Commitments and contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

Commitments and contingencies

Employment agreements

We have employment agreements with certain key employees. None of these employment agreements is for a definitive period, but rather each will continue indefinitely until terminated in accordance with its terms. The agreements provide for a base annual salary, payable in monthly (or shorter) installments. Under certain conditions and for certain of these officers, we may be required to pay additional amounts upon terminating the employee or upon the employee resigning for good reason.

Litigation

From time to time, the Company is subject to various legal proceedings that arise in the ordinary course of business, none of which are currently material to the Company’s business. The Company’s industry is characterized by frequent claims and litigation, including claims regarding intellectual property. As a result, the Company may be subject to various legal proceedings from time to time. The results of any future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. Management is not aware of any significant pending or threatened litigation that is anticipated to result in unfavorable judgments against the Company.

Indemnification

As permitted under Delaware law and in accordance with the Company’s bylaws, the Company is required to indemnify its officers and directors for certain errors and occurrences while the officer or director is or was serving in such capacity. The Company is also party to indemnification agreements with its directors. The Company believes the fair value of the indemnification rights and agreements is minimal. Accordingly, the Company has not recorded any liabilities for these indemnification rights and agreements as of June 30, 2023 and December 31, 2022.

Non-income related taxes

Companies are required to collect and remit sales tax from certain customers if the company is determined to have nexus in a particular state. Upon the determination of nexus, which varies by state, companies are additionally required to maintain detailed record of specific product and customer information within each jurisdiction in which it has established nexus to appropriately determine their sales tax liability, requiring technical knowledge of each jurisdiction’s tax case law. During the year ended December 31, 2022, the Company determined that a sales tax liability related to the periods of 2019 through 2022 was probable and determined an estimated liability. The estimated liability was approximately $4.8 million and $3.7 million as of June 30, 2023 and December 31, 2022, respectively. Outside of the analysis performed to determine the sales tax liability related to the periods of 2019 through 2022, we assessed approximately $266,000 and $306,000 of sales tax obligations generated during the normal course of business as of June 30, 2023 and December 31, 2022, respectively. Due to the variety of jurisdictions in which this estimated liability relates to and our ongoing assessment of sales taxes owed, we cannot predict when final liabilities will be satisfied. We will reevaluate the estimated liability and timing of satisfaction each reporting period.

Settlement of Global Cooling escrow

On May 3, 2021, the Company acquired Global Cooling Inc. Within the the merger agreement, 6,646,870 newly issued shares of common stock were provided with the requirement that the GCI Merger Consideration otherwise payable to GCI Stockholders were subject to reduction for indemnification obligations. Approximately 9% of the GCI Merger Consideration (the "Escrow Shares") otherwise issuable to the GCI Stockholders were deposited into a segregated escrow account in accordance with an escrow entered into in connection with the GCI Escrow Agreement. Of the segregated shares, 5% were considered General Escrow Shares. These shares were eligible to be held for a period of up to 18 months after the closing of the GCI acquisition as the sole and exclusive source of payment for any post-GCI Closing indemnification claims.

On September 28, 2022, BioLife asserted an Indemnification Claim to the Seller Representatives. As of December 31, 2022 and March 31, 2023, the outcome of the claim was uncertain.

On June 5, 2023, a settlement agreement was signed granting BioLife rights to 65% of the General Escrow Shares, totaling 216,024 shares. The shares were returned to BioLife and subsequently cancelled. As a result of the settlement, the Company recorded a $5.1 million gain recognizing the return of the shares.