Note 11. COMMITMENTS AND CONTINGENCY

Lease Obligations

The Company leases certain office premises and apartments for employees under operating lease agreements with various terms through April 16, 2020. Future minimum lease payments under the operating lease agreements are as follows:

	Amount
Twelve months ending March 31,

2019	$	165,170
2020		81,666
	$	246,836

Rental expenses for the three months ended March 31, 2018 and 2017 were $59,183 and $66,642, respectively. Rental expenses for the nine months ended March 31, 2018 and 2017 were $178,490 and $194,532, respectively.

Contingencies

The Labor Contract Law of the PRC requires employers to insure the liability of the severance payments for terminated employees that have worked for the employers for at least two years prior to January 1, 2008. Employers are liable for one month of severance pay per year of service provided by employees. As of March 31, 2018 and June 30, 2017, the Company has estimated its severance payments to be approximately $58,373 and $48,713, respectively. Such payments have not been reflected in its unaudited condensed consolidated financial statements because management cannot predict what the actual payment, if any, will be in the future.

From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. The Company was named a defendant in a breach of service contract lawsuit filed with the California Superior Court on January 19, 2018. Management believes it is too early to predict the outcome of the pending lawsuit but believes it will not likely have a material effect on the Company’s consolidated operations or financial position.