Commitments and Contingencies Litigation The Company from time to time, is party to pending or threatened legal proceedings. The Company recognizes a liability for contingencies, including an estimate of legal costs to be incurred, when information available indicates both a loss is probable and the amount of the loss can be reasonably estimated. Based upon information presently available, and in light of available legal and other defenses, contingent liabilities arising from threatened and pending litigation are not considered material in relation to the respective financial positions of the Company. During 2018, the Company received an offer from Roche Diabetes Care, Inc. (Roche) to license its US Patent No. 6,736,795 (the 795 patent), which expires on September 23, 2020, and is alleged to cover the Company's V-Go product. The Company does not believe the 795 patent to be valid, infringed, and/or enforceable, and therefore does not view Roches allegation as having merit. The Company also understands that Roche has never practiced the 795 Patent and Roche permitted the European equivalent patent to lapse. Accordingly, the Company declined Roches offer of a license to the 795 patent, and on January 24, 2019, the Company filed two Inter Partes Review petitions, which included three previously unconsidered prior art references, with the Patent Trial and Appeal Board (PTAB). In response, in late February 2019, Roche filed a proceeding in federal court in Delaware seeking an unspecified amount of damages and potential injunctive relief. On April 24, 2019 Roche filed a preliminary response with the US Patent and Trademark Office in which it statutorily disclaimed or abandoned all but 2 of the claims in the 795 patent that Roche had suggested covered the V-Go product. A statutory disclaimer means that the subject matter covered by the claims abandoned by Roche are dedicated to the public and free for any party to use. On July 16, 2019, the Company entered into a settlement agreement (the Settlement) with Roche whereby the Company and Roche agreed to terminate all Inter Partes Review proceedings related to the 795 patent and dismiss with prejudice all claims and counterclaims asserted by the two parties in connection with the above disclosed dispute. In exchange for the Settlement, Roche has granted the Company a non-exclusive, worldwide license (the License) to use the 795 patent, upon the terms and conditions set forth in the Settlement. The License is valid from the date of the Settlement until the 795 patent expires and/or is no longer enforceable. In connection with the Settlement, the Company agreed pay to Roche an amount determined not to be material to the Company's financial statements. The settlement has been included in the Company's balance sheet as of September 30, 2019 and will be paid over the period of 12 months from the settlement date. Financing (Capital) Leases In January and November 2018, the Company executed capital leases with Winthrop Resources Corporation (Winthrop) for laptops and other electronic equipment. The initial term of the two leases expire in 2021, then continues year to year until terminated. At the end of the initial term, the Company has the option to purchase the leased equipment in whole for a mutually agreed upon price. The assets under these capital leases were recorded at the present value of the minimum lease payments, which amounted to $0.4 million upon commencement and is depreciated over the term of the leases. The Company is obligated to pay $0.1 million of interest expense under the capital leases. For the nine months ended September 30, 2019 and 2018 the gross fixed assets for capital leases were $0.4 million and $0.3 million , respectively. Capital lease depreciation expense was de minimis amounts for the three months ended September 30, 2019 and 2018 , and $0.1 million for the nine months ended September 30, 2019 and 2018 , respectively. Operating Leases The Company leases buildings in Bridgewater, New Jersey and Marlborough, Massachusetts. The New Jersey lease expires in June 2023 . The original Massachusetts lease was to expire February 2024 . In 2019, the Company entered into the First Amendment to the Marlborough Massachusetts lease, with payments to commence in June 2019 (the Massachusetts First Amendment Lease). The lease adds 4,076 square feet and extends the term of the lease through February, 2026. In addition to rent expense, the Company is obligated to pay costs of insurance, taxes, repairs and maintenance pursuant to the terms of the building leases. The rental payments include the minimum rentals plus common area maintenance charges. The leases include renewal options. As result of the Massachusetts First Amendment Lease an incremental $0.8 million for the ROU asset and lease liabilities were recorded during the nine months ended