Commitments, Contingencies and Legal Matters

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments, Contingencies and Legal Matters

NOTE 12. COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS

Operating & Capital Lease Obligations

In August 2012, the company entered into a Lease Agreement (“Lease”) with Pima County, a political subdivision of the State of Arizona which has been subsequently amended, the details of which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as filed with the SEC on February 26, 2015. In May 2015, we exercised the option to extend the term of the lease for an additional one-year period, resulting in a new expiration date in January 2017.

In July 2015, the Company entered into another Lease Agreement with Pima County, pursuant to which the Company leased approximately 6,207 square feet of space located in Tucson, Arizona for a period of two years, which may be extended by the Company for an additional year. The 6,207 square feet consists of approximately 3,827 square feet of existing space (“Existing Premises”) and approximately 2,380 square feet of new construction by the Company (“Expansion Premises”). The Company agreed to pay rent equal to $9.24 per square foot per year for the Existing Premises and $5.00 per square foot per year for the Expansion Premises for a combined total rent of approximately $47,000 per year. The Company will also pay for constructions costs and other expenses to get both spaces to a usable condition. Rent will commence and actual usable square footage will be calculated upon the completion of construction and notice of substantial completion.

Total rent expense for the Tucson facility, including common area charges for the three-month periods ending September 30, 2015 and 2014 was $208,000 and $85,000, respectively, and for the nine-month periods ending September 30, 2015 and 2014 was $490,000 and $198,000, respectively. Future minimum lease payments are as follows (in thousands):

Operating Lease Obligations (in thousands)
	Year ending December 31:
	Remaining in 2015	$	186
	2016		931
	2017		114
	2018		—
	2019		—
	Thereafter		—
	Total operating lease obligations	$	1,231

The future minimum lease payments under our capital lease arrangement together with the present value of the net minimum lease payments as of September 30, 2015 are as follows:

Capital Lease Obligations (in thousands)
Year ending December 31:
Remaining in 2015	$	38
2016		13
2017		—
2018		—
2019		—
Total minimum lease payments	$	51
Less amount representing interest		(1	)
Present value minimum lease payments	$	50

Clinical Trial Agreements

The Company has entered into master agreements with clinical trial sites in which we typically pay a set amount for start-up costs and then pay for work performed. These agreements typically indemnify the clinical trial sites from losses associated with their participation in the clinical trial. We incurred $665,000 and $0 for these arrangements during the three-month periods ending September 30, 2015 and 2014, respectively, and $1,023,000 and $0 for these arrangements during the nine-month periods ending September 30, 2015 and 2014, respectively which are included in research and development expenses on the condensed consolidated statements of operations and comprehensive loss.

Legal Matters

On March 19, 2015, a putative securities class action lawsuit was filed against us, Lawrence Mehren, and Steve Reichling, Rapp v. Accelerate Diagnostics, Inc., et al., U.S. District Court, District of Arizona, 2:2015-cv-00504.  The complaint alleges that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and SEC Rule 10b-5, by making false or misleading statements about our ID/AST System, formerly called the BACcel System.  Plaintiff purports to bring the action on behalf of a class of persons who purchased or otherwise acquired our stock between March 7, 2014 and February 17, 2015.  On June 9, 2015, Julia Chang was appointed Lead Plaintiff of the purported class.  On June 23, 2015, Plaintiff filed an amended complaint alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, by making false or misleading statements or omissions about our ID/AST System and by allegedly employing schemes to defraud.  Plaintiff seeks certification of the action as a class action, compensatory damages for the class in an unspecified amount, legal fees and costs, and such other relief as the court may order.  Defendants moved to dismiss the amended complaint on July 21, 2015, which is pending before the Court.  We believe the case is without merit and intend to defend it vigorously.  However, an adverse result could have a material adverse effect upon our financial condition or results of operations.