3. BALANCE SHEET COMPONENTS

3 Months Ended

Jul. 31, 2013

Notes to Financial Statements

3. BALANCE SHEET COMPONENTS

Inventory

The Company operates in an industry characterized by rapid improvements and changes to its technology and products. The introduction of new products by the Company or its competitors can result in its inventory being rendered obsolete or it being required to sell items at a discount. The Company evaluates the recoverability of its inventory by reference to its internal estimates of future demands and product life cycles. If the Company incorrectly forecasts demand for its products or inadequately manages the introduction of new product lines, the Company could materially impact its financial statements by having excess inventory on hand. The Company's future estimates are subjective and actual results may vary.

Inventories are recorded at cost using the First-In-First-Out ("FIFO") method. Ending inventories are comprised of raw materials and direct costs of manufacturing and are valued at the lower of cost or market. Inventories consisted of the following as of July 31, 2013 and April 30, 2013:

	July 31, 2013		April 30, 2013
Raw materials	$	28,779	$	28,779
Finished goods		70,157		70,425
	$	98,936	$	99,204

Other current assets

Other current assets consist of the following as of July 31, 2013 and April 30, 2013:

	July 31, 2013		April 30, 2013
R&D materials	$	106,573	$	159,892
Deferred cost of sales		52,500		-
Other		7,090		7,090
Dermacyte samples		3,428		3,428
	$	169,591	$	170,410

Property and equipment, net

Property and equipment consist of the following as of July 31, 2013 and April 30, 2013:

	July 31, 2013			April 30, 2013
Laboratory equipment	$	768,252		$	768,252
Computer equipment and software		134,311			135,697
Office furniture and fixtures		130,192			130,192
		1,032,755			1,034,141
Less: Accumulated depreciation and amortization		(849,986	)		(828,752	)
	$	182,769		$	205,389

Depreciation and amortization expense was approximately $23,000 and $24,000 for the three months ended July 31, 2013 and 2012, respectively. 

Accrued liabilities

Accrued liabilities consist of the following as of July 31, 2013 and April 30, 2013:

	July 31, 2013		April 30, 2013
Employee related	$	95,051	$	66,632
Convertible note interest payable		61,500		59,583
Government grant expenses		51,385		-
Deferred revenue		50,937		185,068
Restructuring liability		43,728		43,728
Other operating costs		16,715		19,865
Accrued settlement costs		-		500,000
	$	319,316	$	874,876

Other liabilities

As further discussed in Note 10 below, following the closing of the Company’s research and development facility in California, the Company entered into a long-term sublease agreement with an unrelated third party covering the vacated space which extends through the termination date. The Company recorded a liability for the remaining lease payments due under its long-term, non-cancelable operating lease for this facility, net of sublease payments, which expires in July 2015. The table below summarizes the net future minimum payments due under this lease agreement.

	July 31, 2013			April 30, 2013
Net non-cancelable operating lease obligation	$	87,456		$	98,388
Less: current portion		(43,728	)		(43,728	)
Long-term portion of net non-cancelable operating lease obligation	$	43,728		$	54,660