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COMMITMENTS AND CONTINGENCIES
12 Months Ended
Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]  
NOTE 8 - COMMITMENTS AND CONTINGENCIES

The Company has entered in a number of consulting agreements with various consultants. Termination of these agreements could result in termination fees.

 

The Company leases its office in Irvine, California on a one-year lease. Total rent expense related to operating leases for the year ended December 31, 2012 was approximately $33,000. Total remaining payments on the lease through July 31, 2013 are approximately $19,000. 

 

The Company maintains employment agreements with certain key management. The agreements provide for minimum base salaries, eligibility for stock options, performance bonuses and severance payments.

 

Legal Proceedings

 

From time to time, claims are made against the Company in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur. In the opinion of management, the resolution of these matters, if any, will not have a material adverse impact on the Company’s financial position or results of operations.

 

As of December 31, 2012, the Company was involved in the following significant legal proceedings:

 

On July 1, 2011, a lawsuit was filed in the United States District Court, the Southern District of Ohio, Cincinnati Division, against GT Beverage Company, LLC (“GT LLC”) by Dominion Liquid Technologies, LLC. The lawsuit alleges that GT LLC breached terms of a Co-Packing Agreement from 2010, which governed the relationship between the parties. As of February 2013, Dominion amended its complaint to add the Company as a defendant in the case. The Company has not yet filed responsive pleadings. Dominion is seeking monetary damages in an amount exceeding $800,000. GT LLC has filed its answer denying all of Dominion’s claims and expects to vigorously defend the suit. Discovery is ongoing, and the case is currently set for trial in November 2013.

 

On December 13, 2011, a lawsuit was filed in the 116th District Court of Dallas County, Texas against GT LLC by Quality Logistics Systems, Inc. (“QLS”). The lawsuit alleges that GT LLC is liable for approximately $68,000 in transportation and logistical fees. On May 18, 2012, a judgment was entered in favor of QLS for $68,542.48, along with $4,145 of costs and fees. GT LLC has not satisfied this judgment to date.