The Company entered into a service agreement
with Cardiomedics, Inc. ("Cardiomedics"), a privately held corporation in which the Chairman/CEO of Trimedyne, Inc. holds
a majority interest and is a member of the Board of Directors. The COO/President of the Company is also a board member of Cardiomedics.
Under the agreement, Trimedyne agreed to provide warranty service, periodic maintenance, and repair on Cardiomedics' heart assist
In connection with the above service agreement
with Cardiomedics, the Company received no service income during the fiscal years ended September 30, 2012 and 2011. As of September
30, 2012 and 2011, there were no amounts receivable from Cardiomedics.
On April 7, 2006, the Company entered into
an agreement to employ Cardiomedics as a consultant to provide graphics arts services, since the Company had no employee with experience
in the design and production of brochures and other marketing materials. Under this agreement, Cardiomedics provides the services
of a graphics art specialist at a rate comparable to those presently prevailing in the market in the design and production of marketing
materials. During the years ended September 30, 2012 and 2011, the Company incurred $1,000 and $3,000, respectively, in expense
for the services provided under the agreement, which was recorded to marketing expense.
See Note 4 for discussion note payable to related