Commitments and Contingencies

Financial Covenants

Effective

September

30,

2015,

the Company entered into a Fifth Amended and Restated Technology License and Escrow Agreement with Cord Blood Registry Systems, Inc. which modified the financial covenant that the Company must meet in order to avoid an event of default. The Company must maintain a cash balance and short-term investments net of debt or borrowed funds that are payable within

one

year of not less than

$2,000.

The Company was in compliance with this financial covenant as of

March

31,

2017.

Warranty

The Company offers a warranty on all of its non-disposable products of

one

two

years. The Company warrants disposable products through their expiration date. The Company periodically assesses the adequacy of recorded warranty liabilities and adjusts the amounts as necessary.

The warranty liability is included in other current liabilities in the unaudited condensed consolidated balance sheet. The change in the warranty liability for the

nine

months ended

March

31,

2017

is summarized in the following table:

Balance at July 1, 2016	$	566
Warranties issued during the period		81
Settlements made during the period		(74	)
Changes in liability for pre-existing warranties during the period		(36	)
Balance at March 31, 2017	$	537

Contingency

In fiscal

2016,

the Company signed an engagement letter with a strategic consulting firm. Included in the engagement letter was a success fee due upon the successful conclusion of a number of defined strategic transactions. On

May

2017,

a lawsuit was filed against the Company by the consulting firm as the consulting firm believes that it is owed a transaction fee of at least

$1,000

under the terms of the engagement letter due to the conversion of the Boyalife Debentures in

August

2016.

The Company’s counsel does not believe there is any merit to the consulting firm’s allegations, intends to defend the lawsuit accordingly and believes the possibility of any future material payment to be remote. Therefore, no accrual has been recorded for this contingent liability as of

March

31,

2017.

Potential Severance Payments

As of

March

31,

2017,

the Company’s Chief Operating Officer (“COO”) has rights upon termination under her employment agreement. The agreement provides, among other things, for the payment of

twelve

months of severance compensation upon termination under certain circumstances. With respect to this agreement at

March

31,

2017,

potential severance amounted to

$320.