Quarterly report pursuant to Section 13 or 15(d)

9. Commitments and Contingencies

9. Commitments and Contingencies
6 Months Ended
Jun. 30, 2017
Notes to Financial Statements  
Note 9. Commitments and Contingencies

Property Leases


On June 1, 2011, the Company entered into a lease for warehouse space in Centralia, Washington, commencing August 1, 2011. The lease is currently operating on a month to month basis. Rent is $510 monthly throughout the term of the lease.


On January 27, 2015, the Company entered into a 13-month lease for office space in Lewis Center, Ohio, commencing February 1, 2015. The lease provides for the option to extend the lease for up to five additional years. Rent was abated for the first month of the lease. To date, the lease has been extended twice through February 2018. Monthly rent is $1,386 through February 2018.


On July 1, 2015, the Company entered into a five year lease for warehouse space in Corsicana, Texas. Rent is $3,750 monthly throughout the term of the lease and is waived from July 1, 2016 through September 30, 2016. The Company is also responsible for the pro rata share of the projected monthly expenses for the property taxes. The current pro rata share is $881.79.


On September 1, 2015, the Company entered into a three year lease for office space in Grand Forks, North Dakota. Rent is $3,500 monthly for the first year and decreases to $2,500 throughout the remainder of the term of the lease.


Future minimum lease payments under these non-cancelable leases are approximately as follows:


For the twelve months ended June 30        
2018   $ 86,000  
2019     50,000  
2020     45,000  
    $ 181,000  


Rent expense was approximately $55,000 and $70,000 for the six months ended June 30, 2017 and 2016, respectively.


Fixed Price Contract


The Company’s multi-year contracts with its commercial customers contain fixed prices for product. These contracts expire through 2019 and expose the Company to the potential risks associated with rising material costs during that same period.


Legal proceedings


The Company is involved in various claims and legal proceedings arising from the normal course of business. While the ultimate liability, if any, from these proceedings is presently indeterminable, in the opinion of management, these matters should not have a material adverse effect on the Company’s consolidated financial statements.