COMMITMENTS AND CONTINGENCIES

Transgenomic is subject to a number of claims of various amounts, which arise out of the normal course of business. In addition to the claims described in this Note 7, Transgenomic is delinquent on the payment of outstanding accounts payable amounting to approximately $0.6 million with certain of Transgenomic’s vendors and suppliers who have taken or have threatened to take legal action to collect such outstanding amounts.

On February 25, 2016, UNMC filed a lawsuit against Transgenomic in the District Court of Douglas County, Nebraska, for breach of contract and seeking recovery of $0.7 million owed by Transgenomic to UNMC. A $0.4 million and $0.7 million liability has been recorded and is reflected in accrued expenses at December 31, 2016 and December 31, 2015. Transgenomic and UNMC entered into a settlement agreement dated February 6, 2017, which included, among other things, a mutual general release of claims, and Transgenomic’s agreement to pay $0.4 million to UNMC in installments over a period of time. As of March 15, 2017, Transgenomic’s initial payment due to UNMC under the settlement agreement is delinquent. Transgenomic and UNMC are currently in discussions to extend the date of Transgenomic’s initial payment due to UNMC.

In addition, on April 13, 2016, Fox Chase filed a lawsuit against Transgenomic in the Court of Common Pleas, alleging, among other things, breach of contract, tortious interference with present and prospective contractual relations, unjust enrichment, fraudulent conversion and conspiracy and seeking punitive damages in addition to damages and other relief. This lawsuit relates to a license agreement between Transgenomic and Fox Chase (the “License Agreement”) as well as the assignment of certain of Transgenomic’s rights under the License Agreement to IDT pursuant to the IDT Agreement. Pursuant to the terms of the IDT Agreement, Transgenomic agreed to indemnify IDT with respect to certain of the claims asserted in the Fox Chase proceeding. On July 8, 2016, the Court of Common Pleas sustained Transgenomic’s preliminary objections to several of Fox Chase’s claims and dismissed the claims for tortious interference, fraudulent conversion, conspiracy, punitive damages and attorney’s fees. Accordingly, the case has been narrowed so that only certain contract claims and an unjust enrichment claim remain pending against Transgenomic. Transgenomic believes that it has good and substantial defenses to the claims asserted by Fox Chase. Transgenomic is unable to determine whether any loss will occur or to estimate the range of such potential loss; therefore, no amount of loss has been accrued by Transgenomic as of the date of filing of this Annual Report on Form 10-K. Furthermore, there is no guarantee that Transgenomic will prevail in this suit or receive any damages or other relief if it does prevail.

On June 23, 2016, Mount Sinai filed a lawsuit against Transgenomic in the Supreme Court of the State of New York, County of New York, alleging, among other things, breach of contract and, alternatively, unjust enrichment and quantum merit, and seeking recovery of $0.7 million owed by Transgenomic to Mount Sinai for services rendered. Transgenomic and Mount Sinai entered into a settlement agreement dated October 27, 2016, which included, among other things, a mutual general release of claims, and Transgenomic’s agreement to pay approximately $0.7 million to Mount Sinai in installments over a period of time. A $0.7 million liability has been recorded and is reflected in accrued expenses at December 31, 2016. Effective as of February 1, 2017, Transgenomic and Mount Sinai agreed to amend the terms of their settlement agreement to extend the date of Transgenomic’s initial payment due to Mount Sinai.

On December 19, 2016, Todd Smith (“Smith”) filed a lawsuit against Transgenomic in the District Court of Douglas County Nebraska, alleging breach of contract and seeking recovery of $2.2 million owed by Transgenomic to Smith for costs and damages arising from a breach of Transgenomic’s obligations pursuant to lease agreement between the parties. Transgenomic and Smith are currently in discussions to determine a mutually agreeable means by which to settle the outstanding liability.

On February 21, 2017, XIFIN, Inc. (“XIFIN”) filed a lawsuit against us in the District Court for the Southern District of California alleging breach of written contract and seeking recovery of approximately $0.27 million owed by us to XIFIN for damages arising from a breach of our obligations pursuant to a Systems Services Agreement between us and XIFIN, dated as of February 22, 2013, as amended and restated on September 1, 2014. On April 4, 2017, XIFIN filed an application for an entry of default by the clerk of the court against us. A $0.21 million liability has been recorded and is reflected in accrued expenses at December 31, 2016.

We and Science Park Development Corporation (“SPDC”) entered into that certain Lease dated as of December 31, 2011, as modified by the First Amendment to Lease dated as of June 18, 2013, as further modified by a letter agreement dated as of February 2, 2015, as modified by the Second Amendment to Lease dated as of June 26, 2015 (the “ SPDC Lease”). In November 2016, SPDC alleged that we defaulted on our obligations under the SPDC Lease. Specifically, SPDC alleges that we failed to pay approximately $0.4 million in rental payments due under the SPDC Lease and that we vacated a portion of the leased premises in violation of the terms of the SPDC Lease. SPDC has not filed a claim against us in connection with these allegations. Transgenomic and SPDC entered into a settlement agreement dated March 6, 2017, which included, among other things, a mutual general release of claims, and Transgenomic’s agreement to pay approximately $0.4 million to SPDC in installments over a period of time.

CPA Global provides us with certain patent management services. On February 6, 2017, CPA Global claimed that we owe CPA Global approximately $0.2 million for certain patent maintenance services rendered. CPA Global has not filed claims against us in connection with this allegation. A liability of approximately $0.2 million has been recorded and is reflected in accrued expenses at December 31, 2016.

On March 9, 2016, counsel for Edge BioSystems, Inc. (“EdgeBio”) sent a demand letter on behalf of EdgeBio to us in connection with the terms of that certain Asset Purchase Agreement dated September 8, 2015 (the “EdgeBio Agreement”). EdgeBio alleges, among other things, that certain customers of EdgeBio erroneously remitted payments to us, that such payments should have been paid to EdgeBio and that we failed to remit these funds to EdgeBio in violation of the terms of the EdgeBio Agreement. On September 13, 2016, we received a demand for payment letter from EdgeBio’s counsel alleging that the balance due to EdgeBio is approximately $0.1 million. A liability of approximately $0.1 million has been recorded and is reflected in accrued expenses at December 31, 2016.

On February 17, 2017, Jesse Campbell (“Campbell”) filed a lawsuit individually and on behalf of others similarly situated against us in the District Court for the District of Nebraska alleging we have a materially incomplete and misleading proxy relating to a potential merger and that the merger agreement’s deal protection provisions deter superior offers. As a result, he alleges that we have violated Sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9 promulgated thereafter. Although we intend to defend the lawsuit, there can be no assurance regarding the ultimate outcome of this case. Given the uncertainty of litigation, the legal standards that must be met for, among other things, class certification and success on the merits, we are unable to estimate the amount of loss, or range of possible loss, at this time that may result from this action. In the event that a settlement is reached related to these matters, the amount of such settlement may be material to our results of operations and financial condition and may have a material adverse impact on our liquidity.

Rent expense under all operating leases was $0.2 million in each of 2016 and 2015. We lease certain equipment, vehicles and operating facilities under non-cancellable operating leases, some of which have escalation clauses that expire on various dates through 2022, for which, we have recorded a straight-line liability of $0.2 million in accrued liabilities on the consolidated balance sheets at December 31, 2016. Future minimum lease payments under non-cancellable operating leases, including non-cancellable lease associated with discontinued operations, are as follows (dollars in thousands):



2017	$	226
2018	230
2019	235
2020	239
2021	244
thereafter	144
Total	$	1,318

At December 31, 2016, firm commitments to vendors totaled less than $0.1 million.