10. Commitments and Contingent Liabilities

Operating Leases

The Company occupied approximately 16,000 square feet of office and storage space under a Commercial Sublease Agreement with Masters Healthcare, LLC, (a former related party – see Note 12) which expired on March 31, 2011. From April 1, 2011 through June 30, 2011, the lease had been in effect on a month to month basis, with a monthly lease rate of $14,125, pursuant to the provision of the sub-lease. The rent expense under this sublease for the years ended December 31, 2011 and 2010 was $84,750 and $113,004.

On June 15, 2011, the Company entered into a lease agreement for approximately 28,000 square feet of office and storage space with an entity effective July 1, 2011. On August 29, 2011, the Company amended the agreement to expand to approximately 62,600 square feet of office and storage space effective November 1, 2011. The amended monthly lease rate of $9,224 is in effect from January 2012 through December 2013. The Company accounts for rent expense using the straight line method of accounting, deferring the difference between actual rent due and the straight line amount. The lease expires on January 1, 2017. Deferred rent payable was $31,947, and has been included in accrued expenses and other current liabilities on the consolidated balance sheet as of December 31, 2011. The Company's leasehold interest is subject to a mechanic's lien in favor of the contractor that assisted with the construction of the facility. The amount the Company owed to the contractor was in dispute. On June 14, 2012, the Company reached a written settlement with the contractor in which the Company agreed to pay the contractor the total amount of $189,000, in three equal installments. The Company received a general release and release of mechanic's lien from the contractor, which will be effective upon final payment. Approximately $140,000 is included in accounts payable as of December 31, 2011.

During 2011, the Company entered into a one-year lease agreement for an apartment effective May 31, 2011. The monthly lease rate of $2,850 is in effect for the full term of the agreement. After the initial term of the lease, the agreement converts to a month to month lease. Subsequent to December 31, 2011, the Company renewed this lease through May 31, 2013.

Future minimum payments, by year and in the aggregate, under operating leases as of December 31, 2011 are as follows:

For year ending December 31	Amortization

2012	$	124,944
2013		110,694
2014		128,049
2015		128,049
Thereafter		143,700
Total future minimum lease payments	$	635,436

During the years ended December 31, 2011 and 2010, the Company recorded aggregate rent expense of $166,857 and $113,004, respectively.

Litigation

On or about January 15, 2010, the Company's former outside counsel, Duval & Stachenfeld LLP (“Duval”), commenced litigation against the Company in federal court in New York, New York asserting that the Company owed Duval $213,887 in unpaid legal fees. Duval was also seeking to recover interest and its fees in connection with the litigation. On May 25, 2010 the Company and Duval settled all litigation by the payment by the Company to Duval in the amount of $165,000. The Company reflected a gain on litigation settlement of $48,887 during the year ended December 31, 2010.

On November 29, 2011, NMN Advisors, Inc. filed a complaint against the Company alleging that it breached a consulting agreement. The complaint seeks damages of $70,000 plus pre-judgment interest. On February 6, 2012, the Company filed its answer to the complaint denying that the Company owes any amounts under the contract, and the Company also filed a cross-complaint against the plaintiff asserting a number of causes of action, including breach of contract. Plaintiff filed its answer to the Company cross-complaint on March 5, 2012. Both the Company and the plaintiff have agreed to attempt to resolve the dispute by court mediation. The date for mediation is tentatively set for July 10, 2012. If mediation is unsuccessful, the Company intends to defend against the allegations in the complaint, and pursue the allegations in our cross-complaint, vigorously.

On February 9, 2012, two of our former shareholders, Rock Castle Holdings, LLC and Jason Smith (“Plaintiffs”), filed suit against us in the Hamilton County, Ohio Court of Common Pleas, alleging that we have breached the terms of certain incentive options we granted to them in connection with our now-terminated oral consulting arrangements with them, by among other things, refusing Plaintiffs’ purported exercise of options to purchase 233,332 shares of our common stock at an exercise price of $2.00 per share in December 2011. Plaintiffs have not specified money damages, but they have requested that, among other things, the court to require us to permit the exercise of the 233,332 options. We believe the Plaintiffs’ claims are without merit. On March 13, 2012, the Company moved to dismiss all claims asserted against the Company in the Complaint. On June 6, 2012, the Court of Common Pleas informed the parties that the Company's motion to dismiss will be denied in its entirety if the Plaintiffs make certain amendments to the Complaint. The court has given the Plaintiffs until July 6, 2012 to make these amendments, and the Company expect that the Plaintiffs will make them prior to this deadline.

On March 2, 2012, a former contractor of ours filed suit against us in the Hamilton County, Ohio Court of Common Pleas, alleging that, among other things, we have failed to pay amounts due on certain credit cards that were issued in plaintiff’s name but for which we agreed to assume financial responsibility. Although we deny any responsibility for the payments owed, we resolved this dispute by entering into a settlement agreement with the plaintiff, and the suit was voluntarily dismissed on May 30, 2012.

In the normal course of business the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Legal fees for such matters are expensed as incurred. Currently, other than discussed above, the Company is not involved in any such material matters.