Commitments and Contingencies

12 Months Ended

Mar. 31, 2022

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’s expiration date was March and June 2022 but such dates were subsequently extended to June and December 2022, respectively. The Company has made total purchases of $7.3 million cumulatively as of March 31, 2022, of which $7.2 million was reimbursed by the government agency as of March 31, 2022. During the year ended March 31, 2022, the Company made purchases of $369 thousand and the remaining accounts payable to the vendors was $131 thousand as of March 31, 2022.

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 $211 thousand for the year ended March 31, 2022.

Operating Leases

The Company leases office and fabrication space in Goleta, California, and office space in Campbell, California and in Japan, China, Hong Kong, Taiwan and the Philippines 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 March 31, 2022, future minimum operating lease commitments were as follows (in thousands):


Year Ending March 31,
2023	$	681
2024	647
2025	156
Total	$	1,484

The Company recorded rent expense, net of rental income, which includes common area maintenance fees in addition to the base rent, of $918 thousand for the year ended March 31, 2022, $212 thousand for the three months ended March 31, 2021 and $892 thousand for the year ended December 31, 2020. Rental income from a noncancelable sublease was $0 for the year ended March 31, 2022, $30 thousand for the three months ended March 31, 2021 and $182 thousand for the year ended December 31, 2020. As of March 31, 2022, 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.

On April 5, 2022, Joel Newman, an alleged holder of the Company’s common stock, filed a complaint in the Delaware Court of Chancery derivatively against the Company’s directors and KKR Phorm Investors L.P. (“Phorm”). The complaint alleges that the directors and Phorm breached their fiduciary duties, and the directors committed waste, because the terms of the November 5, 2021 private placement in which Phorm participated were unfairly favorable to Phorm. The directors have the right to advancement from the Company of expenses incurred defending the claims. The defendants filed motions to dismiss on May 26, 2022. The Company is unable to estimate the potential loss or range of loss, if any, associated with this lawsuit.

The Company is not aware of any material legal claims or assessments other than disclosed above. 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 March 31, 2022 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 consolidated financial statements.