Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 11 - Commitments and Contingencies

Operating leases

We lease office space in New Providence, New Jersey pursuant to a three-year lease agreement for office space which provides for current monthly lease payments of approximately $3,800.  These premises serve as our corporate headquarters. The initial term of the lease expires on October 31, 2012 and we have extended the lease for an additional one-year term.  Facility rent expense for this facility totaled approximately $11,300 and $33,900 for the three and nine months ended September 30, 2012, respectively. Future minimum rental payments for the remainder of the initial lease term plus the one-year extension totals approximately $47,000.

Rutgers License

In February 2007, we acquired an exclusive, royalty-bearing license in specific but broad global territories to make, have made, use, sell, offer for sale, modify, develop, import, and export products made using patent applications owned by Rutgers University (Rutgers”).  We are using these patented technologies in the production of our composite rail ties and structural building products. The term of the License Agreement runs until the expiration of the last-to-expire issued patent within the Rutgers’ technologies licensed under the License Agreement, unless terminated earlier.

We are obligated to pay Rutgers royalties ranging from 1.5% to 3.0% on various product sales, subject to certain minimum payments each year and to reimburse Rutgers for certain patent defense costs in the case of patent infringement claims made against the Rutgers patents. During the three and nine months ended September 30, 2012, we included in costs of sales approximately $13,200 and $77,900, respectively representing the royalties due Rutgers for the period sales. During the three months ended September 30, 2012, we charged operations approximately $162,100 representing the difference between the minimum royalties due for the nine month period pursuant to the license and what was charged to costs of sales.

We also pay annual membership dues to Rutgers Center for Advanced Materials via Immiscible Polymer Processing, or AIMPP, a department of Rutgers.  The membership allows us to use AIMPP for basic research and development at no additional cost, with access to more comprehensive R&D services available to us for fees determined on a per-project basis.

Litigation

In April 2006, we commenced an action against Tonga Partners, L.P. (Tonga”), Cannell Capital, L.L.C. and J. Carlo Cannell in the United States District Court of New York, for disgorgement of short-swing profits pursuant to Section 16 of the Securities Exchange Act of 1934, as amended.  On November 10, 2004, Tonga converted a convertible promissory note into 1,701,341 shares of Common Stock, and thereafter, between November 10 and November 15, 2004, sold such shares for short-swing profits.  In September 2008, the District Court granted us summary judgment against Tonga for disgorgement of short-swing profits in the amount of $5.0 million.  The defendants appealed the order granting the summary judgment to the U.S. Court of Appeals for the 2nd Circuit. The three judge panel held in our favor. The defendants petitioned the Court for a full judge review.  The petition was denied.  The defendants have advised that they intend to request the US Supreme Court to accept an appeal of the case.  Until the defendants no longer have any possibility of any further judicial review, we cannot access the cash bond that the defendants posted.

From time to time, we are subject to various other routine litigation incidental to our business. We do not believe that any of these routine legal proceedings would have a material adverse effect on our financial condition or results of operations.