NOTE 12 – COMMITMENTS AND CONTINGENCIES

Facilities - Our corporate offices and Digital division together occupy approximately 11,000 square feet of commercial office space at 28 East Main Street, Rochester, New York 14614 under a lease that expires September 30, 2015, at a rental rate of approximately $14,000 and $15,000 per month in 2014 and 2015, respectively. Our Plastics division leases approximately 15,000 square feet in a lease that expires December 31, 2018 for approximately $13,000 per month. In addition, the Company owns a 40,000 square foot packaging and printing plant in Victor, New York, a suburb of Rochester, New York. The Company's Technology Management division leases executive office space in Reston, Virginia under a 13 month lease that expires in December 2015 for approximately $2,700 per month, and also leases a sales and research and development facility in Plano, Texas under a 12 month lease that expires in December 2015 for approximately $1,044 per month. In addition, during 2014, the Company's Technology Management division leased office space in New York City for approximately $3,000 under an agreement it terminated in December 2014. The Company believes that it can negotiate renewals or similar lease arrangements on acceptable terms when its current leases expire. The Company believes that its acilities are adequate for our current operations.

Equipment Leases – From time to time, the Company leases certain production and office equipment, digital and offset presses, laminating and finishing equipment for its various printing operations. The leases may be capital leases or operating leases and are generally for a term of 36 to 60 months. The leases expire at various dates February 2017. As of December 31, 2014, the Company did not have any capital leases. During 2013, the Company made payments in the aggregate of approximately $764,000 under operating leases.

The following table summarizes the Company's lease commitments.

	Operating Leases
	Equipment		Facilities		Total

Payments made in 2014	$	30,540	$	513,669	$	544,209

Future minimum lease commitments:
2015		16,907		337,738		354,645
2016		5,241		164,183		169,424
2017		874		169,109		169,983
2018		-		174,182		174,182
2019		-		-		-

Total future minimum lease commitments	$	23,022	$	845,212	$	868,234

Employment Agreements - The Company has employment agreements with nine members of its management team with terms ranging from one to five years through December 2019. The agreements provide for severance payments in the event of termination for certain causes. As of December 31, 2014, the minimum annual severance payments under these employment agreements are, in aggregate, approximately $1,282,000.

Related Party Payments - During 2014 and 2013, the Company paid consulting fees of approximately $145,000 and $188,000, respectively, to Patrick White, its former CEO, under a consulting agreement and paid an aggregate of approximately $35,000 in 2015 through the expiration of the agreement in February 2015.

On December 29, 2014, the Company paid National Securities Corporation underwriting fees of approximately $134,000 and $100,000 in underwriter expenses pursuant to an underwritten offering the Company made of 3,715,000 shares of common stock. (See Note 8). Robert Fagenson, the Company's Board chairman, is also the chairman of the board of directors of National Holdings Corporation, the parent company of National Securities Corporation.

Contingent Litigation Payments – The Company retains the services of professional service providers, including law firms that specialize in intellectual property licensing, enforcement and patent law. These service providers are often retained on an hourly, monthly, project, contingent or a blended fee basis. In contingency fee arrangements, a portion of the legal fee is based on predetermined milestones or the Company's actual collection of funds. The Company accrues contingent fees when it is probable that the milestones will be achieved and the fees can be reasonably estimated. As of December 31, 2014 and 2013, the Company has not accrued any contingent legal fees pursuant to these arrangements.

Legal Proceedings - On October 24, 2011 the Company initiated a lawsuit against Coupons.com Incorporated (“Coupons.com”). The suit was filed in the United States District Court, Western District of New York, located in Rochester, New York. Coupons.com is a Delaware corporation having its principal place of business located in Mountain View, California. In the Coupons.com suit, the Company alleged breach of contract, misappropriation of trade secrets, unfair competition and unjust enrichment, and sought in excess of $10 million in money damages from Coupons.com for those claims. On October 28, 2014, the District Court granted Coupons.com's motion for summary judgment, dismissing the case. On November 25, 2014, the Company appealed that decision to the United States Court of Appeals for the Second Circuit. On March 5, 2015, the parties entered into a Stipulation whereby the Company withdrew the appeal without prejudice so that the parties could complete settlement negotiations. The Company has a right to re-file the appeal if settlement is not reached.

