Annual report pursuant to Section 13 and 15(d)

Other Liabilities

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Other Liabilities
 12 Months Ended
Dec. 31, 2011
Other Liabilities  
Other Liabilities
10.
Other Liabilities

Deferred Lease Incentive

On June 29, 2009, the Company entered into a five year office lease agreement as discussed in note 16.  The lessor agreed to grant a leasehold improvement allowance of $100,000 to the Company to be used for the construction cost of improvements, architectural and engineering fees, government agency plan check, permit and other fees, sales and use taxes, testing and inspection costs, construction fees and telephone and data cabling and wiring in the premises.  The full amount of leasehold improvement allowance had been used up by the Company by December 31, 2009.  The Company accounts for the benefit of the leasehold improvement allowance on a straight line basis as a reduction of rental expense over the 5 year lease term.
 
The following table sets forth the deferred lease incentive:
 
   
December 31,
    
December 31,
  
   
2011
    
2010
  
             
Deferred lease incentive
   $ 100,000     $ 100,000  
Less accumulated amortization
     (50,000 )     (30,000 )
                 
Balance
   $ 50,000     $ 70,000  
 
Deferred Office Lease Expense
 
The office lease agreement, discussed above, requires an initial annual base rent of $76,524 with annual increases over the next five years. The Company recognizes rental expense on a straight-line basis over the term of the lease, which resulted in a deferred rent liability of $54,388 and $63,117 as of December 31, 2011, and 2010, respectively.