Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Commitments And Contingencies Disclosure [Abstract]

Note 12. Commitments and Contingencies

Compensation Agreements

In September 2017, the Company entered into an arrangement with certain of its non-executive officer employees to provide for retention bonus payments to those eligible employees providing continuing service to the Company through July 31, 2018 and December 31, 2018, respectively, with one half of the retention bonus commitment payable at each of these dates. Compensation expense of $87,965 has been included in the condensed statements of operations for both the three and nine months ended September 30, 2017. Retention bonus accrual is included in accrued liabilities in the condensed balance sheets as of September 30, 2017. The remaining retention bonuses will be accrued on a straight-line basis through December 31, 2018. No forfeiture rate has been estimated. Forfeitures will be recognized as they occur.

Legal Matters

The Company’s industry is characterized by frequent claims and litigation, including claims regarding intellectual property and product liability. As a result, the Company may be subject to various legal proceedings from time to time. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Any current litigation is considered immaterial and counter claims have been assessed as remote.

Leases

The Company leases office and laboratory space in Tucson, Arizona under two non-cancelable operating leases. There have been no changes to the Company’s office and laboratory space leases since the disclosures made by the Company in its Annual Report on Form 10-K, filed with the SEC on March 23, 2017. The Company’s remaining minimum real estate lease payments before common area maintenance charges for each fiscal year as of September 30, 2017 are as follows:

2017	$	127,383
2018		512,533
2019		514,977
2020		517,457
2021		43,139
	$	1,715,489

As of September 30, 2017, the Company also has remaining capital lease commitments consisting of approximately $103,000 for computer equipment varying in length from 36 to 48 months and for an equipment financing arrangement of approximately $5,000 with a vendor that expires in December 2017 that have not been included in the minimum lease payments schedule above.

Product Warranty

The following is a summary of the Company’s general product warranty reserve:

	Nine Months Ended September 30,
	2017			2016
Beginning balance	$	50,426		$	20,213
Cost of warranty claims		(6,278	)		(67,663	)
Increase in warranty reserve		3,275			83,745
Ending balance	$	47,423		$	36,295

Warranty reserve is included in accrued liabilities in the condensed balance sheets as of September 30, 2017 and December 31, 2016. Expense relating to the recording of this reserve is recorded in cost of revenue within the condensed statements of operations.