NOTE 1 2  COMMITMENTS AND CONTINGENCIES AEON leases its facilities under a lease agreement dated March 1, 2014, as amended January 20, 2016. The lease, amended, provided for a term of 12 years expiring March 2026. Total Less than 1 year 1-3 years 4-5 years More than 5 years Leases Operating $ 5,590,001 $ 740,000 $ 1,542,001 $ 1,373,000 $ 1,935,000 Capital 12,000 12,000 - - - Total lease obligations 5,602,001 752,000 1,542,001 1,373,000 1,935,000 Prior to the completion of the merger, AT&amp;T provided various communication services and equipment to the Company, including facsimile lines. AT&amp;T has claimed that the Company owes approximately $500,000 for such services. The Company is prepared to negotiate with AT&amp;T to seek a compromise. To the Company's knowledge, no proceedings have been commenced regarding this matter, and the Company has accrued an amount equal to its potential liabilities based on the facts and circumstances known on its financial statements as of the fiscal year ended June 30, 2019. Regarding the termination of the Company's relationship with certain executives, including the former Chief Executive Officer ("CEO") of Authentidate Holding Corp., O'Connell Benjamin, the Company has reviewed its severance obligations and the vesting of post-termination provisions. The Company believes it has accrued all related severance costs as of June 30, 2019 related to past terminations. The former CEO commenced an arbitration proceeding before the American Arbitration Association ("AAA") on or about June 22, 2016 requesting severance compensation of $341,620 and other benefits, including the vesting of certain stock option awards, pursuant to an employment agreement. The parties opted to pursue mediation in their attempt to resolve the matter, and a mediation session was held on October 30, 2017, but no resolution was reached. The Company believes it has valid defenses to Mr. Benjamin's claims and intends to defend this matter accordingly as the arbitration process ensues. On September 14, 2016, the Company received notice from the Office for Civil Rights ("OCR") of the U.S. Department of Health and Human Services ("DHHS") informing the Company that the OCR was conducting a review of the Company's compliance with applicable Federal Standards for Privacy of Individually Identifiable Health Insurance Portability and Accountability Act of 1996, as amended ("HIPAA"), and its privacy, security and data breach rules ("HIPAA Rules"). The OCR's compliance review initially covered the Company's telehealth business, and on December 21, 2017, expanded its review to its clinical laboratory operations. The OCR reviewed the Company's premises and conducted interviews on May 23, 2017, and the Company continues to work on a resolution with the OCR. The OCR may, among other things, require a corrective action plan, issue penalties, or reach a monetary settlement. The Company does not expect a material adverse determination based on consolidated financial position, results of operations, and cash flows. On June 13, 2019, the Company received notice from the Office of the Inspector General ("OIG") of the U.S. Department of Health and Human Services ("DHHS") informing the Company that the OIG had completed an audit of the Company's billing for the period of January 8, 2015, through July 20, 2016, with respect to claims submitted for specimen validity testing (SVT). As a result of a Local Coverage Determination (LCD) from the Center of Medicare and Medicaid Services (CMS), it was decided that claims for SVT would be disallowed effective as of October 15, 2015. The OIG contends the Company continued to submit claims for SVT after the effective date of the LCD, and monies paid for such testing were to be repaid. The Company continues to work on a resolution with the OIG. The OCR may, among other things, require repayment, issue penalties, or reach some other monetary settlement. The Company does not expect a material adverse determination on consolidated financial position, results of operations, and cash flows. The Company was the defendant in an action captioned Cogmedix, Inc. v. Authentidate Holding Corp. in the Superior Court of Worcester County, Commonwealth of Massachusetts, Case No.: 1685CV013188. Suit was filed on September 6, 2016, based upon a purchase order dated December 6, 2013, alleging the principal amount of $227,061, and accumulating interest and attorney fees. On February 15, 2018, judgement in the amount of $320,638 was awarded. Thereafter, the parties entered into a Forbearance Agreement on October 17, 2018, wherein Plaintiff agreed to accept the compromised sum of $149,996 by Company making three ( 3 ) monthly payments of $25,000 from October 18, 2018 through December 2018, followed by five ( 5 ) monthly payment of $12,500 from January 18, 2019 through May 18, 2019, and a final payment of $14,996 on June 18, 2019. All required payments have since been tendered timely and satisfactorily, and the matter is now closed. On September 15, 2015, the Company executed an amendment to the lease for its replacement offices in New Jersey. The term of the lease was for six ( 6 ) years with annual rentals ranging from approximately $135,000 in the first year to $148,000 in its final year. The lease provided the Company with opportunities for its early termination by the tender of a pre-negotiated amount on the 18 th , 27 th , and 36 th month anniversary dates of the amendment. As part of the lease terms, the Company provided a letter of credit ("LOC") in the approximate amount of $121,000 as security for its lease payments. In July 2017, the Company vacated the premises, and the landlord took possession of both the premises and the aforementioned LOC in the first quarter of fiscal year 2018, and subsequently leased the subject premises to a third party by at least the fourth quarter of fiscal year 2018; to wit: May of 2018. The Company is evaluating its possible lease obligations and considering its alternatives, and, although not guaranteed, expects to be successful. The Company is the defendant in an action captioned Grace Partners, LLC. v. Peachstate Health Management, LLC , in the Superior Court of the State of California, County of San Diego, Case No.: 37 - 2019 - 00007050 -CU-BC-CTL. Suit was filed on February 6, 2019, based upon the alleged breach of a lease dated August 25, 2015. The Company ended its tenancy in August 2017, and the plaintiff is seeking monthly rent of $10,938.27 from that time onwards. The Company timely filed its Answer on March 29, 2019, denying the claims of the plaintiff and intends to vigorously defend the claim. Mediation is set for October 10, 2019, to resolve this matter. At the present time, management is unable to determine whether this claim will have a material impact on the Company's financial condition, results of operations, or cash flow. The Company, its Chief Executive Officer, and certain yet identified persons are defendants in a case captioned Carlotta Miraflor v. Peachstate Health Management, LLC d/b/a Aeon Global Health, et al. , filed on October 4, 2017 in the United States District Court for the Central District of California, Case No.: 5:17 -CV- 02046 -DSF-SP. Service of the Summons and Compliant was made on January 3, 2018 and an Answer denying liability was timely filed with the Court Clerk. The plaintiff is a principal of a corporate independent contractor which planned to provide marketing services to the Company pursuant to a services agreement. The lawsuit was preceded by a Dismissal and Notice of Rights by the U.S. Equal Employment Opportunity Commission ("EEOC") in July 2017, on the basis that the Plaintiff was determined to be a principal of a corporate independent contractor. Notwithstanding this ruling the Plaintiff initiated suit alleging wrongful termination, retaliation, harassment, and other claims. The lawsuit seeks monetary damages for Plaintiff's alleged loss of earnings, emotional distress, punitive damages, attorney's fees, and costs. The court ordered the case to mediation as part of its alternative dispute resolution program, but such mediation did not result in a final resolution to the case. Trial has been tentatively set for December, 2019. The Company is also subject to claims and litigation arising in the ordinary course of business. Our management considers that any liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the aggregate, would not have a material adverse effect on our consolidated financial position, results of operations or cash flows. The Company has entered into various agreements by which we may be obligated to indemnify the other party with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business under which we customarily agree to hold the indemnified party harmless against losses arising from a breach of representations related to such matters as intellectual property rights. Payments by us under such indemnification clauses are generally conditioned on the other party making a claim. Such claims are generally subject to challenge by us and to dispute resolution procedures specified in the particular contract. Further, our obligations under these arrangements may be limited in terms of time and/or amount and, in some instances, we may have recourse against third parties for certain payments made by us. It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to the conditional nature of our obligations and the unique facts of each particular agreement. Historically, we have not made any payments under these agreements that have been material individually or in the aggregate. At June 30, 2019, we are not aware of any obligations under such indemnification agreements that would require material payments.