Commitments and Contingencies |
12 Months Ended | |||||||||||
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Dec. 31, 2017 | ||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||
| Commitments and Contingencies |
Note 13 — Commitments and Contingencies
Lease
The Company entered into a lease for 14,782 square feet of office and laboratory space located in Austin, Texas. The triple net lease has a term of 48 months and commenced on June 1, 2014. The annual base rent in the first year of the lease was $154,324 and increases by $3,548 in each succeeding year of the lease. In addition, the Company is required to pay its proportionate share of operating costs for the building.
At December 31, 2017, the remaining annual base rent commitments under the lease is as follows:
Rent expense incurred for the years ended December 31, 2017 and 2016 amounted to $234,160 and $224,308 respectively.
License Agreement In 2015, the Company entered into licensing agreements which expire on February 7, 2033. Per the agreements, the Company has an exclusive royalty-free license associated with semiconductor power switches which enhances its intellectual property portfolio. The agreements include both fixed and variable payments. The variable payments are a function of the number of associated patent filings pending and patents issued under the agreements. The Company will pay $10,000 for each patent filing pending and $20,000 for each patent issued within 20 days of December 21st of each year of the agreement, up to a maximum of $100,000 per year (i.e. five issued patents).
Through December 31, 2017, two patents associated with the agreements were issued. At December 31, 2017 and 2016, the corresponding long-term liability for the estimated present value of future payments under the licensing agreement was $456,234 and $265,418, respectively. The Company is accruing interest for future payments related to the issued patents associated with the agreement. This long-term liability incurred in connection with these patent issuances is a non-cash investing activity with regard to the Company’s statements of cash flows.
Legal Proceedings
On May 17, 2017, the Company provided Libra Industries, Inc. (Libra), its prior contract manufacturer, notice that it was in breach of the Master Supply Agreement (MSA) between the parties. On May 19, 2017, the Company received notice from Libra that the Company was allegedly in breach of the MSA. On June 23, 2017, the Company received a Notice of Arbitration from Libra alleging claims against the Company and demanding recovery for alleged damages. On July 13, 2017, the Company responded to Libra with a Notice of Defense and Counterclaim. The arbitration is governed in accordance with the CPR International Institute for Conflict Prevention and Resolution Rules for Non-Administered Arbitration by a sole arbitrator and the parties agreed on an arbitrator in August 2017. On January 11, 2018, the Company deposed representatives of Libra. On March 7, 2018 and March 8, 2018, Libra deposed representatives of the Company. The arbitration hearing is scheduled for April 23, 2018 to April 25, 2018 in Travis County, Texas. At this time, the Company is unable to estimate the possible loss, if any, associated with this proceeding. At December 31,2017, the Company recorded a $100,000 accrual based on a settlement offer made by the Company to Libra. This charge is reflected within the general and administrative line item of the statement of operations.
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