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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2022
Commitments and Contingencies |
Commitments and Contingencies | Note 8 – Commitments and Contingencies Lease Agreements We lease facilities under non-cancellable operating leases. The leases expire at various dates through fiscal 2024 and frequently include renewal provisions for varying periods of time, provisions which require us to pay taxes, insurance and maintenance costs, and provisions for minimum rent increases. Minimum leases payments, including scheduled rent increases are recognized as rent expenses on a straight-line basis over the term of the lease. The rate implicit in each lease is not readily determinable, and we therefore use our incremental borrowing rate to determine the present value of the lease payments. The weighted average incremental borrowing rate used to determine the initial value of right-of-use (“ROU”) assets and lease liabilities capitalized during the nine months ended September 30, 2022 was 7.0%, and during the nine months ended September 30, 2021 was 5.5%. ROU assets for operating leases are periodically reduced by impairment losses. We use the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant and Equipment – Overall, to determine whether a ROU asset is impaired, and if so, the amount of the impairment loss to recognize. As of September 30, 2022, we have not recognized any impairment losses for our ROU assets. We monitor for events or changes in circumstances that require a reassessment of our leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss. In June 2020, we entered into a sublease agreement to lease 4,351 square feet of office space located in Irvine, California for approximately $6 thousand per month with 3 percent annual increases, plus common area maintenance costs. The lease term began July 1, 2020 and ends May 31, 2023. The space is used for executive offices, sales, finance and administration. We lease a 14,476 square-foot manufacturing facility and administrative office in Shenzhen, China. In May 2022, we renewed this lease for the period June 1, 2022 through May 31, 2024 for approximately $8 thousand per month. We lease a 275 square-foot engineering and administrative office in Singapore for approximately $1 thousand per month. This lease term ends May 2023. We lease a 3,000 square-foot distribution facility in Hong Kong for approximately $2 thousand per month. This lease term ends April 2023. We lease a 500 square-foot sales office in Tokyo, Japan for approximately $1 thousand per month. This lease term ends November 2022. We sublease approximately 205 square-feet of office space in Los Angeles, California for approximately $1 thousand per month. This lease term ends March 2023. As of September 30, 2022, we had current and long-term lease liabilities of $144 thousand and $60 thousand, respectively, and ROU assets of $197 thousand. As of December 31, 2021, we had current and long-term lease liabilities of $138 thousand and $37 thousand, respectively, and ROU assets of $163 thousand. Future imputed interest as of September 30, 2022 totaled $10 thousand. The weighted average remaining lease term of our leases as of September 30, 2022 is 1.1 years. Future minimum lease payments under non-cancellable operating leases that have remaining non-cancellable lease terms in excess of one year are as follows: ​
​ | ​ | ​ | ​
Years ending December 31, |  | (in thousands)
2022 (remainder of year) | ​ | $ | 48
2023 |  | ​ | 128
2024 |  | ​ | 38
Total undiscounted future non-cancelable minimum lease payments |  | ​ | 214
Less: imputed interest | ​ | ​ | (10)
Present value of lease liabilities | ​ | $ | 204
​ During the three months ended September 30, 2022, we incurred approximately $67 thousand in operating lease costs, of which $33 thousand is included in cost of revenue and $34 thousand is included in operating expenses in our condensed consolidated statements of operations. During the three months ended September 30, 2021, we incurred approximately $68 thousand in operating lease costs, of which $29 thousand is included in cost of revenue and $39 thousand is included in operating expenses in our condensed consolidated statements of operations. During the nine months ended September 30, 2022, we incurred approximately $189 thousand in operating lease costs, of which $94 thousand is included in cost of revenue and $95 thousand is included in operating expenses in our condensed consolidated statements of operations. During the nine months ended September 30, 2021, we incurred approximately $234 thousand in operating lease costs, of which $88 thousand is included in cost of revenue and $146 thousand is included in operating expenses in our condensed consolidated statements of operations. Litigation We are not party to any legal proceedings as of September 30, 2022. We are occasionally involved in legal proceedings in the ordinary course of business, including actions against us which assert or may assert claims or seek to impose fines and penalties in substantial amounts. Related legal defense costs are expensed as incurred. Warranties We establish reserves for future product warranty costs that are expected to be incurred pursuant to specific warranty provisions with our customers. We generally warrant our products against defects for one year from date of shipment, with certain exceptions in which the warranty period can extend to more than one year based on contractual agreements. Our warranty reserves are established at the time of sale and are updated throughout the warranty period based upon numerous factors including historical warranty return rates and claim costs over various warranty periods. Historically, our warranty returns have not been material. Intellectual Property Indemnities We indemnify certain customers and our contract manufacturers against liability arising from third-party claims of intellectual property rights infringement related to our products. These indemnities appear in development and supply agreements with our customers as well as manufacturing service agreements with our contract manufacturers, are not limited in amount or duration and generally survive the expiration of the contract. Given that the amount of any potential liabilities related to such indemnities cannot be determined until an infringement claim has been made, we are unable to determine the maximum amount of losses that we could incur related to such indemnifications. Director and Officer Indemnities and Contractual Guarantees Pursuant to our bylaws, we will indemnify our directors and executive officers to the fullest extent permitted by Nevada law, without limitation as to amount or duration, in the event of any actual or threatened lawsuit or proceeding. Certain costs incurred in connection with such indemnifications may be recovered under certain circumstances under various insurance policies. Given that the amount of any potential liabilities related to such indemnities cannot be determined until a lawsuit or proceeding has been threatened or filed, we are unable to determine the maximum amount of losses that we could incur relating to such indemnities. We have also entered into an employment agreement with Steven N. Bronson, our Chairman of the Board, President and Chief Executive Officer. This agreement contains certain severance and change in control obligations. Under the agreement, if Mr. Bronson’s employment is terminated due to his death or disability (as such terms are defined in the agreement), Mr. Bronson or his beneficiaries will be entitled to receive: (i) his base compensation to the end of the monthly pay period immediately following the date of termination; (ii) accrued bonus payments; and (iii) immediate and full vesting of all unvested equity and/or options issued by the Company. If Mr. Bronson’s employment is terminated by him for good reason (as such term is defined in the agreement), or by us without cause, then Mr. Bronson will be entitled to receive: (i) his base compensation to the date of termination; (ii) a severance payment equal to twelve months of his base compensation; (iii) any earned bonus compensation; (iv) employee benefits for twelve months following the date of termination; (v) any vested company match 401(k) or other retirement contribution; and (vi) immediate and full vesting of all unvested equity and/or options issued by the Company. ​ In the event of a change in control of the Company (as such term is defined in the agreement), Mr. Bronson is entitled to receive: (i) a change in control payment in an amount equal to twelve months of his base compensation, payable as of the date the change in control occurs; and (ii) immediate and full vesting of all unvested equity and/or options issued by the Company. Guarantees and Indemnities In the normal course of business, we are occasionally required to undertake indemnification for which we may be required to make future payments under specific circumstances. We review our exposure under such obligations no less than annually, or more frequently as required. The amount of any potential liabilities related to such obligations cannot be accurately determined until a formal claim is filed. Historically, any such amounts that become payable have not had a material negative effect our business, financial condition or results of operations. We maintain general and product liability insurance which may provide a source of recovery to us in the event of an indemnification claim.

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