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10. COMMITMENTS AND CONTINGENCIES
 6 Months Ended
Jun. 30, 2016
Commitments and Contingencies Disclosure [Abstract]  
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 $22,854 in rent expense for the six months ended June 30, 2016 and 2015. Approximate minimum annual rents under the lease are as follows:

 

Twelve Month Period Ending June 30,   Amount  
2017   $ 53,000  
2018     31,000  
    $ 84,000  

 

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 June 30, 2016 and December 31, 2015, there were no claims against the Company for product liability.