Commitments and Contingencies

9 Months Ended

Sep. 30, 2011

Commitments and Contingencies

5. Commitments and Contingencies

Operating Leases

The Company leases office and laboratory space under a noncancelable operating lease that expires on March 31, 2012. The lease contains two two-year options to extend the term of the lease and contains annual scheduled rate increases tied to the Consumer Price Index for the Los Angeles/Long Beach California metropolitan area. The Company also leases space in Fredrick, Maryland, for administrative purposes. This lease has been extended through December 31, 2011 at a rate of $1,500 per month.  Rent expense, included in cost of revenue, general and administrative, and research and development was $118,957 and $112,548 for the three months ended September 30, 2010 and 2011, respectively, and $338,057 and $371,553 for the nine months ended September 30, 2010 and 2011, respectively.

Future minimum lease payments by year and in the aggregate, under the Company’s noncancelable operating leases, consist of the following at September 30, 2011:

Period Ending June 31,
Remainder of 2011	$	141,350
2012		162,778
Thereafter		—
Total	$	304,128

Guarantees

The Company enters into indemnification provisions under its agreements with other counterparties in its ordinary course of business, typically with business partners, clients and landlords. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company's activities. These indemnification provisions generally survive termination of the underlying agreement. The Company reviews its exposure under these agreements no less than annually, or more frequently when events indicate. The Company believes the estimated fair value of these agreements is minimal as historically, no payments have been made by the Company under these indemnification obligations and in many cases, the Company maintains insurance against any losses. Accordingly, the Company has no liabilities recorded for these agreements as of December 31, 2010 and September 30, 2011.

Legal Matters    The Company is, from time to time, involved in legal proceedings, regulatory actions, claims and litigation arising in the ordinary course of business. These matters are not expected to have a material adverse effect upon the Company’s financial statements.

Employment Agreements

The Company has employment contracts with several individuals, which provide for annual base salaries and potential bonuses. These contracts contain certain change of control, termination and severance clauses that require the Company to make payments to certain of these employees if certain events occur as defined in their respective contracts.