OTE

- COMMITMENTS AND CONTINGENCIES

Litigation

From time to time the Company and its subsidiaries are parties to litigation arising in the ordinary course of business operations. Such litigation primarily involves claims for personal injury, property damage, breach of contract and claims involving employee relations and certain administrative proceedings. Based on current information, we believe that the ultimate conclusion of the various pending litigation, in the aggregate, will

not

have a material adverse effect on our consolidated financial position, results of operations and cash flows and liquidity.

Leases

We have operating leases for certain factory, warehouse, office space, and machinery and equipment. Certain leases provide for payment of real estate taxes, common area maintenance, insurance and certain other expenses. Lease terms

may

have escalating rent provisions and rent holidays that are expensed on a straight-line basis over the term of the lease and expire at various dates through

2028.

Certain rent expenditures are made on a month-to-month basis as the underlying operating lease has expired. Total rental expense for operating leases was

$1,299

and

$1,778

for the years ended

December 31, 2019

and

2018,

respectively.

The future minimum lease payments in the aggregate are as follows:

	Operating
Years Ending December 31,	Leases

2020	$	1,280
2021		1,144
2022		1,052
2023		1,079
2024		1,108
Thereafter		2,394

	$	8,057

St. Petersburg Office Lease Agreement

April 7, 2015,

we entered into an Office Lease Agreement (the "Lease") for premises in St. Petersburg, Florida (the "Building"). The term of the Lease is for

twelve

years, commencing on

May 1, 2015

and ending on

April 30, 2027.

We initially leased the

fifth

floor of the Building (“Initial Premises”) and were required to expand the Initial Premises to include the

sixth

floor of the Building (“Expansion Premises”) between

February 1, 2016

and

October 31, 2016,

upon notice to the landlord and provided that the landlord is

not

obligated to deliver the Expansion Premises unless we then have a traded market capitalization of

$50,000

or more for the immediately preceding

thirty

days prior to the date of notice (“Market Cap Test”).

November 30, 2016,

both parties agreed to delay the planned improvements for the

6th

floor of the Building to allow us the opportunity to obtain potential subtenants. Additionally, both parties agreed that the Initial Premises rent commencement date occurred on

May 1, 2016,

the Expansion Premises commencement date occurred on

October 1, 2016

and our obligation to pay rent commenced on

October 1, 2016.

The aggregate amount of rent to be paid over the term of the Lease is

$4,466

for the Initial Premises. In the event that we lease the Expansion Premises, rent for the Expansion Premises will be paid at the same rental rate payable for the Initial Premises and, if leased by us at the earliest date available under the Lease, will result in additional payments of up to approximately

$4,552

over the term of the Lease.

The Lease required us to deposit a

$1,000

security deposit with the landlord, payable

July 1, 2015.

If on

May 1, 2018 (

or on any subsequent

May

1st

during the term of the Lease), we satisfy the Market Cap Test, the landlord is required to return the entire security deposit to the Company. On

April 30, 2015,

the Company and a current institutional investor and lender entered into a Reimbursement Agreement pursuant to which the investor agreed to arrange for and provide an unconditional, irrevocable, transferable, and negotiable commercial letter of credit to serve as the security deposit. (See also Subsequent Events in Note

November 30, 2016,

we entered into a sublease agreement for the

5th

floor of the Building with Powerchord, Inc. (“Subtenant”). The term commenced on

February 1, 2017

and expires on

June 30, 2022.

We granted an option to renew the Subleased Space for the period

July 1, 2022

through

April 29, 2027.

Subtenant will pay us an aggregate of

$2,005

over the term of the agreement and an aggregate of

$2,133

in the event of lease renewal. The subtenant has delivered an irrevocable Letter of Credit in the amount of

$100

to secure its performance under the Sublease Agreement. In the event Subtenant exercises its option for renewal, Subtenant must secure its performance under the renewed Sublease Agreement by delivering an amended Letter of Credit or a new letter of credit.

July 12, 2019,

we entered into a sublease agreement for the

6th

floor of the Building with Landmark Realty of St Petersburg LLC (“Subtenant”). The term commenced on

December 1, 2019

and expires on

May 30, 2027.

Subtenant will pay us an aggregate of

$3,030

over the term of the agreement.

Employee Agreements

We have entered into employment agreements with certain members of management. The terms of each agreement are different. However,

one

or all of these agreements include stipulated base salary, bonus potential, vacation benefits, severance and non-competition agreements.

Platinum Advisory Services LLC Agreement

December 27, 2017,

we entered into the Agreement for Equity in Exchange for Services with Platinum Advisory Services LLC (“Platinum”). Pursuant to the Agreement, we will issue from time to time shares of the Company’s common stock with an aggregate purchase price of

$3,000

in exchange for payment in-kind consisting of the provision of media support and services performed by Platinum or its affiliates.

June 6, 2018,

the Company issued

4,166,667

shares of common stock to Platinum Advisory Services, LLC in accordance with the terms of the Equity in Exchange for Services Agreement that the parties entered into on

December 27, 2017,

wherein the Company received, or will receive advertising services in exchange for the shares.