10. Commitments and Contingencies

Operating Leases

The Company has operating leases for facilities through 2020 and office equipment through 2019. The future minimum rental payments under these leases at September 30, 2015, are as follows:


Year	Amount
2015	$	299
2016		1,067
2017		933
2018		889
2019		673
Thereafter		231

Future minimum lease payments	$	4,092

The rent expense under leases was approximately $0.3 million and $0.2 million for the three months ended September 30, 2015, and 2014, respectively. The rent expense under leases was approximately $0.8 million and $0.7 million for the nine months ended September 30, 2015, and 2014, respectively.

In conjunction with the asset purchase agreement for Nexgen, the Company assumed the lease for office space in Schaumburg, Illinois consisting of 6,652 square feet. The lease expiration date is October 31, 2018 and the total lease obligation pursuant to this lease assumption is $0.4 million.

In April 2015, the Company formally terminated the leased office space in San Antonio, Texas effective September 27^th, 2015.

In May 2015, the Company entered into a new five-year, five-month lease for an office for our expanding engineering services business in Englewood, Colorado consisting of leased space of 4,579 square feet with a lease expiration date of February 28^th, 2021. The first five months of the lease term are rent free. The total lease obligation pursuant to this lease is $0.6 million.

In May 2015, the Company extended the lease for its assembly facility in Pryor, Oklahoma for a period of six months ending October 31^st, 2015. The total lease obligation pursuant to this lease was $39. This lease was not renewed after October 2015 because of the Company’s exit from the mobile tower product line.

In October 2015, the Company entered into a new five-year lease for additional manufacturing space in Tianjin, China consisting of 22,163 square feet with a lease expiration date of October 2020. The total lease obligation pursuant to this lease is $0.2 million.

All properties are in good condition and are suitable for the purposes for which they are used. We believe that we have adequate space for our current needs.

Capital Leases

The Company has capital leases for office and manufacturing equipment. The net book values for asset under capital leases were as follows:


	September 30, 2015			December 31, 2014
Cost	$	219		$	189
Accumulated Depreciation		(46	)		(16	)

Net Book Value	$	173		$	173

The following table presents future minimum lease payments under capital leases at September 30, 2015, together with the present value of the net minimum lease payments due in each year:


Year	Amount
2015	$	13
2016		50
2017		50
2018		40
2019		29
2020		4

Total minimum payments required:		186
Less amount representing interest:		13

Present value of net minimum lease payments:	$	173

Warranty Reserve and Sales Returns

The Company allows its major distributors and certain other customers to return unused product under specified terms and conditions. The Company accrues for product returns based on historical sales and return trends. The Company’s allowance for sales returns was $0.2 million at September 30, 2015 and $0.1 million at December 31, 2014.

The Company offers repair and replacement warranties of up to five years for certain antenna products and scanning receiver products. The Company’s warranty reserve is based on historical sales and costs of repair and replacement trends. The warranty reserve was $0.4 million and $0.3 million at September 30, 2015 and December 31, 2014, respectively, and is included in other accrued liabilities in the accompanying condensed consolidated balance sheets.

Changes in the warranty reserves during the nine months ended September 30, 2015 and 2014, were as follows:


	Nine Months Ended September 30,
	2015			2014
Beginning balance	$	304		$	305
Provisions for warranties		93			62
Consumption of reserves		(16	)		(60	)

Ending balance	$	381		$	307

Restructuring Charges

In June 2015, the Company committed to a restructuring program for reductions in U.S. headcount and the exit from the mobile towers product line. The Company acquired the mobile tower product line in the 2012 acquisition of TelWorx (defined below). The Company’s mobile towers were primarily sold into the oil and gas exploration market in North America. The mobile towers were used to either provide a communications link to an oil drilling site or lighting for a site under construction. The decline in oil prices caused a decline in related mobile tower sales. The Company made the decision to exit the mobile tower product line due to the anticipated long term effect on revenue from depressed oil prices, and the fact that one of our two tower suppliers filed for Chapter 7 bankruptcy during June 2015 as a result of the decline in volume. Mobile towers were not a key element of the company’s kitting operation or antenna business within Connected Solutions. According to the accounting guidance, the exit of the mobile tower product line does not meet the requirements of discontinued operations.

The Company incurred restructuring charges of $0.4 million and $0.9 million during the three and nine months ended September 30, 2015, respectively. During the three months ended September 30, 2015, the Company incurred $0.4 million for severance and employee related costs related to the termination of 18 employees and $23 related to the disposal of fixed assets of the mobile tower product line. During the nine months ended September 30, 2015, the Company incurred severance costs of $0.4 million of severance and employee related costs related to the termination of 20 employees, $23 related to the disposal of fixed assets of the mobile tower product line, and $0.4 million of intangible assets related to mobile towers.

The following table summarizes the restructuring activity during the nine months ended September 30, 2015 and the status of the reserves at September 30. 2015:


	Accrual							Accrual
	Balance at							Balance at
	December 31,		Restructuring		Payments/			September 30,
	2014		Expense		Charges			2015
2015 Restructuring:
Employee related costs	$	0	$	423	($	394	)	$	29
Fixed assets		0		23		(23	)		0
Intangible assets adjustment		0		406		(406	)		0

Totals	$	0	$	852	($	823	)	$	29

TelWorx Settlements

The Company acquired substantially all of the assets and assumed certain specified liabilities of TelWorx Communications LLC, TelWorx U.K. Limited, TowerWorx LLC and TowerWorx International, Inc. (collectively “TelWorx”), pursuant to an Asset Purchase Agreement (“APA”) dated as of July 9, 2012 among the Company, TelWorx and Tim and Brenda Scronce, the principal owners of TelWorx. The business operations associated with these purchased assets is collectively referred to as “TelWorx” in this Form 10-Q. As disclosed in the Company’s Form 8-K/A filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2013, after completion of the acquisition, the Company became aware of certain accounting irregularities with respect to the TelWorx Entities and the Company’s Board of Directors directed management to conduct an internal investigation. Based on the results of the Company’s investigation, the Company’s Board of Directors directed management to seek restitution from the TelWorx Parties. On March 27, 2013, after protracted negotiations and concurrent litigation, the parties entered into an amendment to the APA and related settlement agreements to settle the dispute.

The Company sought and received restitution from two parties who assisted the sellers of TelWorx by providing professional services to the sellers in connection with their sale of the business to PCTEL. On September 30, 2014, the Company settled in cash with one party for $0.1 million and on October 10, 2014, the Company settled with the other party in cash for $0.8 million. The Company recorded the settlements as income in the quarters ended September 30, 2014 and December 31, 2014, respectively.