Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies

5. Commitments and Contingencies

Operating Leases

The Company leases 18,180 square feet of office and laboratory space in Los Angeles, California, under a noncancelable operating lease that expires on March 31, 2012. The Company is currently in negotiations for a new lease. The Company also sub-leases 1,460 square feet of space in Frederick, Maryland, where administrative functions are performed. Our current lease expires on January 31, 2013.

Rent expense, which is classified in cost of revenue, general and administrative, and research and development expenses was $476,666 and $517,417 for the years ended December 31, 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 December 31, 2011:

Years Ending December 31,
2012	$	186,778
2013		2,000
Total	$	188,778

Systems and Services Agreement

The Company entered in to a Systems and Service agreement with Xifin, Inc. on December 21, 2011.  The term of this agreement is for 36 months, at a rate of $20,000 a month with automatic renewals thereafter for 12 months, unless termination notice is given by either party.  

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. Accordingly, the Company has no liabilities recorded for these agreements as of December 31, 2010 and 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 condition.

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.