Note 9 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2012

Commitments and Contingencies Disclosure [Text Block]

9. Commitments and Contingencies

Lease Termination

During the third quarter of 2011, we made the decision to outsource the manufacturing of the PELS beacons.  As a result, on December 24, 2011, we vacated the Thamesmead U.K. factory/office facility. Keyswitch Varley, a wholly-owned subsidiary of Signature, is obligated on the lease.  Neither Signature nor the Company guaranteed the lease.  We have assessed the liability for the lease termination in accordance with ASC 420, “Exit or Disposal Cost Obligations”, and ASC 450, “Loss Contingencies”, and accordingly, we have accrued an estimated lease termination liability at December 31, 2011.  The estimated amount was included in the results of discontinued operations for the year ended December 31, 2011, and in the current liabilities of discontinued operations at March 31, 2012 and December 31, 2011. This estimate is subject to change and any increases or decreases will be reflected in the results of our discontinued operations in future periods.

Destron Transaction Claim of Recovery

On February 3, 2012, we received formal notice of a claim from Allflex, alleging that certain implantable chips supplied to an overseas customer were defective.  The formal notice states that the loss estimate and claim against the funds held in escrow from the sale of Destron is $1.2 million and that there may be additional alleged losses.  We have disputed this claim and notified Allflex that we intend to further investigate this matter, vigorously defend any claim of impropriety and aggressively pursue responsible parties.  Historically, we have never experienced the type of defect claimed. This $1.2 million part of the escrow is included in other long-term assets and long-term deferred gain and the remainder of the escrow of $1.3 million in included in other current assets and current deferred gain at March 31, 2012.  Income will be recognized only upon receipt, if any, of the escrow funds.

SARBE Sale Escrow

Included in funds held in escrow from sales of businesses is an outstanding escrow of £0.2 million (or approximately $0.3 million) from the sale of our SARBE business. The funds have been placed in escrow to cover certain indemnifications.  The escrow period ends in June 2012.