Commitments and Contingencies Operating Leases The Company has entered into operating leases for certain office space and equipment, some of which contain renewal options and escalation clauses. Estimated future lease payments under all non-cancellable operating leases with terms in excess of one year, including taxes and service fees, are as follows (in thousands): Operating Leases Year ending December 31: 2018 (remainder of the year) $ 1,053 2019 4,088 2020 2,998 2021 2,590 2022 2,664 Thereafter 8,423 Total minimum lease payments $ 21,816 Warranties The Company accrues warranty costs based on historical trends for the expected material and labor costs to provide warranty services. Warranty periods are generally one to five years from the date of shipment. The following table reconciles changes in the Companys accrued warranties and related costs for the nine months ended September 30, 2018 and 2017 (in thousands): Nine Months Ended September 30, 2018 2017 Beginning balance $ 931 $ 878 Charged to cost of revenue 1,022 126 Claims and settlements (598 ) (195 ) Foreign exchange impact 6 14 Ending balance $ 1,361 $ 823 Performance Bonds In the normal course of operations, from time to time, the Company arranges for the issuance of various types of surety bonds, such as bid and performance bonds, which are agreements under which the surety company guarantees that the Company will perform in accordance with contractual or legal obligations. As of September 30, 2018 , and 2017, the Company had $2.9 million and $1.0 million of surety bonds guaranteed by third parties, respectively. Purchase Commitments The Company has agreements with various contract manufacturers which include non-cancellable inventory purchase commitments. The Companys inventory purchase commitments typically allow for cancellation of orders 30 days in advance of the required inventory availability date as set by the Company at time of order. The amount of non-cancellable purchase commitments outstanding, net of reserve, was $2.4 million as of September 30, 2018 . Payment Guarantees provided by Third Parties and DNI The following table sets forth payment guarantees of the Company's indebtedness and other obligations as of September 30, 2018 (in thousands) that have been provided by third parties and DNI. DNI owns approximately 57.3% of the outstanding shares of the Company's common stock: Guarantor Amount Guaranteed (in thousands) Description of Obligations Guaranteed DNI $ 3,451 Borrowings from Shinhan Bank DNI 1,726 Purchasing Card from Shinhan Bank DNI 10,730 LC from Industrial Bank of Korea DNI 2,157 Purchasing Card from Industrial Bank of Korea DNI 6,000 LC from NongHyup Bank DNI 6,170 Borrowings from Export-Import Bank of Korea DNI 6,000 LC from KookMin Bank DNI 5,392 Borrowings from Korea Development Bank DNI 8,400 LC from Korea Development Bank Industrial Bank of Korea 6,486 Borrowings and letter of credit NongHyup Bank 3,497 Borrowings and letter of credit Kookmin Bank 304 Letter of credit Korea Development Bank 894 Letter of credit Shinhan Bank 933 Purchasing Card Industrial Bank of Korea 4,075 Performance bonds State Bank of India 34 Performance bonds Seoul Guarantee Insurance Co. 4,232 Performance payment guarantee* $ 70,481 *The Company is responsible for the warranty liabilities generally for the period of two years on major product sales and has contracted surety insurance to cover part of the warranty liabilities. Royalties The Company has certain royalty commitments associated with the shipment and licensing of certain products. Royalty expense is generally based on a dollar amount per unit shipped or a percentage of the underlying revenue and is recorded in cost of revenue. Legal Proceedings The Company is subject to various legal proceedings, claims and litigation arising in the ordinary course of business. While the outcome of these matters is currently not determinable, the Company records an accrual for legal contingencies that it has determined to be probable to the extent the amount of the loss can be reasonably estimated. The Company does not expect that the ultimate costs to resolve these matters will have a material adverse effect on its consolidated financial position or results of operations. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the results of operations of the period in which the ruling occurs, or future periods.