On February 17, 2011, the Company signed a ten-year lease on
an office and laboratory facility in Morrisville, North Carolina.
Future minimum lease payments under non-cancelable operating
leases (with initial or remaining lease terms in excess of
one year) as of December 31, 2010 are as follows:
Year Ending December 31,
2011 $ 37,066
2012 65,407
2013 100,134
2014 102,676
2015 140,904
Thereafter $ 840,004
(9) Related Part y Transacti ons
Research and Development Services from Vanderbilt University
During the year ended December 31, 2010, the Company paid
US $360,000 (2009: US $360,000) to Vanderbilt University
(Vanderbilt), a shareholder, for the dedicated use of a laboratory
and staff which houses the Company's proprietary development
platform. Such amounts are included in research and
technical development costs in the consolidated statements
of operations. As of December 31, 2010 and 2009, no amounts
were payable to Vanderbilt under this arrangement.
(10) Warr ants
(a) XLTech Group, Inc. Warrants
On May 1, 2006 549,306 warrants were issued with a term of
5 years and an exercise price of £3.40. The warrants expired
unexercised on May 1, 2011. At the date of grant, the warrants
were recorded at fair value as a warrant liability and as a discount
in obtaining financing. The fair value of the warrant at
the grant was US $1.9 million. Upon the qualified public offering
of the shares on June 1, 2007, the warrants qualified for
equity classification within the consolidated balance sheets
and as such the warrant liability was reclassified to equity at
fair value on June 1, 2007. The warrants are not subsequently
re-measured to fair value after this date as they qualify for
equity classification. The fair value of the warrant as of June 1,
2007 upon the qualified public offering was US $4.5 million.
The XL TG warrants were transferred to PetroTech Holdings
Corporation, a Laurus/Valens group company, as part of the
transfer of XL TG's 45.69% shareholding in the Company on
August 28, 2008.
(b) Collaborative Warrants
In connection with research and development collaborations,
the Company granted warrants to purchase a variable number
of the Company's common shares (zero shares at December
31, 2010 and 202,941 shares at December 31, 2009) equal to
US $2.0 million divided by the per share price to the public in
the initial public offering in June 2007. The warrants qualify for
equity classification within the consolidated balance sheets
and as such, the warrant liability was reclassified to equity at
fair value in June 2007 and December 2007. The warrants are
not subsequently re-measured to fair value after this date as
they qualify for equity classification. The warrants had a term
of three years from the time of the qualified equity offering
and they expired unexercised on June 1, 2010.
(c) IPO Underwriter Warrants
In connection with the Initial Public Offering (IPO) in June
2007, the Company granted warrants to underwriters of the
IPO to purchase 198,002 common shares of the Company at
£5 per common share. The warrants are for a term of 5 years.
At the date of grant, the warrants were recorded at fair value
to a warrant liability with the expense offset against the IPO
proceeds in equity. The warrant is re-measured at fair value at
each reporting date with subsequent changes in fair value
recorded in the accompanying consolidated statement of
operations in Interest/Other Expense of US $0 (2009: US $612
credit). The fair value of the warrants as of December 31, 2010
and December 31, 2009 were US $6 and US $6, respectively.
The fair value of these warrants was determined by using
the Black-S choles option-pricing model with the following
assumptions:
no dividends, risk-free rate of 0.2% (2009: 4.4%),
the remaining contractual life of the warrants, and a volatility
of 80% (2009: 79%).
(11) St ock Based Compensati on
(a) Unit Grants
From inception until recapitalized from a limited liability
company to a corporation on May 23, 2007, the Company has
granted a total of 2,000,000 member units to various employees
through unit grant agreements. These unit grants were
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