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12. COMMITMENTS

9 Months Ended

Mar. 31, 2014

NOTE 12 – COMMITMENTS

Leasing Activities

The Company leases its Australian research and development facility from a non-related Australian company under the terms of a lease that expires October 31, 2016. The rental rate was $75,596 per annum (A$72,431) and was subject to an annual CPI adjustment. Rent expense was $23,340 and $69,525 for the three and nine months ended March 31, 2014, respectively and $25,907 and $77,632 for the three and six months ended December 31, 2012, respectively. In July of 2011 the Company renewed the lease on its Australian research and development facility through October 2016 at a rental rate of $95,855 per annum (A$95,000) subject to an annual CPI adjustment. The Company also leased a building from an officer of its subsidiary, Tier Electronics LLC, who is also a shareholder and director, under a lease agreement that was due to expire on December 31, 2014. Subsequently a lease termination agreement was entered into on October 20, 2013, which terminated the lease effective December 31, 2013 for a fee of $21,000. The rent expense for the three and nine months ended March 31, 2014 was $0 and $63,000, respectively and $21,000 and $63,000 for the three and nine months ended March 31, 2013. The Company was required to pay real estate taxes and other occupancy costs related to the facility.

The future payments required under the terms of the leases for fiscal periods subsequent to March 31, 2014 are as follows:

2014 (three months)	$	23,217
2015		92,867
2016		30,956
	$	147,039

Employment Contracts

The Company has entered into employment contracts with executives and management personnel. The contracts provide for salaries, bonuses and stock option grants, along with other employee benefits. The employment contracts generally have no set term and can be terminated by either party. There is a provision for payments of up to six months of annual salary as severance if we terminate a contract without cause, along with the acceleration of certain unvested stock option grants.

- Definition

The entire disclosure for significant arrangements with third parties, which includes operating lease arrangements and arrangements in which the entity has agreed to expend funds to procure goods or services, or has agreed to commit resources to supply goods or services, and operating lease arrangements. Descriptions may include identification of the specific goods and services, period of time covered, minimum quantities and amounts, and cancellation rights.

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