8. BANK LOANS AND NOTES PAYABLE

6 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

BANK LOANS AND NOTES PAYABLE

NOTE 8 - BANK LOANS AND NOTES PAYABLE

The Company's debt consisted of the following as of December 31, 2012 and June 30, 2012:

	December 31, 2012		June 30, 2012
Bank loans and notes payable-current	$	935,207	$	1,022,826
Bank loans and notes payable-long term		2,719,258		2,915,134
Total	$	3,654,465	$	3,937,960

In May 2012 the Company entered into Securities Purchase Agreements with certain investors providing for the sale of a total of $2,465,000 of Zero Coupon Convertible Subordinated Notes (the “Notes”).  The Notes, which were to mature on August 31, 2012, were issued to investors with a principal amount equal to the investor’s subscription amount times 110% and did not bear interest except in the instance of default.  The Notes were convertible into shares of common stock of the Company at an exercise price equal to $0.53, which was the closing price of the common stock on May 1, 2012 (the “Conversion Price”).  In connection with the Notes, the Company entered into a security agreement with the lenders providing for a security interest in all of the assets of the Company and certain subsidiaries of the Company.  In connection with the purchase of Notes, each investor  received a five-year warrant to purchase a number of shares of Common Stock equal to 55% times such investor’s investment in the Notes divided by the Conversion Price at an exercise price equal to the Conversion Price.  Certain directors and officers of the Company invested $330,000 in the Notes. The proceeds to the Company were $2,223,307.  The Company recorded financing costs of approximately $227,693 in connection with the issuance of the Notes as interest expense during the year ended June 30, 2012.  As of June 30, 2012 the Notes were either converted into the Company’s stock or paid in full.  Interest expense related to the Notes was $1,366,450 for the year ended June 30, 2012.

Bank loans and notes payable consisted of the following at December 31, 2012 and June 30, 2012:

	December 31, 2012		June 30, 2012
Note payable to the seller of Tier Electronics LLC payable in annual installments of   $450,000 on January 21, 2013 and January 21, 2014.  Interest accrues at a rate of   8% and is payable monthly.  The promissory note is collateralized by the Company’s   membership interest in its wholly-owned subsidiary Tier Electronics LLC.  See note   (a) below.	$	900,000	$	900,000
Note payable to Wisconsin Department of Commerce payable in monthly   installments of $22,800, including interest at 2%, with the final payment due   May 1, 2017; collateralized by equipment purchased with the loan proceeds and   substantially all assets of the Company not otherwise collateralized.  The Company   is required to maintain and increase a specified number of employees, and the   interest rate is increased in certain cases for failure to meet this requirement.		1,154,842		1,279,367
Bank loan payable in fixed monthly payments of $6,800 of principal and interest   at a rate of .25% below prime, as defined, subject to a floor of 5% as of June 30,   2012 and 2011 with any principal due at maturity on June 1, 2018; collateralized by   the building and land.		696,873		719,528
Note payable in fixed monthly installments of $6,716 of principal and interest at   a rate of 5.5% with any principal due at maturity on May 1, 2028; collateralized   by the building and land.		749,818		764,981
Bank loan payable in monthly installments of $21,000 of principal and interest at a   rate equal to prime, as defined, subject to a floor of 4.25% with any principal due   at maturity on December 1, 2013; collateralized by specific equipment.		152,932		274,084
	$	3,654,465	$	3,937,960

(a)   If the federal capital gains  tax rate exceeds 15% and or the State of Wisconsin capital gains tax rate  exceeds 5.425% at any time prior to the payment in full of the unpaid  principal balance and accrued interest on the promissory note, then the  principal amount of the promissory note shall  be retroactively increased by an amount equal to the product of (a) the aggregate amount  of federal and state capital gain realized by the Seller or Seller’s sole member,  as applicable, in connection with the acquisition, multiplied by (b) the  difference between (i) the combined federal and State of Wisconsin capital  gains tax rate as of the date of calculation, minus (ii) the combined federal and  State of Wisconsin capital gains tax rate of 20.425% as of January 21, 2011.  Any adjustment to the principal amount of the promissory note shall be effected by increasing the amount of the last payment due under the promissory note without affecting the next regularly scheduled payment(s) under the promissory note.  On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed, effectively raising the top rate for capital gains to 20%.  The Company is in the process of assessing the effect of the tax law change on the note and has determined the maximum impact on the Company will be approximately $50,000 in additional principal and interest that will be recognized as a result of the aforementioned change in tax law.  The loan was amended in January 2013 and the payment of $450,000 due on January 21, 2013 was deferred to be paid in three installments of $150,000 on January 22, 2013, $75,000 at any time thereafter upon five days written notice by the holder to the Company and $225,000 on February 21, 2013.  Interest continued to accrue at a rate of 8% and is payable monthly.

Aggregate annual principal payments for fiscal periods subsequent to December 31, 2012, before the impact of the adjustment for the change in the tax law previously discussed are as follows:

2013 (six months)	$	738,830
2014		816,002
2015		346,433
2016		356,292
2017		342,826
2018 and thereafter		1,054,082
	$	3,654,465