Certain Relationships and Related Party Transactions

6 Months Ended

Jun. 30, 2011

Certain Relationships and Related Party Transactions [Abstract]

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

NOTE 11 — CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

As more fully described in Note 5, the Company entered into a $4.0 million Credit Facility with both Jeffrey G. Spragens, the Company’s President, Chief Executive Officer and director, and The Frost Group. There were no advances under the Credit Facility during the three and six months ended June 30, 2011 and there were no advances under the Credit Facility during the three and six months ended June 30, 2010. No interest expense related to the Credit Facility has been recorded for the three and six months ended June 30, 2011 and 2010 and there were no outstanding borrowings at June 30, 2011 and 2010.

The Company entered into a five-year lease for office space in Miami, Florida with a company controlled by Dr. Frost. The non-cancelable lease, which commenced January 1, 2008, provides for a 4.5% annual rent increase over the life of the lease. The Miami office lease was amended in July 2010 to include additional office space in the same building, and current rental payments under the lease are approximately $14,000 per month. The Company recorded rent expense related to the Miami lease totaling approximately $47,000 and $94,000, respectively, for the three and six months ended June 30, 2011, and $20,000 and $38,000, respectively, for the three and six months ended June 30, 2010.

Dr. Jane Hsiao, the Company’s Chairman of the Board, served as a director of Great Eastern Bank of Florida until August 2009, a bank where the Company maintains a bank account in the normal course of business.

Dr. Hsiao, Dr. Frost and Mr. Rubin are each significant shareholders and/or directors of Non-Invasive Monitoring Systems, Inc. (“NIMS”), a publicly-traded medical device company, Aero Pharmaceuticals, Inc. (“Aero”), a privately-held pharmaceutical distribution company, Tiger X Medical, Inc. (“Tiger X”) (Formerly known as Cardo Medical, Inc. (“Cardo”), a publicly-traded shell company, SearchMedia Holdings Limited (“SearchMedia”), a publicly-traded media company operating primarily in China and Sorrento Therapeutics, Inc. (“Sorrento”), a development stage biopharmaceutical company. Director Richard Pfenniger is also a shareholder of NIMS. The Company’s Chief Financial Officer also serves as the Chief Financial Officer and supervises the accounting staffs of NIMS and Aero under a Board-approved cost sharing arrangement whereby the total salaries of the accounting staffs of the three companies are shared. Since December 2009, the Company’s Chief Legal Officer has served under a similar Board-approved cost sharing arrangement as Corporate Counsel of SearchMedia and as the Chief Legal Officer of each of NIMS and Tiger X and since June 2011 served as Corporate Counsel for Sorrento. The Company has recorded reductions to selling, general and administrative costs and expenses to account for the sharing of costs under these arrangements of $78,000 and $154,000, respectively, for the three and six months ended June 30, 2011, and $62,000 and $125,000, respectively, for the three and six months ended June 30, 2010. Aggregate accounts receivable from NIMS, Aero, Tiger X and SearchMedia were approximately $64,000 and $64,000 as of June 30, 2011 and December 31, 2010, respectively. Aero will no longer participate in the shared cost arrangement after June 2011.