COMMITMENT AND CONTINGENCIES

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENT AND CONTINGENCIES

Note 6 — Commitment and Contingencies

Operating Lease Agreements

In July 2016, the Company renewed a lease with 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 June 30, 2017 are as follows:

Year
	(unaudited)
2017 (July 1 — December 31, 2017)	$	93,000
2018		190,000
2019		196,000
2020		202,000
2021		208,000
Thereafter		160,000
Total	$	1,049,000

Rental expense for the three months ended June 30, 2017 and 2016 was approximately $46,000 and $25,000, respectively, and for the six months ended June 30, 2017 and 2016 was approximately $92,000 and $85,000, 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 agreement shall automatically be renewed for successive years unless either party notifies the other party in writing, at least 60 days prior to the anniversary date of this agreement that it will not renew 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 $217,000 and $1,103,000 for the three months ended June 30, 2017 and 2016, respectively, and approximately $1,492,000 and $2,279,000 for the six months ended June 30, 2017 and 2016, respectively. As of June 30, 2017, and December 31, 2016 approximately $605,000 and $563,000, respectively, was due to this manufacturer, which is presented in accounts payable and accrued expenses in the accompanying 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.