Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Operating Leases

The Company has a non-cancelable operating lease for an office building space, located in Santa Clara, California which expires in May 2025. The Company also has non-cancelable operating leases for its office building spaces in Gallarate, Italy and Mannheim, Germany which both expire in November 2024, and in Knaresborough, United Kingdom, which expires in December 2026. Further, the Company also leases vehicles under operating lease arrangements for certain of its sales personnel in Europe which expire various times in 2020 to 2023.

Rent expense is recorded over the lease terms on a straight-line basis. Rent expense charged to operations under operating leases was $0.3 million and $0.3 million for three months ended March 31, 2020 and 2019, respectively.

The table below summarizes aggregate future minimum lease payments under all leases as of March 31, 2020:


Year ending December 31,	(in thousands)
2020 (remaining nine months)	$	850
2021	1,024
2022	952
2023	866
2024	867
Thereafter	363
	$	4,922

Purchase Commitments and Obligations

The Company has certain purchase commitments related to its inventory management with certain manufacturing suppliers wherein the Company is required to purchase the amounts forecasted in a blanket purchase order. The contractual obligations represent future cash commitments and liabilities under agreements with third parties and exclude orders for goods and services entered into in the normal course of business that are not enforceable or legally binding. These outstanding commitments amounted to $0.2 million and $0.4 million as of March 31, 2020 and December 31, 2019, respectively.

Legal Proceedings

On February 6, 2019, a putative class action captioned Eric B. Fromer Chiropractic, Inc. ("Plaintiff") v. SI-BONE, Inc. (Civil Action No. 5:19-cv-633-SVK), was filed in the U.S. District Court, Northern District of California. The complaint alleges violations of the Telephone Consumer Protection Act (the “TCPA”) on behalf of an individual and a putative class of persons alleged to be similarly situated. The complaint alleges that the Company sent invitations to an educational dinner event to health care providers by way of facsimile transmission. The TCPA prohibits using a fax machine to send unsolicited advertisements not including proper opt-out instructions or to send unsolicited advertisements to persons with whom the sender did not have an established business relationship. The plaintiff sought various forms of relief, including statutory damages of $500 for each violation of the TCPA or, in the alternative, treble damages of up to $1,500 for each knowing and willful violation of the TCPA and a permanent injunction prohibiting the Company from sending or having sent advertisements by way of facsimile transmission. On December 23, 2019 the parties filed a joint stipulation of dismissal of the case in the District Court in the Northern District of California and on January 14, 2020, the parties executed a definitive settlement agreement (the "Settlement Agreement") pursuant to which, the Company agreed to settle all disputes regarding the advertising faxes to the settlement class.

As this lawsuit is being resolved through a negotiated settlement and class resolution process, the Company believes that it will incur a loss associated with resolution of the claims against it. The Company has accrued litigation expense of $3.2 million during the year ended December 31, 2019 within general and administrative expenses in the consolidated financial statements. The accrual reflects the estimable and probable costs that the Company may incur based on estimated claims submitted by members of the settlement class, as defined in the Settlement Agreement. As of March 31, 2020, the total accrued litigation expense remained the same as of December 31, 2019. The final disposition of the lawsuit may result in a loss in excess of the aggregate recorded amount.

Indemnification

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 any trade secret, copyright, patent or other intellectual property infringement claim by any third-party with respect to the Company’s technology. The term of these indemnification agreements is generally perpetual. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable because it involves claims that may be made against the Company in the future, but have not yet been made.

The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual.

The Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. No liability associated with such indemnifications has been recorded to date.