Effective January 1, 2019, the Company adopted ASU No. 2016-02, as amended, using the alternative transition method, which allowed the Company to initially apply the new lease standard at the adoption date (the “effective date method”). The Company identified only one lease to be accounted for under ASU No. 2016-02, and this was the operating lease for its corporate facility in San Jose, California, which was entered into in October 2017 and initially expired in October 2020. The right-to-use asset and corresponding liability for the facility lease were measured at the present value of the future minimum lease payments. The discount rate used to measure the lease asset and liability represents the interest rate on the Notes (8%). Lease expense is recognized on a straight line basis over the lease term. The Company had an option to extend the lease for an additional 20.5 month period, but, as the renewal was not reasonably certain, it had not included this renewal option in its accounting for the lease.

On September 30, 2020, the Company and the lessor extended the lease for an additional 20.5 month term commencing November 1, 2020. The Company does not have an option to extend the lease term beyond the current extension.

The extension was accounted for as a lease modification. The Company assessed the lease classification of the facility lease at the modification date and determined that the facility lease should be accounted for as an operating lease. The right-of-use asset and corresponding operating lease liability have been remeasured based on the present value of remaining lease payments over the remaining extended lease term. The fair value of the right of use asset and corresponding lease obligation was determined to be $352,000 at the date of modification using a discount rate of 8%. Non-lease components are not included in the right-of-use asset and liability and are reflected as expense in the periods incurred.

Future minimum payments under the facility lease at December 31, 2020 are listed in the table below (in thousands).

	Operating
Year ended December 31,	lease
2021	$	206
2022		112
Total future lease payments		318
Less: imputed interest		(14	)
Present value of lease liabilities	$	304

		Year ended December 31,
		2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
	Operating cash flows for lease	$	220	$	219
Non-cash activity:
	Recognition of additional right-of-use asset and liability upon lease modification	$	352	$	-

Rent expense was approximately $212,000 for each of the years ended December 31, 2020 and 2019. In addition to the minimum lease payments, the Company is responsible for property taxes, insurance and certain other operating costs.

In the ordinary course of business, the Company enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred relating to breach of representations and warranties, failure to perform certain covenants, or claims and losses arising from certain events as outlined within the particular contract, which may include, for example, losses arising from litigation or claims relating to past performance. Such indemnification clauses may not be subject to maximum loss clauses. The Company has also entered into indemnification agreements with its officers and directors. No material amounts were reflected in the Company’s consolidated financial statements for the years ended December 31, 2020 and 2019 related to these indemnifications.

The Company has not estimated the maximum potential amount of indemnification liability under these agreements due to the limited history of prior claims and the unique facts and circumstances applicable to each particular agreement. To date, the Company has not made any payments related to these indemnification agreements.

The Company warrants its products to be free of defects generally for a period of three years. The Company estimates its warranty costs based on historical warranty claim experience and includes such costs in cost of net revenues. Warranty costs were not material for the years ended December 31, 2020 and 2019.