Commitments and Contingencies

Operating Lease

January 2012,

the Company entered into a lease agreement for office and laboratory facilities in Sunnyvale, California. The lease agreement, as amended in

September 2016,

commenced in

March 2012

and will terminate in

March 2018.

February 1, 2017,

the Company entered into a sublease agreement (the “Sublease”) for approximately

12,400

square feet of building space for the relocation of the Company

’s corporate headquarters to Englewood, Colorado (the “Sublease Premises”), which was effective as of

January 26, 2017.

The lease term commenced on

June 1, 2017

and will terminate in

May 2020.

We relocated our corporate headquarters from Sunnyvale, California to Englewood, Colorado in

June 2017.

The monthly base rent under the Sublease is equal to

$20.50

per rentable square foot of the Sublease Premises during the

first

year. The monthly base rent is equal to

$21.12

and

$21.75

per rentable square foot during the

second

and

third

years, respectively. In connection with the execution of the Sublease, the Company also agreed to pay a security deposit of approximately

$22,000.

The Company is entitled to an allowance of approximately

$88,000

for certain tenant improvements relating to the engineering, design and construction of the Sublease Premises.

Rent expense for the

three

months ended

September 30, 2017

and

2016

was

$138,000

and

$55,000,

respectively. Rent expense for the

nine

months ended

September 30, 2017

and

2016

was

$305,000

and

$164,000,

respectively.

As of

September 30, 2017,

future minimum payments under the leases are as follows (in thousands):

Year Ending December 31,
2017 (remaining 3 months)	$	145
2018		338
2019		264
2020		112
Total minimum lease payments	$	859

Indemnification Agreements

The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with performance of services within the scope of the agreement, breach of the agreement by the Company, or noncompliance of regulations or laws by the Company, in all cases provided the indemnified party has

not

breached the agreement and/or the loss is

not

attributable to the indemnified party

’s negligence or willful malfeasance. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these arrangements is

not

determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal.

Loss Contingencies

The Company is or has been subject to proceedings, lawsuits and other claims arising in the ordinary course of business. The Company evaluates contingent liabilities, including threatened or pending litigation, for potential losses. If the potential loss from any claim or legal proceeding in considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. Because of uncertainties related to these matters, accruals are based upon the best information available. For potential losses for which there is a reasonable possibility (meaning the likelihood is more than remote but less than probable) that a loss exists, the Company will disclose an estimate of the potential loss or range of such potential loss or include a statement that an estimate of the potential loss cannot be made. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation and

may

revise its estimates, which could materially impact its condensed consolidated financial statements.

Management does

not

believe that the outcome of any outstanding legal matters will have a material adverse effect on the Company's consolidated financial position, results of operations and cash flows.