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Commitment and Contingencies
6 Months Ended
Jun. 30, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitment and Contingencies Commitment and Contingencies
Purchase Obligations
The Company has non-cancelable purchase commitments of $4.6 million as of June 30, 2022, primarily related to software license fees and co-location facilities and services, of which $2.1 million is expected to be paid in remainder of 2022, $2.4 million in 2023 and $0.1 million in 2024.
Contingencies
The Company has agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines, and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer insurance coverage that may enable the Company to recover a portion of any future amounts paid.
FASB ASC 450-20, Contingencies, sets forth the rules for accounting for uncertain tax positions for taxes not based on income. When a loss contingency exists, the likelihood of the incurrence of the liability can range from probable to remote. The Company believes it is reasonably possible that a loss will result from the sales and use tax assessments in the range of zero to $0.4 million. The Company has not recorded an accrual as of June 30, 2022 and 2021.
Legal Proceedings
The Company, its Chief Executive Officer, its Chief Financial Officer, certain and former members of its Board of Directors and the underwriters that participated in the Company’s IPO are named as defendants in a consolidated putative class action, captioned In re ON24, Inc. Securities Litigation, 4:21-cv-08578-YGR (filed in November 2021), that is currently pending in the United States District Court for the Northern District of California. The consolidated complaint purports to assert claims under Sections 11 and 15 of the Securities Act of 1933 on behalf of all persons and entities that purchased, or otherwise acquired, the Company’s common stock issued in connection with the Company’s IPO. The complaint alleges that the Company’s registration statement and prospectus contained untrue statements of material fact and/or omitted material facts about ON24’s growth and customer base. Plaintiff seeks, among other things, an award of damages and attorneys’ fees and costs. Defendants filed a motion to dismiss the complaint in May 2022, which is scheduled to be heard in August 2022. The Company believes the allegations in the consolidated complaint are without merit. The Company is unable to reasonably estimate a possible loss or range of possible loss, if any, arising from this matter at this early stage. Accordingly, no accrued litigation expense has been recorded in the accompanying condensed consolidated financial statements.
In June 2022, a shareholder derivative complaint, captioned Banks v. Sharan, et al., Case No. 3:22-cv-03861, was filed by a purported shareholder in the United States District Court for the Northern District of California. The complaint names as defendants the Company’s Chief Executive Officer, the Company’s Chief Financial Officer, and certain current and former members of the Company’s board of directors, and names the Company as a nominal defendant. The complaint purports to assert claims on the Company’s behalf against the individual defendants for breach of fiduciary duty and alleged violations of Sections 10(b) and 21D of the Securities Exchange Act of 1934. The complaint is based on allegations that are substantially similar to those in the putative class action filed in the United States District Court for the Northern District of California, described above. The complaint seeks, among other things, an award of damages on behalf of the Company, corporate governance reforms, and attorneys’ fees and costs. The Company has not yet filed a responsive pleading in this action. The Company is unable to reasonably estimate a possible loss or range of possible loss, if any, arising from this matter at this early stage. Accordingly, no accrued litigation expense has been recorded in the accompanying condensed consolidated financial statements.
In the ordinary course of business, the Company may be subject from time to time to various proceedings, lawsuits, disputes or claims. Although the Company cannot predict with assurance the outcome of any litigation, the Company does not believe there are currently any actions, other than those described in the prior paragraph, that if resolved unfavorably, would have a material impact on its financial condition, results of operations or cash flows.