Note 8. Commitments and Contingencies The Company, from time to time, is involved in legal proceedings or regulatory encounters or other matters in the ordinary course of business that could result in unasserted or asserted claims or litigation. Management is not aware of any legal proceedings where the likelihood of a loss contingency is reasonably possible and the amount or range of reasonably possible losses is material to the Companys results of operations, financial condition or cash flows. Operating leases The Company leases its main headquarters and manufacturing facility and facilities for its foreign subsidiaries. Certain of the Companys leases contain renewal options, rent escalation clauses, and/or landlord incentives. Rent expense for noncancelable operating leases with scheduled rent increases and/or landlord incentives is recognized on a straight-line basis over the lease term beginning with the lease commencement date, or the date the Company takes control of the leased space, whichever is sooner. The excess of straight-line rent expense over scheduled payment amounts and landlord incentives is recorded as a deferred rent liability. The Company leases two adjacent facilities located in San Clemente, California, both of which are subject to leases that expire on December 31, 2021. The agreements each contain an option to extend the leases for up to two additional three-year periods at market rates. The total square footage of both facilities equals approximately 77,000. The lease landlord agreed to provide the Company with a tenant improvement allowance after January 1, 2017 in the amount of the cost of any leasehold improvements, not to exceed approximately $264,000 upon the Company providing the necessary documentation evidencing the costs of the allowable leasehold improvements. The Companys foreign subsidiaries lease office space totaling less than 3,000 square feet. The Company recorded deferred rent of $253,000 and $219,000 as of June 30, 2017 and December 31, 2016, respectively, in conjunc