Note 9 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies Disclosure [Text Block]

9.     COMMITMENTS AND CONTINGENCIES

Leases – We have a noncancellable operating lease expiring in May 2012.  Future minimum lease payments are as follows:

Year ended December 31,
(in thousands)
2012	$	194
Total minimum lease payments	$	194

The above future minimum lease payments are payable to a related party.  See Note 12 for further discussion.

Rental expense for leased facilities and equipment related to continuing operations amounted to $467,000 and $465,000 in the years ended December 31, 2011 and 2010, respectively.  Non-affiliated companies sublease space from the company. For the years ended December 31, 2011 and 2010, we received $33,000 and $53,000, respectively, in sublease rental income which reduced our rental expense during these years.

Legal Matters – ChemFree Patent Matter – Our ChemFree subsidiary has been involved since 2004 in a legal matter related to a patent infringement action brought against J. Walter Co. Ltd. and J. Walter, Inc. (“J. Walter”) in the United States District Court for the Northern District of Georgia. On June 18, 2010, the judge issued his Findings of Fact and Conclusions of Law which found (i) that certain of J. Walter’s products did infringe on ChemFree’s four patents-in-suit; (ii) in ChemFree’s favor on the issue of the patents’ named co-inventors and (iii) in J. Walter’s favor on the issue of invalidity of the four patents-in-suit for “obviousness”. ChemFree filed a Motion for Reconsideration of the judge’s findings and conclusions. On June 6, 2011, the judge issued a ruling in J. Walter’s favor upholding the invalidity finding and awarding recovery of allowable taxable costs from ChemFree. On July 1, 2011, ChemFree appealed the ruling to the United States Court of Appeals for the 11th Circuit. On September 30, 2011, the court reduced the amount of allowable taxable costs to approximately $75,000.  On March 12, 2012, the United States Court of Appeals issued its final ruling, affirming the invalidity findings of the lower court with respect to the four patents.  As a result of the ruling, the company anticipates that ChemFree will owe the allowable taxable costs previously awarded of approximately $75,000.  Accordingly, the company has recorded an expense of $75,000 reflected in the category Other Income and a corresponding liability reflected in Other Current Liabilities in its 2011 Consolidated Financial Statements.

On September 29, 2011, ChemFree filed a second patent infringement action against J. Walter in the United States District Court for the Northern District of Georgia, alleging that certain of J. Walter’s products infringe a newly issued patent held by ChemFree.  The complaint seeks a ruling to compel the defendant to cease its infringing activities.  The matter is in a preliminary phase.

In the ordinary course of business, from time to time we may be involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations.