Note 11. Operating leases, commitments and security deposits

Operating leases

In January 2012, the Company had a $13 monthly office lease payment. In February 2012, the Company moved to a smaller office in the same location with month–to–month rental payments of $4 and a rental deposit of $6. On April 30, 2012, we terminated our UK lease effective June 30, 2012.

In September 2011, the Company entered into a 39–month lease agreement for office space located in Harrison, New York, terminating on November 30, 2014. Under the agreement our total rental payments over the 39–month lease period are $240, inclusive of three months of free rent and a refundable rental deposit of $39, held in a restricted cash account.

In May 2013, the Company assumed a 24–month lease agreement for office space located in Saratoga Springs, New York terminating on October 31, 2014. Under the agreement our total rental payments over the lease period are $2, and a security deposit of $2.

In January 2014, the Company entered into a six–month lease agreement for temporary office space due to the Avcom acquisition located in New York, NY, terminating on June 30, 2014. Under the agreement our total rental payments over the lease period are $3, and a security deposit of $3.

A satellite office in Tokyo, Japan, was closed in January 2012, and the rental deposit of $128 was refunded to us.

The following is a schedule of the future minimum payments required under operating leases in the aggregate and for each subsequent year through lease maturity:

Year ending
2014	$	104
2015		–
Total	$	104

The total lease rental expense was $145 for the year ended December 31, 2013.

Commitments

Consulting agreements

On October 26, 2012, the Company entered into a one–year financial advisory and consulting agreement with a national investment–banking firm. Compensation under the agreement includes cash consideration of $250 and 120,000 shares of restricted Common Stock. Under the terms of the agreement, there are no penalties or liabilities to the Company if approval is not received. Issuances of restricted Common Stock to service providers as compensation for services are subject to shareholder approval. These shares were subsequently issued on September 4, 2013, (2012: None.). The stock was valued at $504, the closing market price on that date. For the year ended December 31, 2013, the Company expensed $188 in cash and $504 in stock consideration (2012: $42 and $nil respectively).

In November 2012, in connection with the sale of the Preferred Stock, the Company was required to enter into investor/public relations service agreements, with terms of seven, ten and twelve months. Compensation under the agreements included cash consideration of $444, the issuance of 100,000 shares of Preferred Stock and 400,000 warrants to purchase MGT Common Stock. Issuance of Preferred Stock and warrants to service providers as compensation for services are subject to shareholder and NYSE MKT approval. No shares were approved or issued as of December 31, 2013 and 2012. Under the terms of the agreements, there are no penalties or liabilities to the Company if approval is not received.

The twelve–month agreement was mutually terminated in January 2013, and the stock consideration still owed under the agreement was further renegotiated on May 3, 2013, to replace the issuance of 100,000 shares of Preferred Stock and 200,000 warrants to purchase MGT Common Stock with the issuance of 50,000 shares of Restricted Common Stock, subject to NYSE MKT exchange approval. These shares were subsequently issued on September 4, 2013. The stock was valued at $206, using the closing market price on that date.

On May 3, 2013, the seven–month agreement was mutually terminated, reducing the future cash consideration due by $20 in consideration of having a month–to–month service agreement for $15 per month. This agreement was cancelled in August 2013.

The ten–month agreement terminated in accordance with its terms on September 19, 2013, however, because the obligation to meet the timeframe contemplated and the issuance of the Warrant was never made, management determined it was in the best interest of the Company to enter into a settlement regarding the Warrant issuance. On December 2, 2013, the Company entered into a Settlement Agreement (the “Settlement Agreement”). Pursuant to the Settlement Agreement, both parties agreed to the following: (i) the Company’s obligation to grant the Warrant and to issue the underlying Common Stock, and Century’s right to receive the Warrant and the underlying Common Stock is cancelled, (ii) Century will make a cash payment to the Company of $100 and (iii) the Company will issue to Century 100,000 shares of Common Stock subject to NYSE MKT exchange approval. Proceeds under the Settlement Agreement were received December 10, 2013. The shares were issued on December 26, 2013 and valued at $301, using the closing market price on that date. The Company recorded $201 of expense and $100 of cash proceeds related to the issuance.

For the years ended December 31, 2013, the Company paid $415 in cash consideration (2012: $113), and recognized $911 (2012: $nil) of stock–based expense relating to the agreements.

Haller agreements

On September 30, 2013, the Company and Michael Haller (“Haller”) agreed to terminate the June 1, 2013, Employment Agreement between the Company and Haller. In addition, the Company agreed to license certain intellectual property obtained from Digital Angel Corporation to Gammaker Pty. Ltd (“Gammaker”), a Singapore entity controlled by Haller in exchange for a 10% share of the gross revenues generated by Gammaker on such licensed assets. The Company also sold to Haller certain trademarks owned by the Company for consideration of $6, which was received on October 17, 2013.