On October 3, 2012, Lexington Technology Group's (now DSS Technology Management) subsidiary, Bascom Research, LLC, commenced legal proceedings against five companies, including Facebook, Inc. and LinkedIn Corporation, pursuant to which Bascom Research, LLC alleged that such companies infringed on one or more of its patents. On January 5, 2015, the U.S. District Court for the Northern District of California granted summary judgment to defendants Facebook, Inc., and LinkedIn Corp. effectively ending the case at the trial court level. On January 22, 2015, Bascom Research, LLC and Facebook, Inc. entered in to a Stipulation filed with the District Court whereby Bascom Research, LLC agreed not to appeal the District Court's judgment, and Facebook, Inc. agreed to request the dismissal of a pending CBM review it had previously filed with the USPTO's Patent Trial and Appeal Board (PTAB). The CBM proceeding was terminated on February 24, 2015.

On November 26, 2013, DSS Technology Management filed suit against Apple, Inc. (“Apple”), in the United States District Court for the Eastern District of Texas, for patent infringement (the “Apple Litigation”). The Apple Litigation relates to certain patents owned by DSS Technology Management in the Bluetooth technology space. On November 7, 2014, the case was transferred to the Northern District of California. In December, 2014, Apple filed two petitions for Inter Partes Review of the patents at issue with the USPTO's Patent Trial and Appeal Board (PTAB). DSSTM intends to file its responses to the petitions by March 30, 2015.

On March 10, 2014, DSS Technology Management filed suit in the United States District Court for the Eastern District of Texas against Taiwan Semiconductor Manufacturing Company, TSMC North America, TSMC Development, Inc. (referred to collectively as TSMC), Samsung Electronics Co., Ltd, Samsung Electronics America, Inc., Samsung Telecommunications America L.L.C., Samsung Semiconductor, Inc., Samsung Austin Semiconductor LLC (referred to collectively as Samsung), and NEC Corporation of America (referred to as NEC), for patent infringement involving certain of its semiconductor patents. DSS Technology Management is seeking a judgment for infringement, injunctive relief, and money damages from each of the named defendants. In June, 2014, TSMC filed a petition for Inter Partes Review (IPR) of the patents at issue with the USPTO's Patent Trial and Appeal Board (PTAB). DSSTM filed its preliminary response to the petition in October, 2014. Samsung also filed an IPR relating to the same patents in September, 2014. DSSTM filed its preliminary response to that petition in December, 2014. On December 31, 2014, the PTAB instituted review of several of the patent claims at issue in the case. Samsung filed a motion with PTAB to join TSMC's IPR proceeding. The request was granted by the PTAB. On March 3, 2015, a Markman hearing was held in the Eastern District of Texas, and the court's decision is pending.

On May 30, 2014, DSS Technology Management filed suit against Lenovo (United States), Inc. (“Lenovo”) in the United States District Court for the Eastern District of Texas, for patent infringement. The complaint has alleged infringement by Lenovo of one of DSSTM's patents that relates to systems and methods of using low power wireless peripheral devices. DSS Technology Management is seeking judgment for infringement and money damages from Lenovo in connection with the case. The case is currently in the discovery phase.

On February 16, 2015, DSS Technology Management filed suit in the United States District Court, Eastern District of Texas, against defendants Intel Corporation, Dell, Inc., GameStop Corp., Conn's Inc., Conn Appliances, Inc., NEC Corporation of America, Wal-Mart Stores, Inc., Wal-Mart Stores Texas, LLC, and AT&T, Inc. The complaint alleges patent infringement and seeks judgment for infringement of two of DSSTM's patents, injunctive relief and money damages.

In addition to the foregoing, the Company is subject to other legal proceedings that have arisen in the ordinary course of business and have not been finally adjudicated. Although there can be no assurance in this regard, in the opinion of management, none of the legal proceedings to which we are a party, whether discussed herein or otherwise, will have a material adverse effect on its results of operations, cash flows or our financial condition. The Company accrues for potential litigation losses when a loss is probable and estimatable.