COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jun. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

12.  COMMITMENTS AND CONTINGENCIES

Facility Rental

The Company leased offices with approximately 6,848 square feet in Bethesda, Maryland, pursuant to a lease which expired on December 31, 2011.  The lease required the payment of a refundable security deposit of $28,525 which was included in deposits on the Company’s consolidated balance sheet at June 30, 2011 and monthly lease payments of total approximately $16,053.   Rent expense for this lease is included in the accompanying financial statements since the reverse acquisition.

On December 7, 2011, the Company entered into a one-year lease for 1,957 square feet in Gaithersburg, Maryland which expires on December 31, 2012.  The lease required the payment of a refundable security deposit of $4,000 which is included in prepaid expenses and other current assets at June 30, 2012.  Monthly lease amounts for this facility total approximately $2,000 including monthly operating expense charges of $763.

Rent expense included in the accompanying financial statements since the reverse acquisition was $110,241and $64,212 for the years ended June 30, 2012 and 2011, respectively.  Future minimum rental payments required under the current operating lease through expiration are $12,000.

Operating Lease

In May 2010, AccelPath entered into a non-cancelable operating lease for certain equipment.  The lease required monthly rental payments of $3,698 and expired in May 2015.  The lease terms required payment of a refundable security deposit of $18,000 which was included in deposits on the Company’s consolidated balance sheet at June 30, 2011.  On April 9, 2012, AccelPath entered into a general release and covenant not to sue with the lessor.  Under the terms of the release, AccelPath returned the equipment to the lessor, the lessor returned AccelPath’s security deposit, and the parties released each other from any and all claims.

Rent expense for the years ended June 30, 2012 and 2011 was $18,675 and $44,487, respectively.

Consulting Agreements

On December 14, 2011, the Company entered into a consulting agreement that terminates on December 31, 2012.  The agreement may be cancelled by the Company with 90 days prior notice.  Under the agreement the consultant received a stock option for 2,500,000 shares of common stock (see Note 10), a payment of $10,000 in February 2012, and is entitled to monthly payments of $7,500 for the remainder of agreement.  The monthly payments are subject to scheduled increases contingent on future events.  Consulting expense, not including expense recognized for the stock option, was $58,750 for the year ended June 30, 2012.

On March 15, 2012, the Company entered into a six month consulting agreement.  Under the agreement, the consultant received a $10,000 retainer and will receive additional compensation of $10,000 per month for the term of the agreement.  The Company also granted the consultant a restricted stock award (see Note 10).  Consulting expense, not including expense recognized for the restricted stock award, was $35,000 for the year ended June 30, 2012.

Government Contracts

Technest, Inc.’s billings related to certain U.S. Government contracts are based on provisional general and administrative and overhead rates which are subject to audit by the contracting government agency.  Provisional rates are based on the annual budget submitted to and approved by the government.

Employment Agreements

At June 30, 2012, the Company was not obligated under any employment agreements.