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10. COMMITMENTS AND CONTINGENCIES
 9 Months Ended
Sep. 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 approximately $11,000 and $34,000 in rent expense for the three and nine months ended September 30, 2016 and 2015, respectively. Approximate minimum annual rents under the lease are as follows:

 

 Twelve Month Period Ending September 30,    Amount  
    $ 53,000  
 2017     18,000  
 2018   $ 71,000  

 

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. In addition, from time to time, the Company may have to file claims against parties that infringe on our intellectual property.

 

Product Liability

 

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