COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Commitments

We entered into a sub-lease of our corporate offices in Orange County, California, on December 1, 2014. The property consists of approximately 11,000 square feet of office, manufacturing and assembly space. After completing various leasehold improvements, we occupied the property in early March 2015. We currently sublease the property from ASP, an affiliate of the Company, for approximately $12,000 per month, consistent with the amount that is charged to ASP by the landlord. On February 5, 2015, ASP entered into a new five year lease for the property beginning July 1, 2015 and subsequently amended to begin June 1, 2015. The lease calls for a base rent of $9,968 per month plus payment of approximately $2,000 per month for common area maintenance. The lease includes annual increases in the monthly lease payments of approximately 3% each year. Additionally, in conjunction with the new lease agreement, NuGene paid a commission to the real estate agent of $19,152. The commission has been recorded in Other Long Term Assets in the accompanying consolidated balance sheet as of March 31, 2015 and will be amortized over the life of the lease.

At June 30, 2015, aggregate future minimum payments under the lease, including common area maintenance costs, are as follows:

2015	$ 71,232
2016	144,816
2017	148,848
2018	152,880
2019	156,912
Thereafter	66,080
Total	$740,768

As of June 30, 2015, the Company had entered into Advisory Board agreements (“Advisory Agreements”) with five individuals from the fields of medicine related to the Company’s industry focus. The Company believes our Advisory Board consists of leaders in their respective fields. The Advisory Agreements are for a period of three years and will begin expiring in December 2017. The terms of each Advisory Agreement vary but generally provide our advisory members with up to 50,000 initial sign on shares vesting over an 18 month period, base compensation of $3,000 per month and up to 50,000 shares of common stock per annum issued on the anniversary of the effective date of the agreement. Our Advisory Board members are required to attend two Advisory Board meetings per year for which they will be compensated $2,000 - $6,000 per meeting plus travel expenses.

On May 26, 2015, Donna Queen accepted a position on the Company’s Board of Directors. As compensation for her services, Ms. Queen shall receive an annual stipend of $30,000 and a total of 100,000 shares of the Company’s common stock which vests on the third, sixth, ninth and twelfth month following the acceptance date of her position.

Legal Proceedings

On July 10, 2015 Stemage Skin Care, LLC (the “Plaintiff”) filed a complaint in the U.S. District Court for the Central District of California entitled “Stemage Skin Care LLC, a North Carolina limited liability company vs. NuGene International, Inc. et al.” (Civil Action No.8:15-cv-01078-AG-JCG). The complaint also names as defendants NuGene, Inc., Ali Kharazmi, Saeed Kharazmi, Kathy Ireland Worldwide, Stephen Roseberry, Steve Rosenblum and Erik Sterling. The complaint contains allegations of damage asserted to be grounded on:

· copyright infringement,

· interference with contract,

· intentional interference with prospective economic advantage,

· negligent interference with prospective economic advantage, and

· conspiracy.

The complaint allegedly arises out of an August 20, 2012 agreement among the Plaintiff and kathy ireland inc. ("KI") pursuant to which KI made Kathy Ireland available to perform “Ambassador Services" as defined within that agreement. That agreement effectively terminated in October 2014 and is the subject of a separate arbitration with KI and Kathy Ireland before the American Arbitration Association. Although this matter is at an early stage and we have not as of the date of this report filed any response we do not find it probable that any material losses will be incurred as a result of this complaint.

On July 31, 2015 Star Health & Beauty, LLC (“SH&B”) filed a complaint in the U.S. District Court for the Northern District of Georgia entitled “Star Health & Beauty, LLC vs. NuGene, Inc. and NuGene International, Inc. Defendants” (Case No. 1:15-cv-02634-CAP). The complaint alleges that our use of the NUGENE name and trademark infringes on their NUGEN name. SH&B seeks cancelation of our NUGENE trademark, as well as unspecified monetary damages. We are in the process of evaluating the merits of this lawsuit and intend to defend our intellectual property rights vigorously. As this matter is at an early stage we are unable to determine a range of potential losses that are reasonably possible of occurring as a result of this complaint.

From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect our financial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion of management attention and other factors. We expense legal costs in the period incurred. We cannot assure you that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these matters could relate to prior, current or future transactions or events.

Other than that described above, we are not currently a party to any other material legal proceedings. We are not aware of any pending or threatened litigation against us that in our view would have a material adverse effect on our business, financial condition, liquidity, or operating results. However, legal claims are inherently uncertain, and we cannot assure you that we will not be adversely affected in the future by legal proceedings.