000 at June 30, 2013). We pay monthly rental fees in the amount of approximately $49,000 in accordance with the sublease agreement plus parking fees. The monthly straight-line rental expense from August 1, 2008 to December 1, 2013, is approximately $45,000. As a result of the straight-line rent calculation generated by the one free rent period and rent escalation, we have recorded in accrued liabilities a deferred rent credit of approximately $22,000 and $33,000 at June 30, 2013 and December 31, 2012, respectively. Total rent expense was approximately $0.2 million for each of the three months periods ended June 30, 2013 and 2012 and approximately $0.4 million for each of the six months periods ended June 30, 2013 and 2012.

Estimated annual minimum rental payments (in millions) under our operating leases are as follows:

Year ending - December 31, 2013 $ 0.4  
Total minimum lease payments $ 0.4