Withheld Payroll Taxes

 

Since its inception, the Company has made several payments to employees for wages, net of state and federal income taxes. Due to cash constraints, the Company has not yet remitted all of these withheld amounts to the appropriate government agency. Accordingly, as of December 31, 2020 and 2019 the Company has recorded $37,984 and $37,984, respectively, related to this obligation in accounts payable and accrued liabilities, including estimated penalties and interest.

 

Operating Lease

 

Rent expense for the years ended December 31, 2020 and 2019 was approximately $16,000 and $39,000, respectively. As our lease is considered short-term under the accounting guidance of ASC 842 as of December 31, 2020, we have not included the related disclosures required under ASC 842. Our lease is a twelve-month lease that expires in May 2021 and upon expiration our lease continues on a month-to-month basis. Our monthly lease expense for this arrangement is approximately $1,000 per month.

 

Indemnities and Guarantees

 

We have made certain indemnities and guarantees, under which we may be required to make payments to a guaranteed or indemnified party, in relation to certain transactions. We indemnify our officers and directors to the maximum extent permitted under the laws of the State of Nevada. The duration of these indemnities and guarantees varies and, in certain cases, is indefinite. These indemnities and guarantees do not provide for any limitation of the maximum potential future payments we could be obligated to make. Historically, we have not been obligated to make any payments for these obligations and no liabilities have been recorded for these indemnities and guarantees in the accompanying consolidated balance sheets.

 

Legal Matters

 

In the ordinary course of business, we may face various claims brought by third parties and may, from time to time, make claims or take legal actions to assert our rights, including intellectual property disputes, contractual disputes and other commercial disputes. Any of these claims could subject us to litigation. Management believes there are currently no claims that are likely to have a material effect on our consolidated financial position and results of operations.

 

The Company has filed a lawsuit against a former distributor for breach of contract resulting in losses to the Company estimated to be in excess of $1,000,000. A court date has been set for June 18, 2021.