Quarterly report pursuant to Section 13 or 15(d)

14. Commitments and Contingencies

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14. Commitments and Contingencies
3 Months Ended
Mar. 31, 2017
Notes to Financial Statements  
14. Commitments and Contingencies

From time to time, the Company may be involved in a variety of claims, lawsuits, investigations and proceedings relating to contractual disputes, employment matters, regulatory and compliance matters, intellectual property rights and other litigation arising in the ordinary course of business. Defending such proceedings can be costly and can impose a significant burden on management and employees. The Company does not expect that the outcome of any such claims or actions will have a material adverse effect on the Company’s liquidity, results of operations or financial condition. As of March 31, 2017, the Company did not have any ongoing legal matters that would have a material adverse effect on its liquidity, results of operations or financial condition.

 

Recently, Apptix underwent a compliance audit relating to its resale of certain software licenses. The audit covers periods prior to November 14, 2016, the date on which the Company acquired Apptix. Based on preliminary findings from this audit, as of March 31, 2017 the Company has accrued approximately $2.9 million as part of the Apptix purchase price allocation. On May 3, 2017, FNAC commenced a lawsuit against the seller and certain of its and Apptix’s officers seeking to recover all amounts that it may be required to pay to the software vendor as well as to recoup a portion of the purchase price paid. This suit, which was filed in the United States District Court for the Southern District of New York, currently seeks a total of approximately $18.0 million in damages. There can be no assurances, however, that the Company will be able to recover all or any portion of the amount it seeks to recover. On May 9, 2017, the Company received formal notification from the software vendor asserting that the total amount owed is approximately $3.7 million. The Company is reviewing the materials provided and is evaluating whether a further accrual may be required. FNAC intends to amend its suit to increase the amount of damages claimed by an additional $1.0 million.