Operating Leases

The Company rented its Beaverton, Oregon office under an operating lease, which expired on October 31, 2020. Under the terms of the lease, the Company was responsible for taxes, insurance and maintenance expense. The Company recognized rent expense on a straight-line basis over the lease period.

On August 18, 2020, the Company signed a new operating lease that began on November 1, 2020, to rent office space in Beaverton Oregon. The new lease expires on January 31, 2024. The following are the annual minimum lease payments for the years ending December 31, 2022 through December 31, 2024: $153,000, $173,000, and $15,000.

Rent expense for the years ended December 31, 2021 and 2020 was $236,000 and $332,000, respectively.

Capital Leases

During August 2020, the Company entered into a lease agreement for equipment under a capital lease with a term of 36 months. The equipment under the lease is collateral for the agreement and is included within property and equipment, net on the consolidated balance sheets.

Future minimum lease commitments for the capital lease as of December 31, 2021 are as follows:

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Obligations under the capital lease are included in accrued liabilities and other liabilities on the consolidated balance sheets.

Contingencies

In the normal course of business, the Company may become involved in legal proceedings. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of a possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred.

The Company’s management does not believe that any such matters, individually or in the aggregate, will have a materially adverse effect on the Company’s consolidated financial statements.