10. Commitments and Contingencies

 

Operating Leases

 

The Company leases office and warehouse space under operating leases that expire between 2017 and 2021. The terms of the leases include periods of free rent, options for the Company to extend the leases (three to five years) and increasing rental rates over time. The Company recognizes rental expense under these operating leases on a straight-line basis over the lives of the leases and has accrued for rental expense recorded but not paid.

 

Rental expense was approximately $0.7 million and $0.7 million for the three months ended September 30, 2017 and 2016, respectively, and $2.2 million and $1.9 million for the nine months ended September 30, 2017 and 2016, respectively.

 

Future minimum rental payments required under non-cancelable operating leases with initial or remaining terms in excess of one year consist of the following as of September 30, 2017 (in thousands):

 

 

The Company vacated one of the Pakedge facilities during 2016, which resulted in a loss of $0.4 million recorded to general and administrative expenses. The Company subleased this facility during the three months ended September 30, 2017 for the remaining lease term. The terms of the sublease did not result in a significant change to the initial loss recorded during 2016.

 

Purchase Commitments

 

The Company had non-cancellable purchase commitments for the purchase of inventory, which extend through June 2018 totaling approximately $51.8 million at September 30, 2017.

 

Indemnification

 

The Company has agreed to indemnify its officers and directors for certain events or occurrences while the officer or director is or was serving at the Company’s request in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company has a directors’ and officers’ insurance policy that provides corporate reimbursement coverage that limits its exposure and enables it to recover a portion of any future amounts paid. The Company has no liabilities recorded for these agreements as of September 30, 2017, as there were no outstanding claims.

 

Legal Matters

 

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings, that if determined adversely to us, we believe would individually or in the aggregate have a material adverse effect on our business, results of operations, financial condition or cash flows.