Leases

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Leases

6. Leases

The Company leases its office and warehouse facilities in Boynton Beach, Florida under a long-term non-cancellable lease agreement, which contains renewal options and rent escalation clauses. A $235,000 security deposit was paid in 2002, which was refunded ratably on an annual basis over the first three years of the lease term beginning on the last day of the first lease year, provided there has been no Event of Default, as defined, by the Company. Of this amount, $66,667 was paid to the Company in November 2003, January 2005 and January 2006, respectively. As of December 31, 2011, $34,970 is included in noncurrent assets in the accompanying consolidated balance sheet. During 2008, this lease was renewed effective August 1, 2008 and expires July 31, 2013 and contains an annual increase of 3%. During June 2009, an amendment to the lease agreement was reached, temporarily reducing the monthly rent. The total minimum lease payments over the term of the lease were reduced from an aggregate of approximately $956,000 to approximately $925,000, or approximately 3%.

The Company leased a condominium in Ocean Ridge, Florida to provide accommodations for Company use, primarily for Mr. Kevin Kroger, the Company’s Chief Operating Officer. The lease, which expired on December 31, 2009, had an annual expense of $6,750, in 2011 the lease was renewed until December, 2012 at the same annual expense.

Rent expense under all operating leases for the years ended December 31, 2011 and 2010 totaled $315,185 and $315,555, respectively, of which $242,666 and $242,957 is included in cost of products sold and approximately $72,519 and $72,598 is included in selling and administrative costs, respectively, in the accompanying consolidated statements of operations.

In May 2007 and August 2011, the Company entered into capital lease obligations for the purchase of $8,525 and $13,681, respectively of office equipment, which is included in property and equipment, net of $7,815 and $1,140, respectively, of accumulated depreciation, in the accompanying consolidated balance sheet.

Future minimum lease commitments due for facilities and equipment leases under non-cancellable capital and operating leases at December 31, 2011 are as follows:

	Capital Leases			Operating Leases
2012	$	4,646		$	197,812
2013		4,646			117,383
2014		4,646			—
2015		3,092			—
2016 and thereafter		—			—
Total minimum lease payments		17,030		$	315,195
Less amount representing interest		(4,188	)
Present value of minimum lease payments	$	12,842