The Company’s leases mainly include facility leases and storage leases. In September 2019, the Company entered into a noncancelable operating lease for approximately 10,823 square feet of primary office space, which expired on July 31, 2021, without the option to extend.

On February 5, 2021, the Company entered into a lease to renew the corporate headquarters in Menlo Park, California. The lease commenced on August 1, 2021 and is for a term of 37 months from the commencement date. The Company recorded an aggregate right-of-use ("ROU") asset and lease liability of $1.5 million. The ROU asset and corresponding lease liability were estimated using a weighted-average incremental borrowing rate of 13.59%. Total base rent is approximately $1.6 million under the lease agreement.

The Company recognizes rent expense on a straight-line basis over the noncancelable lease term. The Company’s rent expense was $0.2 million and $0.2 million for the three months ended September 30, 2021 and 2020, respectively. The Company’s rent expense was $0.5 million for the nine months ended September 30, 2021 and 2020.

In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. At the date of adoption of Topic 842, the Company determined the amounts of lease liability using a discount rate of 16.4%, which represents the Company’s incremental borrowing rate, which was based on the Company’s current borrowing rate adjusted for various factors including level of collateralization and term. As of September 30, 2021, the remaining lease term for the lease was 2.9 years.

Operating lease expense and supplemental cash flow information related to operating leases for the three and nine months ended September 30, 2020 and 2021 were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Operating lease expense	$	175	$	175	$	528	$	488
Cash paid for operating leases		131		173		484		517
New operating lease assets obtained in exchange for operating lease liabilities		1,514		—		1,537		—

During the three and nine months ended September 30, 2021 and 2020, the Company’s costs related to short-term lease arrangements and non-lease variable payments were immaterial.

Aggregate future minimum lease payments at September 30, 2021 and December 31, 2020, under these noncancelable operating leases were as follows (in thousands):


	As of September 30,			As of December 31,
	2021			2020
2021	$	170		$	440
2022		691			66
2023		705			68
2024		462			29
Total future minimum lease payments	$	2,028			603
Less: imputed interest		(364	)		(74	)
Present value of future minimum lease payments	$	1,664			529
Less: current portion of operating lease liability		(486	)		(395	)
Operating lease liabilities - noncurrent	$	1,178		$	134

On September 16, 2021, the Company filed suit in the U.S. District Court for the District of Delaware (C.A. No. 1:21-cv-01317) alleging that Ivantis, Inc. directly or indirectly infringes U.S. Patent Nos. 8,287,482, 9,370,443, 9,486,361, and 10,314,742 by making, using, selling, and offering for sale the Hydrus® Microstent. The Company’s Complaint seeks money damages and injunctive relief. Ivantis has not yet responded to the Complaint, and no trial date has been set. The Company is presently unable to predict the outcome of this lawsuit or to reasonably estimate the potential financial impact of the lawsuit on the Company, if any.

The Company is subject to claims and assessments from time to time in the ordinary course of business. Accruals for litigation and contingencies are reflected in the financial statements based on management’s assessment, including the advice of legal counsel, of the expected outcome of litigation or other dispute resolution proceedings, and/or the expected resolution of contingencies. Liabilities for estimated losses are accrued if the potential losses from any claims or legal proceedings are considered probable and the amounts can be reasonably

estimated. Significant judgment is required in both the determination of probability of loss and the determination as to whether the amount can be reasonably estimated. Accruals are based only on information available at the time of the assessment due to the uncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities related to pending claims and litigation and may revise its previous estimates, which could materially affect the Company’s results of operations in a given period. As of September 30, 2021 and December 31, 2020, the Company was not involved in any material legal proceedings except as described above.

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but that have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations.

The Company indemnifies each of its directors and officers for certain events or occurrences, subject to certain limits, while the director is or was serving at the Company’s request in such capacity, as permitted under Delaware law and in accordance with its certificate of incorporation and bylaws. The term of the indemnification period lasts as long as a director may be subject to any proceeding arising out of acts or omissions of such director in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director liability insurance. This insurance allows the transfer of risk associated with the Company’s exposure and may enable it to recover a portion of any future amounts paid. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations as of September 30, 2021 and December 31, 2020.