12 .	Commitments and Contingencies

In the case captioned

Medlogic, LLC and Malena F. Badon

. Peachstate Health

anagement, LLC, et al.

, now pending in the

Judicial District Court, Lafayette Parish, State of Louisiana, Docket

No.:

2015

0151

I, the Company is the defendant in a case where the Plaintiffs, as independent contractors, allege they are owed certain commissions that they purportedly earned while marketing the Company’s products and services. The Company believes the contractors were overpaid and has asserted a counterclaim for reimbursement of such overpayments. The Company intends to vigorously defend the claim and pursue its counterclaim. The parties have completed initial discovery and the matter remains pending. The Company believes the resolution of this matter will

not

have a material effect on its financial statements.

Prior to the completion of the merger, AT&T provided various communication services and equipment to the Company, including facsimile lines. AT&T has claimed that the Company owes approximately

$500,000

to it for such services. The Company continues to negotiate with AT&T to seek a compromise of such amount. To the Company’s knowledge,

proceedings have been commenced regarding this matter, and the Company has accrued the full amount of its potential liabilities on its financial statements as of the fiscal quarter ended

September 30, 2018.

Regarding the termination of the Company’s relationship with certain executives, including the former Chief Executive Officer of Authentidate Holding Corp., O’Connell Benjamin, the Company has been reviewing its severance obligations and the vesting of post-termination provisions. The Company believes it has accrued all related severance costs as of

September 30, 2018

related to past terminations. Mr. Benjamin 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

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.

Mar 3, 2017,

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 is conducting a review of the Company’s compliance with applicable Federal Standards related to 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 compliance review covers both the Company’s telehealth business and its clinical laboratory operations. The OCR reviewed the Company’s premises and conducted interviews on Mary

23,

2017

and the Company continues to work on a resolution with the OCR. The OCR

may,

among other things, require a correct action, issue penalties, or reach a 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,

judgment in the amount of

$320,638

was awarded. The parties entered into a Forbearance Agreement on

October 17, 2018,

and plaintiff agreed to the Company's tender of

monthly installments totaling

$149,996

payable through

June 2019.

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 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 earning, emotional distress, punitive damages, and attorney’s fees and costs. The Company believes it has strong defenses to Plaintiff’s allegations and intends to vigorously defend the claim. Management is unable to determine at this time whether this claim will have a material impact on the Company’s financial condition, results of operations, or cash flow.

The Company is the defendant in the case captioned

Healthy Practice Solutions, LLC v. Peachstate Health Management, LLC,

now pending in State Court of Fulton County, State of Georgia, Civil Action File

No.:

000042,

where Plaintiff alleges it is owed certain commissions earned while marketing the Company’s products and services. The parties are negotiating the case’s resolution, and the Company believes the resolution of this matter will

not

have a material effect on its financial statements,

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

years with annual rentals ranging from approximately

$135,000

in the

first

year to

$148,000

in the final year. The lease provided the Company with opportunities for its early termination by the tender of a pre-negotiated amount on the

, and

month anniversary dates of the amendment. As part of the lease terms, the Company provided a letter of credit 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 letter of credit monies in the

first

quarter of fiscal year

2018.

The Company is evaluating its possible lease obligations and considering its alternatives, and, although

not

guaranteed, expects to be successful.

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 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 agreement. Historically, we have

not

made any payments under these agreements that have been material individually or in the aggregate. As of

September 30, 2018,

we are

not

aware of any obligations under such indemnification agreements that would require material payments.