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10. COMMITMENTS AND CONTINGENCIES
 12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
NOTE 10. COMMITMENTS AND CONTINGENCIES

Lease Commitments

 

In September 2014 we entered into a lease agreement for office and warehouse space in Frederick Maryland. As part of the lease agreement, we 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 years ended December 31, 2016 and 2015. Approximate minimum annual rents under the lease are as follows:

 

Twelve Month Period Ending December 31,  Amount
    
 2017   $53,000 
 2018    5,000 
     $58,000 

 

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, we may have to file claims against parties that infringe on our intellectual property.

 

Product Liability

 

As of December 31, 2016 and 2015, there were no claims against us for product liability.