Commitments, Contingencies And Litigation

9 Months Ended

Sep. 30, 2011

Commitments, Contingencies and Litigation [Abstract]

COMMITMENTS, CONTINGENCIES AND LITIGATION

6. COMMITMENTS, CONTINGENCIES AND LITIGATION

The Company is obligated under a non-cancelable operating lease for office, lab, and assembly space expiring December 2016. The lease is subject to escalations for increases in operating expenses. The approximate aggregate minimum future payments due under this lease at September 30, 2011 are as follows:

2011 Remaining three months	$	95
2012		410
2013		439
2014		456
2015		455
2016		456
	$	2,311

Rental payments are recognized as rent expense on a straight-line basis over the term of the lease.

ASKION GmbH (“ASKION”), located in Gera, Germany, which specializes in precision optics, is an integral member of the MelaFind^® development team and the Company expects to continue to work with ASKION for the foreseeable future. ASKION produced the MelaFind^® hand-held imaging devices used in our pivotal clinical trials and is currently building additional units and performing other developmental activities under production and R&D contracts.

The Company, primarily through ASKION, engages Carl Zeiss Jena GmbH (“Zeiss”) to build the lenses and assemblies, as well as provide certain technical consulting, for the MelaFind^® units used in the Company’s pivotal clinical trials and additional units being manufactured. This work is expected to continue for MelaFind^® units through 2012.

In April, 2011, the Company entered into a “Last Time Buy” supply agreement with Arrow Electronics, Inc. (“Arrow”), a distributor for ON Semiconductors (“ON”), pursuant to which the Company agreed to purchase complementary metal-oxide-semiconductor (“CMOS”) sensors. The CMOS sensor is a critical part of the Company’s MelaFind^® system. The Company believes that these CMOS sensors will be sufficient to meet the Company’s needs until an alternative is found.

The Company has an employment agreement with its President and Chief Executive Officer, Dr. Gulfo, which provides for an annual base salary, stock options and discretionary performance bonuses. The agreement, which provides for automatic one-year renewal terms, currently runs through the end of 2011.

On November 19, 2010, a purported securities class action complaint was filed in the U.S. District Court for the Southern District of New York, naming as defendants the Company and certain of its officers and directors, entitled Randall J. Pederson, Individually and on Behalf of All Others Similarly Situated v. MELA Sciences, Inc., Joseph V. Gulfo, Richard I. Steinhart, and Breaux Castleman, No. 7:10-cv-08774-JFM. Two similar complaints were also filed, one on December 2, 2010 and the other on January 20, 2011, in the same District Court, entitled Amy Steigman, Individually and on Behalf of All Others Similarly Situated v. MELA Sciences, Inc., Joseph V. Gulfo, Richard I. Steinhart, and Breaux Castleman, No. 7:10-cv-09024-JFM; and Martin Slove and Linda Slove, Individually and on Behalf of All Others Similarly Situated v. MELA Sciences, Inc., Joseph V. Gulfo, Richard I. Steinhart, and Breaux Castleman, No. 1:11-cv-00429-JFM. These three securities class actions were consolidated into one action on February 15, 2011, entitled In re MELA Sciences, Inc. Securities Litigation, No. 10-Civ-8774-JFM (“securities class action”). The securities class action plaintiffs assert violations of the Securities Exchange Act of 1934, alleging, among other things, that defendants made misstatements and omissions regarding the Company’s product, MelaFind^®, and its prospects for FDA approval, on behalf of stockholders who purchased the Company’s common stock during the period from February 13, 2009 through November 16, 2010, and seek unspecified damages. On May 2, 2011, the securities class action plaintiffs filed their amended consolidated complaint, alleging similar claims to their prior complaints. On July 29, 2011, defendents filed a motion to dismiss the consolidated amended complaint in its entirety. Plaintiff’s opposition to the motion to dismiss was filed on September 23, 2011. In light of the Company’s receipt of the Approvable Letter from the FDA for the MelaFind^® PMA Application on September 22, 2011, the parties filed a stipulation on October 19, 2011 in which Plaintiff stated its intention to file a motion seeking leave to amend its complaint. Defendants withdrew the outstanding motion to dismiss the current Amended Complaint without prejudice to renew it at a later date.

The Company believes that it has meritorious defenses and intends to vigorously defend against the securities class action; however, as with any litigation, we cannot predict with certainty the eventual outcome of this litigation. An adverse outcome could have a material adverse effect on our business and our business could be materially harmed.

From time to time, we may be a party to certain legal proceedings, incidental to the normal course of our business. These may include controversies relating to contract claims and employment related matters, some of which claims may be material, in which case, we will make separate disclosure as required.