Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

v2.4.0.8
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]
Commitments and Contingencies
 
The Company leases facilities, automobiles and certain equipment under agreements classified as operating leases, which expire at various dates through 2017.  Substantially all of the property leases provide for increases based upon use of utilities and landlord’s operating expenses as well as pre-defined rent escalations.  Total expense under these agreements for the years ended December 31, 2013 and 2012 was approximately $4.9 million and $3.0 million, respectively, of which $4.1 million and $2.4 million, respectively, related to automobiles leased for use by employees for a lease term of one year from the date of delivery with the option to renew.

Under the Company's two collaboration arrangements it has committed to spend up to $1.0 million in the aggregate as part of phase one collaboration efforts. If the Company moves forward to phase two of the collaboration arrangement with Transgenomic, Inc. (Transgenomic) it may provide Transgenomic with funding support of up to $3.0 million, principally to mitigate working capital requirements. In addition, if the Company moves forward into phase two of the collaboration agreement with the Diagnostics Company, and all milestone are achieved at their maximum levels, the Company could pay up to $6.0 million to the Diagnostics Company.

As of December 31, 2013, contractual obligations with terms exceeding one year and estimated minimum future rental payments required by non-cancelable operating leases with initial or remaining lease terms exceeding one year are as follows:
 
 
 
Less than
 
1 to 3
 
3 to 5
 
After
 
Total
 
1 Year
 
Years
 
Years
 
 5 Years
Contractual obligations (1)
$
666

 
$
319

 
$
343

 
$
4

 
$
—

Operating lease obligations:
 
 
 
 
 
 
 
 
 
  Minimum lease payments
10,563

 
4,547

 
5,731

 
285

 
—

  Less minimum sublease rentals (2)
(5,728
)
 
(2,506
)
 
(3,222
)
 
—

 
—

       Net minimum lease payments
4,835

 
2,041

 
2,509

 
285

 
—

               Total
$
5,501

 
$
2,360

 
$
2,852

 
$
289

 
$
—


(1) Amounts represent contractual obligations related to software license contracts, office equipment and contracts for software systems.

(2) As of December 31, 2013, the Company has entered into various sublease agreements for all of the office space at the Saddle River, New Jersey facility, the Dresher, Pennsylvania facility, and the Schaumburg, Illinois facility. These subleases will provide aggregated lease income of approximately $3.7 million, $1.9 million and $0.1 million, respectively, over the remaining lease periods.

Letters of Credit
 
As of December 31, 2013, the Company had $2.0 million in letters of credit outstanding as required by its existing insurance policies and its facility leases. As discussed in Note 5, Investments in Marketable Securities these letters of credit are collateralized by certain investments.
 
Litigation 

Due to the nature of the businesses in which the Company is engaged, such as product detailing and in the past, the distribution of products, it is subject to certain risks. Such risks include, among others, risk of liability for personal injury or death to persons using products the Company promotes or distributes. There can be no assurance that substantial claims or liabilities will not arise in the future due to the nature of the Company’s business activities and recent increases in litigation related to healthcare products, including pharmaceuticals. The Company seeks to reduce its potential liability under its service agreements through measures such as contractual indemnification provisions with customers (the scope of which may vary from customer to customer, and the performance of which is not secured) and insurance. The Company could, however, also be held liable for errors and omissions of its employees in connection with the services it performs that are outside the scope of any indemnity or insurance policy. The Company could be materially adversely affected if it were required to pay damages or incur defense costs in connection with a claim that is outside the scope of an indemnification agreement; if the indemnity, although applicable, is not performed in accordance with its terms; or if the Company’s liability exceeds the amount of applicable insurance or indemnity.

The Company routinely assesses its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where the Company assesses the likelihood of loss as probable. The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In addition, in the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosures related to such matter as appropriate and in compliance with ASC 450. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, the Company will, as applicable, adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made. As of December 31, 2013 and 2012, the Company's accrual for litigation and threatened litigation was not material to the consolidated financial statements.