NOTE 8. COMMITMENTS AND CONTINGENCIES Directors and Officers Indemnification As permitted under Delaware law and in accordance with its bylaws, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is or was serving at the Companys request in such capacity. The term of the indemnification period is for the officers or directors lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that limits its exposure and may enable it to recover a portion of any future payments. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, it has not recorded any liabilities for these agreements as of March 31, 2020. In the normal course of business, the Company provides indemnification of varying scope under its agreements with other companies, typically its clinical research organizations, investigators, clinical sites, suppliers and others. Pursuant to these agreements, it generally indemnifies, holds harmless, and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified parties in connection with the use or testing of its products or product candidates or with any U.S. patent or any copyright or other intellectual property infringement claims by any third party with respect to its products. The term of these indemnification agreements is generally perpetual. The potential future payments the Company could be required to make under these indemnification agreements is unlimited. Historically, costs related to these indemnification provisions have been immaterial. The Company also maintains various liability insurance policies that limit its exposure. As a result, it believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recorded any liabilities for these agreements as of March 31, 2020. Legal Matters From time to time, the Company may be involved in various legal proceedings arising in the ordinary course of business. On July 29, 2019, Mr. John McGovern, the Companys former Interim President &amp; Chief Executive Officer and Chief Financial Officer, submitted a demand for arbitration seeking severance in the amount of $370,000 as well as additional damages in connection with his separation from service with the Company. The Company does not believe the claims asserted by Mr. McGovern have any merit, and the Company intends to defend against all such claims. As of March 31, 2020, there are no other matters that, in the opinion of management, would ultimately result in liability that would have a material adverse effect on the Companys financial position, results of operations or cash flows. Leases The Company leases office space for its corporate headquarters, located in Emeryville, California. The initial lease term is through February 28, 2022. The Company has the option to extend the term of the lease for one five ( 5 )-year period upon written notice to the landlord. The Company intends to exercise the renewal option for this lease. The Company also has a lease commitment for laboratory facilities and office space at EmeryStation North in Emeryville, California (EmeryStation) under an operating lease that will expire on October 31, 2020. There are no stated renewal terms. Per the terms of the agreements, the Company does not have any residual value guarantees. In July 2016, the Company subleased all rentable square feet of real property at EmeryStation (Sublease Agreement). The Sublease Agreement commenced September 8, 2016. The Sublease Agreement will terminate on October 21, 2020 and there are no stated renewal terms. Per the terms of the agreement, the sublessee does not have any residual value guarantees. In addition to the facility leases, the Company has leased 54 vehicles under a master fleet lease agreement. Each lease is for a period of 36 months, which commenced upon the delivery of the vehicle during the first quarter of 2017. During the first quarter of 2019, in connection with the restructuring of its U.S. sales force, the Company reviewed its fleet leases for impairment. The Company estimated fair value based on the lowest level of identifiable estimated future cash flows and recorded an impairment charge of $125 thousand, which is included in sales and marketing expenses within the operating expenses in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2019. During the fourth quarter of 2019, the Company early terminated the lease agreement related to the idled vehicles, and had 15 leased vehicles as of December 31, 2019. The lease agreement expired in the first quarter of 2020, and, as of March 31, 2020, the Company no longer has any leased vehicles. Additionally, the Company has an operating lease for 2 copiers which will expire in October 2022. The monthly lease payment for the copiers is not material. In calculating the present value of the lease payments, the Company has elected to utilize its incremental borrowing rate based on the original lease term and not the remaining lease term. The Company has elected to account for each lease component and its associated non-lease components as a single lease component, and has allocated all of the contract consideration across lease components only. This will potentially result in the initial and subsequent measurement of the balances of the right-of-use assets and lease liability for leases being greater than if the policy election was not applied. The leases include variable components (i.e. common area maintenance, excess mileage charges, etc.) that are paid separately from the monthly base payment based on actual costs incurred and therefore were not included in the right-of-use assets and lease liability, but are reflected as an expense in the period incurred. The components of lease expense for the three months ended March 31, 2020 and 2019 were as follows (in thousands except lease term and discount rate): Lease Costs Three Months Ended March 31, 2020 2019 Operating lease cost $ 264 $ 312 Sublease income (158 ) (158 ) Net lease cost $ 106 $ 154 Other information Operational cash flow used for operating leases $ 296 324 Weighted-average remaining lease term (in years) 1.5 2.2 Weighted-average discount rate 12 % 12 % Future lease payments under non-cancelable leases as of March 31, 2020 were as follows (in thousands): Remaining in 2020 $ 751 2021 454 2022 88 Thereafter  Total future minimum lease payments 1,293 Less imputed interest (113 ) Total $ 1,180 Reported as: Operating lease liability $ 774 Operating lease liability- non-current 406 Total $ 1,180 Future lease payments to be received under non-cancelable leases as of March 31, 2020 were as follows (in thousands): Remaining in 2020 $ 385 2021 and thereafter  Total future minimum lease payments $ 385