Commitments and Contingencies

3 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitment with a Government Agency

In connection with a contract with a government agency, the Company entered into a commitment to acquire equipment and services from vendors totaling $7.4 million, all of which is reimbursable. The contract expires March and June 2022 and the Company is working on an extension. The Company has made total purchases of $7.2 million cumulatively as of December 31, 2021, of which $7.2 million was reimbursed by the government agency as of December 31, 2021. During the three and nine months ended December 31, 2021, the Company made purchases of $119 thousand and $347 thousand, respectively, and the remaining accounts payable to the vendors was $135 thousand as of December 31, 2021. For the three months ended March 31, 2021, the Company made purchases of $270 thousand, of which $124 thousand was in accounts payable as of March 31, 2021.

In September 2021, the Company was awarded a $0.9 million contract with a $0.5 million option by a government agency for delivering epiwafer technology. The Company billed and received $2 thousand and $5 thousand for the three and nine months ended December 31, 2021, respectively.

Operating Leases

The Company leases office and fabrication space in Goleta, California, and office space in Campbell, California and in Japan under noncancelable operating lease agreements. The terms of certain leases provide for escalating rental payments through the term of the lease. The Company recognizes rent expense on a straight-line basis over the lease term and accrues for rent expense incurred but not paid.

As of December 31, 2021, future minimum operating lease commitments were as follows (in thousands):


Year Ending March 31,
2022	$	177
2023	697
2024	666
Thereafter	156
Total	$	1,696

The Company recorded rent expense, net of rental income, which includes common area maintenance fees in addition to the base rent, of $196 thousand and $237 thousand for the three months ended December 31, 2021 and 2020, respectively, and of $661 thousand and $659 thousand for the nine months ended December 31, 2021 and 2020, respectively. Rental income from a noncancelable sublease was $0 and $45 thousand for the three months ended December 31, 2021 and 2020, respectively, and $0 and $136 thousand for the nine months ended December 31, 2021 and 2020, respectively. As of December 31, 2021, there are no future minimum rental payments to be received under the noncancelable sublease.

Contingencies

During the ordinary course of business, the Company may become a party to legal proceedings incidental to its business. The Company accrues contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. Legal cost is expensed as incurred. The Company is not aware of any material legal claims or assessments. Although the results of litigation and claims are inherently unpredictable, management believes there was not at least a reasonable possibility that the Company had incurred a material loss with respect to any loss contingencies as of December 31, 2021 and through the issuance of these financial statements.

Indemnification

The Company from time to time enters into types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily relate to: (1) real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities and for other claims arising from the Company’s use of the applicable premises; (2) agreements with the Company’s officers, directors, and employees, under which the Company may be required to indemnify such persons from liabilities arising out of their relationship; (3) indemnifying customers in the event of product failure; and (4) agreements with outside parties that use the Company’s intellectual property, under which the Company may indemnify for copyright or patent infringement related specifically to the use of such intellectual property.

Historically, the Company has not been required to make payments under these obligations, and no liabilities have been recorded for these obligations in the Company’s unaudited condensed consolidated financial statements.