Quarterly report pursuant to Section 13 or 15(d)

COMMITMENTS

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COMMITMENTS
3 Months Ended
Mar. 31, 2017
Notes to Financial Statements  
COMMITMENTS

Operating Leases

 

Office Space

 

The Company pays TAG Aviation, a company owned by its Chief Executive Officer, Jarrett Gorlin (“Mr. Gorlin”) for office space that is currently being used as the Company’s principal business location plus utilities cost (see “Related Party Transactions”) on a monthly basis. Base annual rent is $2,147 per month. Rent expense and utilities cost paid to TAG Aviation amounted to approximately $6,300 and $7,500 for the three months ended March 31, 2017 and 2016, respectively.

 

On July 8, 2015, the Company entered into a 3 year lease agreement for a commercial building which commenced on August 1, 2015. Base rent for the three months ended March 31, 2017 was $2,849 per month. Total lease expense for the three months ended March 31, 2017 and 2016 was approximately $8,550 and $8,250, respectively, related to this lease. Future minimum lease payments under this rental agreement are approximately as follows:

 

For the year ending:

 

December 31, 2017   $ 26,000  
December 31, 2018     21,000  
    $ 47,000  

 

Equipment

 

The Company entered into a non-cancelable 36 month operating lease agreement for equipment on April 22, 2015. The agreement is renewable at the end of the term and requires the Company to maintain comprehensive liability insurance. Total lease expense was approximately $700 for the three months ended March 31, 2017 and 2016.

 

Future minimum lease payments under this operating lease agreement are approximately as follows:

 

For the year ending:

 

December 31, 2017   $ 2,000  
December 31, 2018     800  
    $ 2,800  

  

Purchase Orders

 

For the three months ended March 31, 2017, the Company had approximately $130,000 in outstanding purchase order obligations related to the build of the DenerveX System to Nortech and Bovie Medical Corporation (“Bovie”).

 

Consulting Agreements

 

In January 2017, the consulting agreement with one of the Company’s founding stockholders to provide business development consulting services was modified from $5,000 per month to $10,000 per month and extended through January 2018.

 

Employment Agreements

 

The Company has Employment Agreements with each of its five executive officers for aggregate compensation amounting to approximately $994,000 per annum, plus customary benefits. These employment agreements, having commenced at separate dates, are for terms of three years which began in October 2013 and end in January 2018.

 

Generator development agreement

 

The Company is obligated to reimburse Bovie up to $295,000 for the development of the Pro40 electrocautery generator. For the three months ended March 31, 2017 and 2016, the Company paid approximately $31,000 and $0, respectively, under this agreement. Through March 31, 2017, we have paid approximately $420,000 to Bovie.