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10. COMMITMENTS AND CONTINGENCIES
 12 Months Ended
Dec. 31, 2015
Notes to Financial Statements  
NOTE 10. COMMITMENTS AND CONTINGENCIES

Lease Commitments

 

In September of 2014 the Company entered into a lease agreement for office and warehouse space in Fredrick Maryland. As part of the lease agreement, the Company received a rent holiday in the first 5 months of the lease.  The lease also provides for an escalation clause where the Company will be subject to an annual rent increase of 3%, year over year.  The lease expires on January 31, 2018.  The Company accounts for the lease using the straight line method and recorded $45,709 in rent expense for the year ended December 31, 2015.  Approximate minimum annual rents under the lease are as follows:

 

 Twelve Month Period Ending December 31,   Amount  
       
 2016   $ 52,000  
 2017     53,000  
 2018      5,000  
    $ 110,000  

 

Legal Contingencies 

 

We may become a party to litigation in the normal course of business.  In the opinion of management, there are no legal matters involving us that would have a material adverse effect upon our financial condition, results of operations or cash flows.

 

Product Liability

 

As of December 31, 2015 and 2014, there were no claims against the Company for product liability.