Commitments, Contingencies, Guarantees and Indemnifications

12 Months Ended

Mar. 31, 2012

Notes to Financial Statements

Note 15. Commitments, Contingencies, Guarantees and Indemnifications

From time to time, the Company may become involved in claims and other legal matters arising in the ordinary course of business. Management is not currently aware of any matters that will have a material adverse effect on the Company’s consolidated financial position, results of operations or its cash flows.

The Company indemnifies its officers and directors for certain events or occurrences while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The Company will indemnify the officers or directors against any and all expenses incurred by the officers or directors because of their status as one of the Company’s directors or executive officers to the fullest extent permitted by California law. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements.  The Company has a director and officer insurance policy which limits the Company's exposure and may enable it to recover a portion of any future amounts paid.  The Company believes the fair value of these indemnification agreements is minimal. Accordingly, there are no liabilities recorded for these agreements at March 31, 2012 or 2011.

In the normal course of business, the Company provides indemnifications of varying scopes under agreements with other companies, typically clinical research organizations, investigators, clinical sites, suppliers and others.  Pursuant to these agreements, the Company generally indemnifies, holds harmless, and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified parties in connection with the use or testing of the Company's product candidates or with any U.S. patents or any copyright or other intellectual property infringement claims by any third party with respect to the Company's product candidates.  The terms of these indemnification agreements are generally perpetual.  The potential future payments the Company could be required to make under these indemnification agreements is unlimited.  The Company maintains liability insurance coverage that limits its exposure.  The Company believes the fair value of these indemnification agreements is minimal.  Accordingly, the Company has not recorded any liabilities for these agreements as of March 31, 2012 or 2011.

Leases

As of March 31, 2012 and 2011, the following assets are under capital lease obligations and included in property and equipment:

	March 31,
	2012			2011
Leased laboratory and computer equipment	$	139,700		$	120,700
Accumulated amortization		(119,200	)		(92,000	)
	$	20,500		$	28,700

Amortization expense for assets recorded under capital leases is included in depreciation expense.  Future minimum payments, by year and in the aggregate, required under capital leases are as follows: 

Fiscal Years Ending March 31,	Equipment Capital Leases
2013	$	12,100
2014		7,500
2015		3,100
2016		-
2017		-
Future minimum lease payments		22,700
Less imputed interest included in minimum lease payments		(2,500	)
Present value of minimum lease payments		20,200
Less current portion		(10,500	)
Non-current capital lease obligation	$	9,700

Future minimum payments under operating leases relate to the Company’s facility lease in South San Francisco, California through June 30, 2013 and total $175,500 and $44,200 for the fiscal years ended March 31, 2013 and 2014, respectively.  Total facility rent expense incurred by the Company for the fiscal years ended March 31, 2012 and 2011 was $166,000 and $151,600, respectively.

Long-term Debt Repayment

At March 31, 2012, future minimum principal payments related to long-term debt were as follows: 

Fiscal Years Ending March 31,	Amount
2013	$	750,300
2014		1,319,100
2015		688,900
2016		1,396,900
2017		7,100
Thereafter through October 2023		119,000
	$	4,281,300