5.	Commitments and Contingencies

Operating Leases

We lease our Rancho Cordova and Emeryville facilities pursuant to operating leases, which contain scheduled rent increases. The leases expire in May 2019 and April 2020, respectively. The Emeryville lease contains a five year renewal option. We recognize rent expense on a straight-line basis over the term of the facility lease. The annual future minimum lease payments for our non-cancelable operating leases are as follows:

2015	$	446
2016		459
2017		497
2018		635
2019		629
Thereafter		315
Total	$	2,981

Rent expense was $496, $431 and $470 for the years ended June 30, 2014, 2013 and 2012, respectively.

Financial Covenants

On December 31, 2013, we entered into a Sale and Purchase Agreement with Cord Blood Registry (“CBR”) in which we will supply CBR with the AXP cord blood processing system and disposables. The term of the agreement is for 5 years with automatic two-year renewal options unless CBR provides a 6 month notice of non-renewal. Additionally, we entered into the Fourth Amended and Restated Technology License and Escrow Agreement to delete or reduce the financial covenants that we must meet in order to avoid an event of default to one financial covenant, to maintain a balance of cash and short-term investments net of debt or borrowed funds of not less than $2,000 at any month end.

Contingencies

During the three months ended September 30, 2012, we were notified by a third party who believes that the Res-Q system infringes upon certain of its US and European patents. Subsequently the claim has not been pursued. The Company is in the process of gathering information; however, it has not yet collected enough information to assess the validity of the alleged infringement or estimate any potential financial impact; therefore, it has not made an accrual as of June 30, 2014.

On April 11, 2013, we filed an answer and counter-claims in response to the complaint Harvest Technologies Corp. (Harvest) filed on October 24, 2012, against the Company in the case captioned as Harvest Technologies Corp. v. Cesca Therapeutics, 12-cv-01354, U.S. District Court, District of Delaware (Wilmington), with the complaint being amended on February 15, 2013, to name the Company’s customer Celling as a co-defendant. In the complaint, Harvest contends that our Res-Q 60 System infringes certain Harvest patents. The counter-claims are based on anti-trust and other alleged improper conduct by Harvest and further seek declarations that the Res-Q 60 System does not infringe the patents and that the patents are invalid. Harvest filed an answer on May 20, 2013 in which they denied the assertions made by the Company in the counterclaim. The Company intends to vigorously defend itself against the Harvest claims, while aggressively pursuing its separate claims against Harvest. The Company is unable to ascertain the likelihood of any liability and has not made an accrual as of June 30, 2014.

We have given notice of our intent to cancel a contract with a product manufacturing supplier due to various manufacturing and quality issues. The supplier is disputing the contract cancellation and has asked for reimbursement of costs incurred and damages of approximately $350. We have recorded an estimated loss contingency of $80 as management considers it probable that a payment will be made.

In the normal course of operations, we may have disagreements or disputes with customers, employees or vendors. Such potential disputes are seen by management as a normal part of business. As of June 30, 2014, management believes any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on our consolidated financial position, operating results or cash flows.

Warranty

We offer a warranty on all of our non-disposable products of one to two years. We warrant disposable products through their expiration date. We periodically assess the adequacy of our recorded warranty liabilities and adjust the amounts as necessary.

Changes in the Company’s product liability which is included in other current liabilities during the period are as follows:

	For years ended June 30,
	2014			2013
Beginning balance	$	489		$	547
Warranties issued during the period		172			224
Settlements made during the period		(104	)		(259	)
Changes in liability for pre-existing warranties during the period		(59	)		(23	)
Ending balance	$	498		$	489