(8)    Commitments and Contingencies

In August 2013, the Company entered into a four month warehouse lease in Santa Barbara, California, commencing on September 1, 2013. This operating lease is used for additional general office, warehouse, and research and development. This lease has been renewed until January 2019.

In March 2014, the Company entered into a 68 month lease agreement in Santa Barbara, California. The operating lease is for general office use only and commenced on July 1, 2014.

The terms of the facility lease provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease term. Rent expense for the years ended December 31, 2015,  2014 and 2013 was $519,  $424 and $359 respectively.

As of December 31, 2015, future minimum lease payments under all non‑cancelable operating leases are as follows:

 

On November 12, 2015, the Company entered into the following Separation and Consulting Agreements:

Mr. Hani Zeini stepped down from his role as President and Chief Executive Officer and he and the Company entered into a Separation Agreement.  Pursuant to the Separation Agreement, Mr. Zeini received: (i) a lump sum payment of $871, which is equivalent to the sum of twelve (12) months of his base salary as in effect on the separation date plus the annual bonus earned by Mr. Zeini in connection with the completion of the fiscal year prior to the separation date, and (ii) up to twelve (12) months of company-paid health insurance premiums to continue his coverage. As a result of this Separation Agreement, the Company incurred $871 in termination benefits which was recorded during the year ended December 31, 2015. Further, on February 16, 2016, Mr. Zeini resigned from the Company’s board of directors.

The Company entered into a Consulting Agreement with Mr. Zeini. The term of the Consulting Agreement is effective as of November 12, 2015 through December 31, 2016.  Pursuant to the Consulting Agreement, Mr. Zeini shall provide consulting services to the Company in the area of his experience and expertise for up to thirty (30) hours per month and Mr. Zeini will be compensated in the amount of $43 per month. As a result of the terms and conditions of this Consulting Agreement, the Company accrued for all consulting services to be rendered of $586 which was recorded during the year ended December 31, 2015.

Mr. Joel Smith stepped down from his role as General Counsel, Secretary and Chief Compliance Officer of the Company. On December 7, 2015, he and the Company entered into a Separation Agreement and pursuant to the Separation Agreement, Mr. Smith received: (i) aggregate payments equivalent to nine (9) months of his base salary as in effect on the separation date plus the pro-rated annual bonus earned by Mr. Smith in connection with the completion of the fiscal year prior to the separation date of $113, and (ii) up to nine (9) months of company-paid health insurance premiums to continue his coverage. As a result of this Separation Agreement, the Company incurred $338 in termination benefits which was recorded during the year ended December 31, 2015.

The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. There were no contingent liabilities requiring accrual as of December 31, 2015. 

In 2012, the Company filed a claim with the Hartford Insurance Company, or Hartford for reimbursement of legal costs incurred in connection with litigation with a competitor that was resolved in 2013. The Company held a D&O insurance policy with Hartford, and the Company and Hartford settled the matter in May 2014. The Company received settlement payments from Hartford and recovery of costs associated with the litigation of $0, $2,358, and $351 for the years ended December 31, 2015, 2014 and 2013, respectively.

On September 25, 2015, a lawsuit styled as a class action of the Company’s stockholders was filed in the United States District Court for the Central District of California. The lawsuit names the Company and certain of its officers as defendants and alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, in connection with allegedly false and misleading statements concerning the Company’s business, operations, and prospects.  The plaintiff seeks damages and an award of reasonable costs and expenses, including attorneys’ fees. On November 24, 2015, three stockholders (or groups of stockholders) filed motions to appoint lead plaintiff(s) and to approve their selection on lead counsel.  On December 10, 2015, the court entered an order appointing lead plaintiffs and approving their selection of lead counsel.  On February 19, 2016, lead plaintiffs filed their consolidated amended complaint.

On October 28, November 5, and November 19, 2015, three lawsuits styled as class actions of the Company’s stockholders were filed in the Superior Court of California for the County of San Mateo. The lawsuits name the Company, certain of its officers and directors, and the underwriters associated with the Company’s follow-on public offering that closed on September 23, 2015 as defendants. The lawsuits allege violations of Sections 11, 12(a)(2), and 15 of the Securities Act in connection with allegedly false and misleading statements in the Company’s offering documents associated with the follow-on offering concerning its business, operations, and prospects. The plaintiffs seek damages and an award of reasonable costs and expenses, including attorneys’ fees. On December 4, 2015, defendants removed all three lawsuits to the United States District Court for the Northern District of California.  On December 15 and December 16, 2015, plaintiffs filed motions to remand the lawsuits back to San Mateo Superior Court, or the Motions to Remand.  On January 19, 2016, defendants filed their opposition to the Motions to Remand, and plaintiffs filed their reply in support of the Motions to Remand on January 26, 2016.

It is possible that additional suits will be filed, or allegations made by stockholders, with respect to these same or other matters and also naming the Company and/or its officers and directors as defendants. The Company believes it has meritorious defenses and intends to defend these lawsuits vigorously.  Due to the early stage of these proceedings, the Company is not able to predict or reasonably estimate the ultimate outcome or possible losses relating to these claims.