15.

Commitments

Operating Leases

The Company’s United Kingdom subsidiary maintains a lease for office and warehouse space which expires December 2014 at a cost of $5,000 per month and additional space that expires July 2014 at a cost of $2,000 per month. In September 2010, the Company’s German subsidiary entered into a 3-year lease to rent approximately 3,000 square feet of office and warehouse space in Heusenstamm, Germany at a cost of $2,000 per month. In August 2011, Flexo Universal entered into a 5-year lease to rent 73,000 square feet of warehouse and office space in Guadalajara, Mexico at the cost of $30,000 per month. In October 2011, we entered into a lease agreement, expiring on December 31, 2012, to rent approximately 30,000 square feet of warehouse space in Elgin, Illinois at a cost of $20,000 per month. In May 2012, we entered into a lease agreement, expiring on March 31, 2013 to rent approximately 23,000 square feet of warehouse space in Cary, Illinois at a cost of 10,000 per month. In September 2012, we entered into a lease agreement, expiring on February 28, 2017 to rent approximately 117,000 square feet of warehouse and office space in Lake Zurich, Illinois at a cost per month as follows:

Lease period	Amount per month
March 1, 2013 – October 31, 2013	$	25,000
November 1, 2013 – October 31, 2014		28,000
November 1, 2014 – October 31, 2015		30,000
November 1, 2015 – October 31, 2016		33,000
November 1, 2016 – February 28, 2017		36,000

All of the Company’s lease payments are recognized on a straight-line basis. The net lease expense was $963,000 and $935,000 for the years ended December 31, 2013 and 2012, respectively.

The future aggregate minimum net lease payments under existing agreements as of December 31, are as follows:

2014	$	1,005,000
2015		898,000
2016		687,000
2017		72,000
Thereafter		-
Total	$	2,662,000

Licenses

The Company has certain merchandising license agreements, which are of a one to two year duration that require royalty payments based upon the Company’s net sales of the respective products. The agreements call for guaranteed minimum commitments that are determined on a calendar year basis. Future guaranteed commitments due, as computed on a pro rata basis, as of December 31, are as follows:

2014	$	375,000
Thereafter		-
Total	$	375,000