Commitments and Contingencies - Note 7

3 Months Ended

Mar. 31, 2012

Commitments and Contingencies

7. COMMITMENTS AND CONTINGENCIES

Litigation

We are subject to various claims and pending or threatened lawsuits in the normal course of business. We are not currently party to any legal proceedings that management believes are reasonably possible to have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Adverse purchase commitments

We have periodically entered into noncancelable purchase contracts in order to ensure the availability of materials to support production of our PicoP based products. We periodically assess the need to provide for impairment on these purchase contracts and record a loss on purchase commitments when required. As of December 31, 2011 and March 31, 2012 we had approximately $134,000 accrued for adverse purchase commitments related to these purchase contracts.