Commitments and Contingencies

Leases

The Company leases certain office and lab space in San Diego, California under a non-cancelable operating lease, which was amended July 1, 2015 to add laboratory space and office space and extend its terms through December 2020. Rent expense for the three months ended June 30, 2019 and 2018 was $42,949 and $147,522, respectively, including the offset for amortization of leasehold incentive obligation of $56,263 each period and sublease rental income of $105,529 for the three months ended June 30, 2019. Rent expense for the six months ended June 30, 2019 and 2018 was $85,898 and $295,044, respectively, including the offset for amortization of leasehold incentive obligation of $112,526 each period and sublease rental income of $211,058 for the six months ended June 30, 2019.

The future minimum lease payments required under non-cancelable leases as of June 30, 2019, are summarized as follows:



Year Ending December 31,	Gross Payments		Scheduled Sublease Payments			Net Payments
2019 (6 months remaining)	$	431,328	$	(222,170	)	$	209,158
2020	902,412		(464,334		)	438,078
Total minimum lease payments	$	1,333,740	$	(686,504	)	$	647,236

Royalty Agreements

The Company has entered into agreements to market and distribute chips and kits used in its instruments. Pursuant to these agreements, the Company is obligated to pay royalties based on sales during each annual license period and is obligated to make minimum payments regardless of the level of sales achieved. The Company accrued $58,795 and $74,580 as of June 30, 2019 and 2018, respectively.

Such royalty agreements extend through the life of underlying intellectual property which is affected by patent filing date and jurisdiction. As of December 31, 2018, annual future minimum royalty payments under the Company’s royalty agreements total $90,000 through December 31, 2019 and increase to $110,000 through November 29, 2026.

Purchase Commitments

The Company has a contractual commitment with a supplier to purchase $165,000 of products each quarter for an initial term of two years beginning March 1, 2019. The contract can be terminated on 90 days written notice by either party.

Litigation

The Company is subject to potential liabilities under various claims and legal actions that are pending or may be asserted. These matters arise in the ordinary course and conduct of the business. The Company intends to continue to defend itself vigorously in such matters. The Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in the financial statements. An estimated loss contingency is accrued in the financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it currently does not have any amount accrued as it is not a defendant in any claims or legal actions.