September 30, 2019 . The Company has a service contract for the manufacturing of its products with a three year term and a separate contract for the packaging and the shipping of its product with an evergreen term, which the Company accounts for as a one and one half year term. These service contracts are recorded in the cost of sales as manufacturing overhead. Under ASC 842 Leases, the Company tested these service contacts and determined the assets were implicit in the contract, they are distinct, and the supplier does not have practical substantive substitution rights. During the nine months ended September 30, 2019 , the Company recorded an ROU asset and associated liability of $0.2 million for these embedded leases. Both leases are determined to be operating leases as the contractual term is less than 75% of the estimated economic life, the allocated cash flows are less than 90% of the fair market value to purchase these assets, there is no purchase option (bargain or otherwise), there is no transfer of ownership at the end, and the assets are not so customized to the Company's needs that they could not be reworked to use for another customer. Rent, lease amortization and interest expense under the building leases amounted to $0.1 million and $0.2 million for the three months ended September 30, 2019 and 2018 , and $0.3 million and $0.5 million for the nine months ended September 30, 2019 and 2018 , respectively. The straight line expense for the embedded lease is a de minimis amount per month and is recorded in cost of sales as manufacturing overhead. During the three and nine months ended September 30, 2019 , the Company recorded ROU assets of zero and $2.6 million , respectively. As of September 30, 2019 , the Companys right-of-use assets, lease obligations and remaining cash commitment on the operating leases is as follows: Right-of-use Assets Operating Lease Obligations Remaining Cash Commitment Building and embedded operating leases $ 2,393 $ 2,546 $ 3,286 The Companys weighted average discount rate and remaining term on lease liabilities is approximately 9.0% and 5.9 years . Supplemental cash flows information related to leases for the three and nine months ended September 30, 2019 are as follows: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 142 $ 345 Financing cash flows from finance (capital) leases 31 90 Operating cash flows from finance (capital) leases 8 27 Right-of-use assets obtained in exchange for new lease obligations: Operating leases $  $ 2,592 At September 30, 2019 , the Company had the following minimum operating lease commitments: Year ending December 31: Operating Lease Commitments 2019, remaining $ 153 2020 612 2021 544 2022 537 2023 446 Thereafter 994 Subtotal 3,286 Imputed interest (740 ) Total $ 2,546 Development Agreement On April 16, 2018, the Company entered into an agreement with Glooko, a leader in diabetes data management. With this agreement, the Company will provide future V-Go SIM (Simple Insulin Management) users with Glookos cloud-based mobile and web diabetes data management platform to help track and analyze their diabetes care plan. Users can also share their data with their providers. Pursuant to the agreement, the Company was obligated to pay a one-time integration fee of $0.1 million , as well as an annual maintenance fee of $0.1 million and a monthly fee per user. The initial term of the agreement is 3 years, with renewal options available in yearly increments thereafter. There were no fees associated with this agreement during the three and nine months ended September 30, 2019 . Licensing Agreement Pursuant to a formation agreement, dated as of August 22, 2006 (the Formation Agreement), BioValve and BTI Technologies Inc. (BTI), a wholly owned subsidiary of BioValve, contributed to Valeritas, Inc. (formerly Valeritas, LLC) all of their right, title and interest in and to all of the assets, properties and rights of BioValve and BTI to the extent related to BioValve's drug delivery/medical device initiative, consisting of patents and equipment, hereafter referred to as the Device Assets. On August 26, 2008 , the Formation Agreement was amended and the Company agreed to pay BioValve an amount equal to 9% of any cash received from upfront license or signing fees and any cash development milestone payments received by the Company in connection with licenses or grants of third party rights to the use in development or commercialization of the Company's Rapid Infuser Technology. In certain circumstances the Company would owe 10% of such payments received. As of September 30, 2019 and December 31, 2018 , no amounts were owed under this agreement. Although the Company believes the intellectual property rights around this technology have value, the technology licensed under this agreement is not used in V-Go or any current products under development.