(8) Commitments and contingencies

Leases

The Company and its subsidiaries occupy various facilities and operate various equipment under operating lease arrangements. Rent charged to operations pursuant to such operating leases amounted to approximately $419,000 in 2014, $512,000 in 2013 and $516,000 in 2012.

Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of April 30, 2014 are as follows:

Purchases

At April 30, 2014, the Company had open purchase orders outstanding totaling $1,758,000 primarily for inventory items to be delivered in the first three months of the fiscal year ending April 30, 2015. These purchase orders are cancelable.

License Agreements

The Company has entered into certain licensing agreements with varying terms and conditions. The Company is obligated to pay royalties on certain of these agreements. Royalties charged to operations pursuant to such agreements amounted to approximately $60,000 in 2014, $92,000 in 2013 and $94,000 in 2012.

Legal Proceedings

We are a party to a litigation that could cause us to incur substantial cost or pay substantial damages. The landlord for the property previously leased by the Company in Ivyland, Pennsylvania filed suit against the Company, which vacated the property at the expiration of its lease, for the Company's alleged failure to restore the Property to its original condition. The landlord is currently in possession of a security deposit in the amount of $52,000. The Company denies its liability for the restoration of the property and believes that the outcome cannot be determined at this time.

On July 30, 2013, the District Court Judge issued an order against the Company in favor of the landlord Ivyland Ventures, LLC. Based on the language of the lease agreement, the Court, without making any factual findings on the extent of the Company's liability, ruled that the Company is required to remove and restore the premises to condition that existed as of January 11, 2006 or pay the cost of removal and restoration of improvements made during its entire occupation. Dates have been set for discovery with a trial tentatively scheduled for the Fall/Winter of 2014. The Company believes that the claims of the landlord are without merit and intends to vigorously defend this action. However, no assurance can be given that any amounts ultimately due by the Company will not have a material impact on the Company's financial condition.

On July XX, 2014 the parties have agreed to settle the case in the amount of $225,000 payable in three installments of $75,000 each. The payments will be made over a ninety day period from the date of executing appropriate documents. The settlement amount of $225,000 is accrued in the April 30, 2014 financial statements.