this is page 86/148 read and look for the word "reverse Split"
making false statement
violates fedral law Fedral Securities laws. the securities exchange Act, Section 10, outlaws intentional misstatements by a company
you can be jailed I am too lazy to report you
POSITIVEID CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2016 and 2015
11. Commitments and Contingencies
Lease Commitments
The Company leases certain office space under non-cancelable operating leases, including the Company’s corporate offices in Delray Beach, Florida
under a lease scheduled to expire in October 18, 2018, laboratory and office space in Pleasanton, California a lease scheduled to expire in September 30, 2018 and
office and manufacturing space in Concord, California which is currently on a month-to-month commitment for approximately $7,600 per month. Rent expense
under operating leases totaled approximately $244,000 and $136,000 for the years ended December 31, 2016 and 2015, respectively. Future minimum lease
payments under operating leases at December 31, 2016 are as follows (in thousands):
2017 $ 133
2018 105
$ 238
Exergen Litigation
On October 10, 2012, Thermomedics and its former parent company, Sanomedics (together “Sano”), received a cease and desist demand letter from
Exergen Corporation (“Exergen”), claiming that Sano infringed on certain Exergen patents relating to Sano’s non-contact thermometers. On May 21, 2013, Exergen
filed a complaint in the U.S. District Court of the District of Massachusetts against Sano. On September 3, 2013, Sano filed its answer to Exergen’s complaint and
asserted counterclaims and affirmative defenses for non-infringement and invalidity of certain patents. On March 26, 2015, Exergen and Sano filed a partial
dismissal that removes Sano’s previous product, the Talking Non-Contact Thermometer, from the lawsuit. On September 15, 2015, the United States District Court
– District of Massachusetts, entered an order granting Sano’s motion for summary judgment, ruling that the patent claims made by Exergen against Sano were
invalid. On June 22, 2016, the U.S. Court of Appeals affirmed the United States District Court – District of Massachusetts’ summary judgment decision in favor of
Sano that the patent claims asserted against Sano by Exergen are invalid. The period for Exergen to object has expired.
LG Capital Funding Litigation
On March 7, 2017, LG Capital Funding, LLC (“LG”), filed a complaint in the U.S. District Court of the Eastern District of New York, related to a 10%
Convertible Redeemable Note issued by us to LG on July 7, 2016 in the amount of $66,150 (the “LG Note”). The LG Note provides that LG is entitled to convert all
or any amount of the outstanding balance and accrued interest of the LG Note into shares of our Common Stock. The complaint alleges breach of contract and
anticipatory breach of contract, asserting, among other things, that we failed to deliver shares of stock to LG pursuant to a notice of conversion, and failed to reserve
a sufficient number of shares of stock issuable under the terms of the LG Note. The Company will answer and defend against this complaint.
Other Legal Proceedings
The Company is a party to certain legal actions, as either plaintiff or defendant, arising in the ordinary course of business, none of which is expected to
have a material adverse effect on the Company’s business, financial condition or results of operations. However, litigation is inherently unpredictable, and the costs
and other effects of pending or future litigation, governmental investigations, legal and administrative cases and proceedings, whether civil or criminal, settlements,
judgments and investigations, claims or charges in any such matters, and developments or assertions by or against the Company relating to the Company or to the
Company’s intellectual property rights and intellectual property licenses could have a material adverse effect on the Company’s business, financial condition and
operating results.
Distributor and Supplier Agreements
Under certain agreements the Company may be subject to penalties if they are unable to supply products under its obligations. Since inception, the
Company has never incurred any such penalties.
12. Employment Contracts and Stock Compensation
On December 6, 2011, the Compensation Committee approved a First Amendment to Employment and Non-Compete Agreement (“First Amendment”),
between us and William J. Caragol, our CEO, in connection with Mr. Caragol’s assumption of the position of chairman of the Board effective December 6, 2011.
The First Amendment amends the Employment and Non-Compete Agreement dated November 11, 2010, between us and Mr. Caragol and provides for, among
other things, the elimination of any future guaranteed raises and bonuses, other than a 2011 bonus of $375,000 to be paid beginning January 1, 2012 in twelve (12)
equal monthly payments. This bonus was not paid during 2012 and on January 8, 2013, $300,000 of such bonus was converted into 14,778 shares of our restricted
common stock, which vest on January 1, 2016. The remaining $75,000 was paid in 2013. In addition, the First Amendment amends the change of control provision
by increasing the multiplier from 3 to 5 and capping any change in control compensation to 10% of the transaction value. The First Amendment also obligated us to
grant to Mr. Caragol an aggregate of 10,000 shares of restricted stock over a 4 year period as follows: (i) 2,000 shares upon execution of the First Amendment,
which shall vest on January 1, 2014, (ii) 2,000 shares on January 1, 2012, which shall vest on January 1, 2015, (iii) 2,000 shares on January 1, 2013, which shall vest
on January 1, 2018, (iv) 2,000 shares on January 1, 2014, which shall vest on January 1, 2018, and (v) 2,000 shares on January 1, 2015, which shall vest on January
1, 2018. We and Mr. Caragol agreed to delay the issuance of the first and second restricted share grants, for a total of 4,000 shares, until we had available shares
under one of our stock incentive plans. The restricted shares were granted on October 4, 2012. These restricted shares have been fully expensed as of December 31,
2016. On January 14, 2014, Mr. Caragol’s agreement was further amended, lowering his salary to $200,000 per annum through the remaining term of the agreement
in exchange for the issuance of 143 shares of Series I Preferred Stock.
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