Note 16 - Commitments and Contingencies

In the normal course of business, from time-to-time, the Company may become subject to claims in legal proceedings. In addition to creating its own content and using its own technologies, the Company distributes third party content and utilizes third party technology, which could further expose the Company to claims arising from actions of such third parties (for which the Company would seek indemnification that may or may not be available under the terms governing the Company’s relationships with such third parties). Legal proceedings are subject to inherent uncertainties, and an unfavorable outcome could include monetary damages, and in such event, could result in a material adverse impact on the Company’s business, financial position, results of operations, or cash flows.

Screen Media is contingently liable for a standby letter of credit in connection with an office lease agreement in the amount of $129,986 as of September 30, 2019 and December 31, 2018.

Screen Media leases its office facilities under the terms of a non-cancelable operating lease agreement that expires on February 28, 2020. Minimum annual rental commitments under the lease are as follows:

Operating Lease Commitment - Screen Media


Year Ended December 31,	Amount
Remainder of 2019		105,000
2020		70,000
	$	175,000

Rent expense recorded in the condensed consolidated statements of operations for the three months ended September 30, 2019 and 2018 was $107,303 and $102,987, respectively, and $340,421 and $310,375 for the nine months ended September 30, 2019 and 2018, respectively. The Company does not record rent expense for its Connecticut office as it is included under the Management Agreement with CSS.

Programming obligations

The Company enters into long-term contracts for programming content that cover various periods up to 5 years. Programming obligations are recognized when the license period begins and the content is available for showing. Programming obligations of $6,005,154 are included in the Consolidated Condensed Balance Sheet as of September 30, 2019. There are no other future contractual commitments in regard to the Company's programming obligations as of September 30, 2019.

Expense Reimbursement

As a part of the Crackle business combination, the company is required to reimburse CPE (“Crackle, Inc.”) upon written request during the exercise period (during the six month period following the first anniversary of the closing of the transaction) up to a maximum of $5,000,000 of reasonable, documented third-party expenses incurred in connection with the transaction payable in cash by the joint venture entity or CSSE’s Series A 9.75% perpetual preferred stock, valued at a price per share of $25. The reimbursement is due at the end of the exercise period when CPE exercises its put option or conversion rights.