COMMITMENTS

3 Months Ended

Jun. 30, 2012

COMMITMENTS

COMMITMENTS

NOTE 16 — COMMITMENTS

Leases

On November 17, 2010, the Company entered into a lease agreement to lease approximately 3,200 square feet of office space in Center Valley, Pennsylvania to be used as the Company’s corporate headquarters.  The Company took possession of the office space on April 1, 2011.  Under the Lease, the Company’s payment obligations were deferred until the fifth month after it takes possession, at which time the Company will pay annual rent of approximately $58,850 in equal monthly installments, subject to upward adjustments during each subsequent year of the term of the Lease.  In addition to Base Rent, the Company will pay to the Landlord certain operating expenses and other fees in accordance with the terms of the Lease.  Payment of Base Rent and other fees under the Lease may be accelerated if the Company fails to satisfy its payment obligations in a timely manner, or otherwise defaults on its obligations under the Lease. The Lease expires sixty-four months after the date of the Lease. The Company may elect to renew the lease for an additional five-year term. The Lease contains customary representations and covenants regarding occupancy, maintenance and care of the Property. At June 30, 2012 we recorded a liability for deferred rent of $17,508 reflecting the difference between the expense recorded in the consolidated statement of operations and comprehensive income (loss) and the monthly rent cash payments paid to the lessor.

On November 15, 2010 and June 15, 2011, the Company entered into certain leases for approximately 1,000 sq. ft. of office space in Wuxi, China. The annual rental cost is approximately $27,000 and the leases expire on November 14, 2012. We also lease apartment space for certain expatriate employees who live and work in China. The annual rental cost is approximately $42,000 and the leases expire on various dates during fiscal 2013.

Rent expense for all operating leases for the three months ended June 30, 2012 and June 30, 2011 was $41,210 and $50,193, respectively.  Future minimum lease payments required under non-cancellable operating leases in the aggregate, at June 30, 2012, totaled $240,985. The totals for each annual period ended on June 30 were: 2013- $73,695, 2014- $57,360, 2015- $57,358 and 2016- $52,572.

Employment Agreements

The Company has employment agreements with its executive officers. Such agreements provide for minimum salary levels, adjusted annually, as well as for incentive bonuses that are payable if specified company goals are attained.

Severance Agreement

On February 8, 2012 the Company’s President and General Manager for its Ranor operation in the U.S. retired. In connection with the above event, the Company was required to provide severance and certain post-employment benefits. As such, the Company recorded a charge of $226,945 associated with this event. A balance of $170,208 remains outstanding at June 30, 2012, and is included in accrued expenses on the consolidated balance sheet.