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Debt, Commitments and Contingencies
12 Months Ended
Dec. 31, 2022
Debt Commitments And Contingencies Disclosure [Abstract]  
Debt, Commitments and Contingencies

Note 8. Debt, Commitments and Contingencies

Debt

As of December 31, 2022, the Company had an outstanding borrowing of $15.0 million under its margin account with the custodian of the Company’s marketable debt security investment account, Pershing Advisor Solutions, LLC, a BNY Mellon Company. The outstanding balance is included in the Consolidated Balance Sheets. Margin account borrowings were used for the purchase of real property located in El Monte, California in 2020. The securities in the brokerage account were used as collateral for the margin loan. The custodian can issue a margin call at any time. The interest rate on the margin loan was the effective federal funds rate, or EFFR, plus a spread. EFFR and/or the spread can be changed by BNY Mellon at any time. The interest was 1% at the time of withdrawal of $15.0 million from the margin account, and the interest rate at December 31, 2022 was 4.59%. The related interest expenses in 2022, 2021 and 2020 were $346,000, $117,000 and $20,000, respectively.

Notes payable as of December 31, 2022, consisted of $3.8 million of notes payable related to an installment sale contract the Company entered in February 2022 for a building and $5.2 million of notes payable to Xilong Scientific Co., or Xilong Scientific, by Fujian Fujun Gene Biotech Co., Ltd., or FF Gene Biotech. The notes payable related to the installment sale are due in February 2030, and the interest rate is 1.08%. The current portion and noncurrent portion are $461,000 and $3.4 million, respectively, and the noncurrent portion is included in the other long-term liabilities in the accompanying Consolidated Balance Sheets. The notes payable to Xilong Scientific is due on March 31, 2023, and the interest rate on the loan is 4.97%. The related interest expenses in 2022 and 2021 were $304,000 and $177,000, respectively. The Company did not have the installment sale contract in 2021.

Operating and Finance Leases

See Note 9, Leases, for further information.

Purchase Obligations

As of December 31, 2022, the Company had non-cancelable purchase obligations of $10.1 million, of which, $3.2 million for computer software and hardware, $2.5 million for reagents and other supplies, $1.1 million for services and $746,000 for medical lab equipment are payable within twelve months. $2.2 million for computer software and $381,000 for services are payable within the next thirty-six months.

Contingencies

From time to time, the Company may be subject to legal proceedings and claims arising in the ordinary course of business. Management does not believe that the outcome of any of these matters will have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

The Company has received a CID issued by the U.S. Department of Justice pursuant to the False Claims Act related to its investigation of allegations of medically unnecessary laboratory testing, improper billing for laboratory testing, and remuneration received or provided in violation of the Anti-Kickback Statute and the Stark Law. This CID requests information and records relating to certain of the Company’s customers named in the CID, which represent a small portion of the Company’s revenues. The Company is fully cooperating with the U.S. Department of Justice to promptly respond to the requests for information in this CID, and does not presently expect this CID or resulting investigation to have a material adverse impact. However, the Company cannot predict when the

investigation will be resolved, the outcome of the investigation or its potential impact, which may ultimately be greater than the Company currently expects.