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Commitments and contingencies

3 Months Ended

Mar. 31, 2023

Commitments and contingencies.

Commitments and contingencies

NOTE 8: Commitments and contingencies

Leases

The Company leases facilities for office space under non-cancelable operating lease agreements. The Company leases space for its corporate headquarters in Mountain View, California through August 2025.

As of March 31, 2023 and December 31, 2022, the components of leases and lease costs are as follows:


		March 31, 2023			December 31, 2022
Operating leases
Operating lease right-of-use assets		$	1,849		$	2,012

Operating lease liabilities, current portion		$	807		$	731
Operating lease liabilities, non-current portion			1,130			1,309
Total operating lease liabilities		$	1,937		$	2,040

Operating lease costs were approximately $0.2 million for the three-month periods ended March 31, 2023 and 2022.

As of March 31, 2023, future minimum operating lease payments for each of the next three years and thereafter is as follows:


Years ending December 31,		Amount
2023 (remaining)		$	755
2024			806
2025			608
2026			15
Total future minimum lease payments			2,184
Less - Interest			(247)
Present value of lease liabilities		$	1,937

Weighted average remaining lease term is 2.5 years as of March 31, 2023 and the weighted average discount rate is 11.1%.

Legal Matters

The Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business; however, no such claims have been identified as of March 31, 2023 that would have a material adverse effect on the Company’s financial position, results of operations or cash flows.

The Company from time to time enters into contracts that contingently require the Company to indemnify parties against third party claims. These contracts primarily relate to: (i) arrangements with clients which generally include certain provisions for indemnifying clients against liabilities if the services infringe a third party’s intellectual property rights, (ii) the Regulation A Issuer Agreement where the Company may be required to indemnify the placement agent for any loss, damage, expense or liability incurred by the other party in any claim arising out of a material breach (or alleged breach) as a result of any potential violation of any law or regulation, or any third party claim arising out of any investment or potential investment in the offering, and (iii) agreements with the Company’s officers and directors, under which the Company may be required to indemnify such persons from certain liabilities arising out of such persons’ relationships with the Company. The Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the consolidated financial statements as of March 31, 2023 and December 31, 2022.

Sales Tax Contingencies

The Company has historically not collected state sales tax on the sale of its “MaaS” product offering but has paid sales tax and use tax on all purchases of raw materials and in conjunction with the financing arrangement of the Company’s ASRs with Farnam Street Financial. The Company’s MaaS product offering may be subject to sales tax in certain jurisdictions. If a taxing authority were to successfully assert that the Company has not properly collected sales or other transaction taxes, or if sales or other transaction tax laws or the interpretation thereof were to change, and the Company was unable to enforce the terms of their contracts with Clients that give the right to reimbursement for the assessed sales taxes, tax liabilities in amounts that could be material may be incurred. Based on the Company’s assessment, the Company has recorded a use tax liability of $0.5 million and $0.4 million as of March 31, 2023 and December 31, 2022, respectively, which has been included in other current liabilities on the accompanying condensed consolidated balance sheets. The Company continues to analyze possible sales tax exposure but does not currently believe that any individual claim or aggregate claims that might arise will ultimately have a material effect on its results of operations, financial position or cash flows.