14. COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

14. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company may become involved in certain legal proceedings and claims which arise in the normal course of business.

1. Subsequent to the year end, the Company became a defendant in an employment related lawsuit filed by a former employee, who was terminated for cause in October 2018. The Company believes it is without merit and has filed a defense and Motion to move the matter to Arbitration. The complaint revolves around alleged unpaid commissions and the Company does not consider it to be material.

2. In May 2019, a Company subsidiary was named in a lawsuit filed in the Superior Court of Arizona County of Maricopa by the Company’s prior manufacturer, Infinity Power and Controls, LLC. (Infinity), alleging non-payment of invoices totaling $414,000 and an undetermined amount of parts inventory. On July 5, 2019, the Company was added as a defendant in the action. Infinity was the Company’s manufacturer until they were dismissed in December 2018, due to quality and reliability issues, which resulted in unacceptable product returns. On July 2, 2019, the Company commenced an action against Infinity Power and Controls LLC in the United States District Court Central District of California for Breach of Contract, Negligence and Fraud. The lawsuit asks for direct and punitive damages of $30 million from Infinity. As a both plaintiff and defendant in matters relating to its prior manufacturer, the Company believes it sustained substantial damage from the poor-quality product manufactured by Infinity.

Lease Agreements

We lease offices in Hollywood, California (located at 6671 Sunset Blvd., Suite 1520, 1518 and 1550, Hollywood, California, 90028) for corporate, research, engineering and mastering services. The lease expired on December 31, 2017 and now is on a month to month basis. The total lease expense for the facility is approximately $20,574 per month, and the total remaining obligations under these leases at June 30, 2019, were approximately $0.

We lease a warehouse space located at 8260 E Gelding Drive, Suite 102, Scottsdale, Arizona, 85260. The lease expired on January 31, 2019 and now is on a month to month basis. The total lease expense for the facility is approximately $1,993 per month, and the total remaining obligations under this lease at June 30, 2019, were approximately $0.

We lease corporate offices located at 7825 E Gelding Drive, Suite 101, Scottsdale, Arizona, 85260. The lease expires on April 30, 2021. The total lease expense for the facility is approximately $7,450 per month, and the total remaining obligations under this lease at June 30, 2019, were approximately $163,895.

We lease corporate offices located at 7825 E Gelding Drive, Suite 103, Scottsdale, Arizona, 85260. The lease expired on February 22, 2019 and the Company did not renew the lease. The total lease expense for the facility was approximately $3,000 per month, and the total remaining obligations under this lease at June 30, 2019, were approximately $0.

Below is a table summarizing the annual operating lease obligations over the next 5 years:

Year	Lease Payments
2020	$	89,397
2021		74,498
2022		-
2023		-
2024		-
Total	$	163,895

Other

The Company has not declared dividends on Series A or B Convertible Preferred Stock or its Series A-1 Convertible Preferred Stock. The cumulative dividends in arrears through June 30, 2019 were approximately $1,361,102.