COMMITMENT AND CONTINGENCIES

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENT AND CONTINGENCIES

Note 6 — Commitment and Contingencies

Operating Lease Agreements

In July 2016, the Company renewed a commercial lease requiring monthly payments to an unrelated third party for its headquarters office. The renewal was effective September 1, 2016 and expanded the office space being occupied. The lease expires in September 2022 and lease payments increase by 3% annually. Future minimum lease payments as of September 30, 2016 and December 31, 2015 are as follows:

	As of September 30, 2016,		As of December 31, 2015
Year	(unaudited)
2016	$	41,000		101,000
2017		166,000		60,000
2018		172,000		—
2019		178,000		—
2020		183,000		—
Thereafter		332,000		—
Total	$	1,072,000		161,000

Rental expense for the three months ended September 30, 2016 and 2015 was approximately $24,000 and for the nine months ended September 30, 2016 and 2015 was approximately $74,000 and $73,000, respectively.

Manufacturing Agreement

In July 2010, the Company entered into a three-year contract manufacturing agreement with an unrelated third party for the production and manufacture of the Company’s main product in accordance with the Company’s product specifications. The Company continues to do business with the contract manufacturer in accordance with the agreement. The Company or the manufacturer has the option to terminate the agreement with 90 days written notice. Any change in the relationship with the manufacturer could have an adverse effect on the Company’s business.

Purchases from this manufacturer totaled approximately $713,000 and $888,000 for the three months ended September 30, 2016 and 2015, respectively and $2,998,000 and $1,855,000 for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016 and December 31, 2015 approximately $566,000 and $283,000, respectively, was due to this manufacturer, which is presented in accounts payable and accrued expenses in the accompanying unaudited condensed balance sheets.

Legal contingencies

The Company is party to certain legal proceedings in the ordinary course of business. The Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and related contingencies. The Company does not believe that any legal proceedings are likely to have a material effect on the business, financial condition, or results of operations.