Note 6 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Note 6 - Commitments and Contingencies

NOTE 6 – COMMITMENTS AND CONTINGENCIES

Operating Leases

Phototron leased office and warehouse facilities under a lease with an initial term ending on December 31, 2007, with an automatic 3 year extension to December 31, 2010, requiring monthly payments of $3,554. In January 2011, the lease term expired and Phototron rented the facility on a month-to-month basis. In February 2011, we entered into a new lease for office facilities. The landlord, 20259 Ventura Blvd LP is an affiliate of a stockholder of our company. The terms of the lease provided for monthly rental expense of $8,066 with annual cost of living adjustments. The lease expired in January 2014. On December 24, 2011, we issued to 20259 Ventura Blvd LP 1,884,796 shares of restricted common stock valued at $113,087. The purpose of this grant was to buy-out the remaining lease at this facility. The stock price on the date of grant was $0.06 per share. Since these shares vest immediately and there is no service period, the Company expensed these shares on the date of grant.

In May 2011, we entered into a new lease for our warehouse facility. The terms of the new lease provide for monthly rental expense of $4,065 and a lease term of 13 months. The new lease expires in May 2012. We renewed the lease for an additional two years.

Rent expense was $211,285 and $42,642 for the years ended December 31, 2011 and 2010 respectively.

Future minimum rental payments for each of the remaining years are as follows:

Years Ending December 31,
2012	$	49,634
2013		51,126
2014		21,565
2015		—
Total	$	122,325