6. COMMITMENTS AND CONTINGENCIES Lease - Head Office We rent office space in Marlboro New Jersey under a 12 month lease, with an option to extend the term of the lease for a further 12 months, at $1,300 per month and operating expenses. This lease is personally guaranteed by one of our officers and directors. Leases - Mexican Operation We lease a warehouse (storage) facility in the city of Morelia, Michoacán, Mexico. This lease expires February 1, 2013. It is our current intention to relocate this facility to a location substantially closer to our Solidaridad Property when our current lease expires. Mining rights We are required to make payments to the Mexican government on a bi-annual basis to maintain its mining concessions. In the twelve months ended May 31, 2012 we made payments of $76,290 to the Mexican government to maintain our mining concessions. It is anticipated that these payments will increase by 75% - 100% in the twelve months ending May 31, 2013. Legal Title Dispute On April 3, 2012, our Mexican subsidiary company, US Precious Metals SA de CV, was served with a lawsuit under case number 293/2012 by Mr. Israel Tentory Garcia ("Plaintiff") regarding one of our mining concessions. The case was filed in a local court in the Federal District of Mexico City. By way of background, during 2003, we contracted with eight private individuals, including the Plaintiff, to acquire an exploration concession to 174.54 hectares (the Solidaridad I claim). Pursuant to this agreement, we paid the former holders 1.5 million shares of our common stock. The Agreement further provided for the payment of $1 million to the former holders upon the occurrence of certain conditions. In his lawsuit, the Plaintiff alleges that the payment was due and payable on or about 2009 and ownership of the mining concession should revert back to him. We have retained counsel in Mexico to represent our subsidiary in this matter. We strongly dispute the allegations raised in the lawsuit and intend to vigorously defend our rights to the mining