NOTE 7: COMMITMENTS AND CONTINGENCIES a. Cyren Ltd., which was incorporated in Israel, partially financed its research and development expenditures under programs sponsored by the Israel Innovation Authority (IIA) for the support of certain research and development activities conducted in Israel. In connection with specific research and development, the Company received $3,699 of participation payments from the IIA through December 31, 2018. During 2018 and 2017, the Company received $228 and $718 grants from the IIA, respectively. In return for the IIAs participation in this program, the Company is committed to pay royalties at a rate of 3% - 3.5% of the programs developed product sales, up to 100% of the amount of grants received plus interest at annual LIBOR rate. The Companys total commitment for royalties payable with respect to future sales, based on IIA participations received, net of royalties paid or accrued, totaled $2,921 and $2,734 as of December 31, 2018 and 2017, respectively. For the years ended December 31, 2018 and 2017, $156 and $144, respectively, were recorded as cost of revenues with respect to royalties due to the IIA. b. Operating leases: Certain facilities of the Company are rented under non-cancellable operating lease agreements, which expire on various dates, the latest of which is in 2026. Facilities rent expenses for 2018 and 2017 were $1,749 and $2,004, respectively. Annual minimum future lease payments due under the above agreements (and motor vehicle leases, which expire in 2021), at the exchange rate in effect on December 31, 2018, are as follows: 2019 $ 2,224 2020 2,375 2021 2,263 2022 1,777 2023 903 2024 and thereafter 1,164 $ 10,706 c. Litigations: i. Between 2014 and 2015 the Company entered into arbitral proceedings with the former shareholders of eleven regarding an escrow account and the earn-out consideration related to the purchase agreement of former eleven. With respect to these claims, on March 9, 2017, the arbitrational panel provided their ruling in which it accepted the claims submitted by the former eleven shareholders with respect to the escrow amount and the 2013 earn-out liability. The arbitrational panel also ruled that Cyren pay legal expenses and interest on the claimed amounts, which were reflected in the year ending December 31, 2016 on the Companys balance sheet and in the consolidated statements of operations under adjustment to earn-out consideration. The escrow account has been released to the former shareholders. The arbitrational award related to the 2013 earn-out consideration was declared enforceable by the applicable courts in Germany. Accordingly, on May 30, 2018, the Company paid the portion of the earn-out consideration in the amount of $604 that was declared enforceable by the German district court. The Company did not pay the remainder of the earn-out consideration, including accrued legal and interest, which appear on the Companys consolidated balance sheets as of December 31, 2018, and has filed an appeal to the German Federal Supreme Court challenging the enforceability of the remaining amounts. In February 2019, the parties have signed a settlement agreement to resolve all pending claims, and on February 28, 2019 the Company paid $2,683 to settle the earn-out consideration in full. ii. On June 28, 2017 a vendor filed a Statement of Claim in the Tel Aviv District Court (the SOC). According to the vendors SOC, the Company entered into an agreement with the vendor for receipt of services, based on a database developed by the vendor. In September 2015, the Company terminated the agreement with the vendor, effective as of December 31, 2015. The vendor claims that the Company continues to make use of the vendors database post termination thus breaching the agreement, infringing on the vendors rights and commercial secrets, and being unjustly enriched. The vendor is claiming license fees of approximately $3,150 and an injunction relief ordering the Company and/or its customers to delete any remaining data and to cease from utilizing such data. The Company denies all claims and has filed a Statement of Defense on November 15, 2017. Pretrial was scheduled for May 15, 2018. In accordance with the courts recommendation from November 28, 2017, the parties agreed to examine a non-binding mediation process and have appointed a mediator. The parties agreed to conduct a third party audit of the Companys databases in the scope of the mediation and the audit is currently being conducted. At this early stage, the Company is unable to make any estimations as to the outcome of this litigation. In September 2018 and January 2019, the same vendor filed a lawsuit against two of the Companys customers in the United States. The vendor alleges that the clients misappropriated the vendors trade secrets and is seeking injunctive relief and monetary damages in an amount to be determined. Both customers have contended that the allegations relate to the services they receive from the Company, and the Company has agreed to indemnify both clients against these claims. As such, the Company has taken over the representation in these lawsuits. At this early stage, the Company is unable to make any estimations as to the outcome of these litigations.