Commitments and Contingencies
|9 Months Ended|
Sep. 30, 2021
|Commitments and Contingencies|
|Commitments and Contingencies||
13. Commitments and Contingencies
Accrued expenses as of September 30, 2021 and December 31, 2020 were as follows:
The Company and its subsidiaries have entered into operating lease agreements for certain of its office space and data centers. The offices are located in the United States, Israel, Belgium, Finland, France, Japan, Singapore, the United Kingdom, Germany, Poland and the United Arab Emirates. The data centers are premises used to house computing and networking equipment. The data centers are located in the United States, Netherlands, Germany and Singapore.
For the three months ended September 30, 2021 and September 30, 2020, office and data center rent expense was $1.5 million and $1.8 million, respectively. For the nine months ended September 30, 2021 and September 30, 2020, office and data center rent expense was $3.9 million and $5.3 million, respectively.
For the three and nine months ended September 30, 2021, the Company recorded expense of $0.8 million in General and Administrative expenses in the Condensed Consolidated Statement of Operations and Comprehensive Income upon triggering the recognition of a cease-use liability related to unoccupied leased office space; whereby, the Company no longer receives any economic benefit from the rights conveyed by the lease. The cease-use liability was determined based on the remaining lease rentals, adjusted for the effects of any prepaid or deferred items recognized under the lease as required by ASC 420, Exit or Disposal Cost Obligations.
Future minimum lease obligations are as follows:
As of September 30, 2021, the Company had seven lease agreements for certain equipment which provide for the transfer of ownership at the end of the lease term or are for underlying assets that will have an insignificant fair value at the end of the lease term. The Company has classified these agreements as capital leases and recognized the corresponding assets and liabilities within the Condensed Consolidated Balance Sheet.
The following is a schedule of future minimum lease payments under these agreements (including interest) as of September 30, 2021.
From time to time, the Company is subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. The Company records liabilities for contingencies including legal costs when it is probable that a liability has been incurred and when the amount can be reasonably estimated. Legal costs are expensed as incurred. Although the outcome of the various legal proceedings and claims cannot be predicted with certainty, management does not believe that any of these proceedings or other claims will have a material effect on the Company’s business, financial condition, results of operations or cash flows.
With respect to potential payments due related to the Zentrick acquisition, discussed in Footnote 4, Business Combinations, the Company and the Zentrick selling stockholders are currently in discussions to negotiate the early termination of the Zentrick Deferred Payment Terms and resolution of the contingent payments due for both the technical milestones and revenue targets. The Company believes the total of approximately $2.8 million for these potential payments reflected in the Condensed Consolidated Balance Sheet as contingent consideration current and other current liabilities reflect the Company’s estimated obligations under the stock purchase agreement entered into in connection with the transaction, as of September 30, 2021. In efforts to terminate early the Zentrick Deferred Payment Terms, the Company believes payment between $2.8 million and $5.5 million is possible, with no amount within the range being a better estimate than the amount recorded on the Condensed Consolidated Balance Sheets.
The entire disclosure for commitments and contingencies.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef