15. Commitments

Operating Leases

In August 2015, the Company’s United Kingdom subsidiary entered into a 5-year lease agreement to rent approximately 9,000 square feet of warehouse and office space in Rugby, England for $6,000 per month.

In November 2016, CTI Europe entered into a lease agreement for 13,000 square feet of office and warehouse space in Heusenstamm, Germany for a term commencing on February 1, 2017 and ending on February 1, 2022 at the rate per month of $9,000. A prior lease for space in Heusenstamm was terminated on February 1, 2017.

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 $22,000 per month. The lease was extended to February 28, 2017. Effective March 1, 2017, Flexco Universal entered into a five year lease for these premises at a cost of 493,090 Mexican Pesos per month (currently, approximately $26,000 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. Effective March 1, 2017, this lease has been renewed for three years, at a basic rental cost per month of:

Lease period	Amount per month
November 1, 2016 – February 28, 2017	$	36,000
March 1, 2017 – February 28, 2018	$	38,000
March 1, 2018 – February 28, 2019	$	40,000
March 1, 2019 – February 29, 2020	$	42,000

All of the Company’s lease payments are recognized on a straight-line basis. The net lease expense was $732,000 and $950,000 for the years ended December 31, 2016 and 2015, respectively.

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

2017	$	182,000
2018		111,000
2019		111,000
Thereafter		373,000
Total	$	777,000

Licenses

The Company has certain merchandising license agreements 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:

2017		$	500,000
Total		$	500,000