10. Commitments and Contingencies

Restructuring

The restructuring liability at September 30, 2017 and December 31, 2016 is primarily related to the Company’s exit from its Colorado office during the first quarter 2016. The restructuring liability includes the remaining obligations under the Colorado lease, net of proceeds for a sublease. The Company signed a sublease for the office space in the second quarter 2017. The Company exited from its Colorado office in order to consolidate facility space for its Engineering Services reporting unit. The restructuring expense related to the Colorado lease is included in discontinued operations in the statements of earnings for the nine months ended September 30, 2017 and 2016, respectively. The restructuring liability was not held for sale at September 30, 2017. Of the $108 restructuring liability at September 30, 2017, $24 was included in accrued liabilities and $84 was included in long-term liabilities in the consolidated balance sheets. Of the $0.2 million restructuring liability at December 31, 2016, $0.1 million was included in accrued liabilities and $0.1 million was included in long-term liabilities in the consolidated balance sheets.

The following table summarizes the restructuring activity during the nine months ended September 30, 2017 and the status of the reserves at September 30, 2017.

	December 31, 2016		Expenses/ Adjustments			Cash Payments/ Adjustments			September 30, 2017

Severance and related employee benefits	$	6	$	(1	)	$	(5	)	$	0
Lease terminations		190		9			(91	)		108
Total	$	196	$	8		$	(96	)	$	108
.

Operating Leases

The Company has operating leases for facilities through 2024 and office equipment through 2021. The future minimum rental payments under these leases at September 30, 2017, are as follows:

Year	Amount
2017	$	276
2018		1,085
2019		1,056
2020		470
Thereafter		456
Future minimum lease payments	$	3,343

The rent expense under leases was approximately $0.2 million for the three months ended September 30, 2017, and 2016, respectively. The rent expense under leases was approximately $0.7 million for the nine months ended September 30, 2017, and 2016, respectively.

Operating Leases - Continuing Operations

In June 2016, the Company entered into a new four-year lease for its Beijing Design Center and in January 2017 the Company signed a new lease for additional space at the same location. With the expansion, the Company has 11,270 square feet in its Beijing Design Center. The total lease obligation pursuant to agreement for the expansion was $0.4 million. The Beijing Design Center has an engineering department for antenna development as well as sales and marketing for the China market.

In April 2017, the Company renewed the first-floor space of Tianjin facility with 22,120 square feet of leased space. The total lease obligation as of September 30, 2017 pursuant to the agreement was $35 and expires on April 11, 2018.

In August 2017, the Company entered into a new seven-year lease for 5,977 square feet of office space in Akron, Ohio for antenna product development. The total lease obligation pursuant to the agreement was $0.7 million with a scheduled commencement date of January 1, 2018.

Operating Leases- Discontinued Operations

During the first quarter 2016, the Company exited from its Colorado office in order to consolidate facility space related to its Engineering Services reporting unit. In May 2017, the Company signed a sublease with a term through the lease termination date. The lease expires on October 31, 2020 and the Company’s remaining lease obligation to the landlord as of September 30, 2017 was $0.4 million. See discussion related to the Colorado offices in the restructuring section of this footnote.

As part of the sale of the Engineering Services business to Gabe’s on July 31, 2017, Gabe’s assumed the lease of the Company’s office space in Melbourne, Florida through the end of the lease period. The lease expires on December 31, 2018 and the remaining lease obligation as of the transaction date with Gabe’s was $78.

Capital Leases

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

	September 30, 2017			December 31, 2016
Cost	$	453		$	324
Accumulated Depreciation		(172	)		(105	)
Net Book Value	$	281		$	219

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

2017	$	26
2018		104
2019		87
2020		47
Thereafter		47
Total minimum payments required:		311
Less amount representing interest:		21
Present value of net minimum lease payments:	$	290

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 September 30, 2017 and December 31, 2016, 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 $0.4 million at September 30, 2017 and December 31, 2016, respectively, and is included in other accrued liabilities in the accompanying condensed consolidated balance sheets.

	Nine Months Ended September 30,
	2017			2016
Beginning balance	$	394		$	348
Provisions for warranties		99			57
Consumption of reserves		(75	)		(86	)
Ending balance	$	418		$	319