Note 12. Commitments and Contingencies

During the quarter ended June 30, 2012, the Company was named as a defendant in a lawsuit seeking damages for injuries suffered by the victim of a shooting allegedly perpetrated by an individual who was under electronic monitoring by the State of Maryland using the Company’s GPS-based monitoring system. The Company’s management believes the plaintiff’s allegations and legal basis for recovery are without merit and accordingly has estimated that the maximum net exposure to the Company is $50,000 which is the amount of the Company’s liability insurance deductible. As of June 30, 2012, no expense has been recorded or accrued for relating to this lawsuit.