10. Commitments and Contingencies

Restructuring

During the six months ended June 30, 2016, the Company incurred restructuring expenses of $0.5 million consisting of $0.2 million in employee severance and related costs, $0.2 million for lease terminations, and $49 related to fixed asset disposals. During the first quarter 2016 the Company reduced headcount in its RF Solutions segment related to services and SeeHawk analytics, and exited from its Colorado office in order to consolidate facility space. The restructuring expense incurred for lease terminations include the remaining obligations under the lease, net of an assumption for proceeds for a sublease. Of the $0.3 million restructuring liability at June 30, 2016, $0.2 million was included in accrued liabilities and $0.1 million was included in long-term liabilities in in consolidated balance sheets. The restructuring liability of $0.2 million at December 31, 2015 was included in accrued liabilities in the consolidated balance sheets.

The following table summarizes the restructuring activity during the six months ended June 30, 2016 and the status of the reserves at June 30, 2016.

	December 31, 2015		Restructuring Expenses		Cash Payments/ Adjustments			June 30, 2016

Severance and related employee benefits	$	237	$	253	$	(348	)	$	142
Lease terminations		0		239		(84	)		155
Fixed assets		0		49		(49	)		0
Total	$	237	$	541	$	(481	)	$	297
.

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 June 30, 2016, are as follows:

Year	Amount
2016	$	528
2017		942
2018		921
2019		849
2020		300
Thereafter		20
Future minimum lease payments	$	3,560

The rent expense under leases was approximately $0.2 million for the three months ended June 30, 2016, and 2015, respectively, and approximately $0.5 million for the six months ended June 30, 2016, and 2015, respectively.

In February 2016, the Company modified the lease agreement for the office of its engineering services business in Melbourne, Florida. Under the lease amendment, the Company reduced the lease space from 6,174 sq. ft. to 3,600 sq. ft. The expiration lease term remained the same at December 31, 2018. There were no additional fees related to this lease amendment.

To accommodate the transfer of certain antenna manufacturing operations to the Company’s Tianjin, China facility, in October 2015 the Company entered into a new five-year lease for additional manufacturing space in Tianjin consisting of 22,163 square feet which expands the Company’s footprint in Tianjin to 44,289 square feet. This lease expires October 2020. The total lease obligation pursuant to this lease was $0.2 million.

In May 2015, the Company entered into a new five-year, five month lease for office space in Englewood, Colorado, consisting of 4,759 square feet of office space for the engineering services business. The lease expires on October 31, 2020; however, during the first quarter 2016, the Company vacated this facility and is marketing this property for sublease. Excluding any sublease payments, the remaining lease obligation pursuant to this lease was $0.5 million at June 30, 2016.

Pursuant to the Asset Purchase Agreement dated February 27, 2015 with Nexgen, the Company assumed Nexgen’s lease for office space in Schaumburg, Illinois consisting of 6,652 square feet. The total lease obligation pursuant to this lease assumption was $0.3 million. The Schaumburg lease expires on October 31, 2018, but the lease contains a one-time option to elect an early termination of the lease on August 31, 2016. In March 2016, the Company exercised the early termination option and paid a fee of $57.

In June 2016, the Company entered into a new four-year lease for its Beijing Design Center, at the same location, consisting of 5,393 square feet. The total lease obligation pursuant to this lease agreement was $0.4 million.

Capital Leases

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

	June 30, 2016			December 31, 2015
Cost	$	305		$	190
Accumulated Depreciation		(67	)		(48	)
Net Book Value	$	238		$	142

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

Year	Amount

2016	$	32
2017		65
2018		65
2019		54
2020		28
2021		16
Total minimum payments required:		260
Less amount representing interest:		22
Present value of net minimum lease payments:	$	238

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 product returns was $0.2 million at June 30, 2016 and December 31, 2015, respectively, and is included within accounts receivable on the accompanying condensed consolidated balance sheet.

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 $0.3 million at June 30, 2016 and December 31, 2015, respectively, and is included in other accrued liabilities in the accompanying condensed consolidated balance sheets.

	Six Months Ended June 30,
	2016			2015
Beginning balance	$	348		$	304
Provisions for warranties		33			16
Consumption of reserves		(78	)		(16	)
Ending balance	$	303		$	304