Quarterly report pursuant to Section 13 or 15(d)

Note 7 - Commitments and Contingencies

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Note 7 - Commitments and Contingencies
9 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]
 
7.
Commitments and Contingencies
 
Operating Lease
 
On
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.
The Company relocated its 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, 2018
and
2017
was
$65,000
and
$138,000,
respectively. Rent expense for the
nine
months ended
September 30, 2018
and
2017
was
$293,000
and
$305,000,
respectively.
 
In
September 2018,
the Company entered into a
36
-month noncancelable operating lease agreement for office equipment.  The lease commenced on
September 20, 2018.  
The monthly payment is approximately
$2,600.
 
 
As of
September 30, 2018,
future minimum payments under the leases are as follows (in thousands):    
 
Year Ending December 31,
 
 
 
 
2018 (remaining three months)
  $
73
 
2019
   
296
 
2020
   
143
 
2021
   
23
 
Total minimum lease payments
  $
535
 
 
 
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 is 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.
 
Legal Proceedings
 
On
March 11, 2016,
the Company filed a demand for Arbitration with the American Arbitration Association ("AAA") against a former employee asserting common law and statutory negligence claims against the former employee arising from the former employee's negligent performance of certain work duties. The demand seeks damages for lost profits, along with attorney's fees, interest, and costs. The former employee filed a counterclaim in the proceeding, alleging discrimination, retaliation, wrongful termination, and various claims for alleged wage and hour violations under the California Labor Code, stemming from the cessation of her employment with the Company. The former employee seeks damages for lost wages, punitive damages, statutory penalties, injunctive relief, and attorney’s fees, interest and costs.
 
On
June 4, 2018,
the Company entered into a Settlement and License Agreement (the “Settlement Agreement”) with ThermiGen LLC and ThermiAesthetics LLC (“ThermiGen,” collectively) as well as Red Alinsod, M.D. resolving the Company’s patent litigation against ThermiGen and Dr. Alinsod. The Settlement Agreement also resolved ThermiGen’s inter partes review proceedings against the Company. The litigation arose from the Company’s claim that ThermiGen and Dr. Alinsod were improperly using the Company’s patented technology without consent. Pursuant to the Settlement Agreement, the parties agreed to resolve all currently pending disputes between them.
 
Under the terms of the Settlement Agreement, the Company received an initial monetary payment to settle the litigation and past claims and an on-going royalty for future sales. Viveve granted to ThermiGen a non-exclusive, non-transferable license to use the Company’s U.S. patent for the current version of ThermiGen’s ThermiVa system (which includes RF generators and consumables). The Company has recorded the monetary payment as a gain on litigation settlement in selling, general and administrative expenses on the condensed consolidated statements of operations during the
nine
months ended
September 30, 2018.