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Leases | 9 Months Ended
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Sep. 30, 2022
Leases [Abstract] |
Leases | Note 8 – Leases The Company leases office and warehouse space primarily in four locations: Del Mar, CA; Hayward, CA; San Diego, CA and Edwardsville, IL. As each contract does not meet any of the four criteria of ASC 842 for financing lease classification, the Company has determined that each lease arrangement should be classified as an operating lease. On October 27, 2020, the Company entered into an agreement (the “Lease”) with Hayward FGHK Industrial, LLC (“Landlord”) pursuant to which the Company leases 30,321 square feet of industrial space in Hayward, California from Landlord. The Lease has a commencement date of April 1, 2021, and an initial term of ninety (90) months, unless terminated earlier by either party pursuant to the terms of the Lease. The Lease provides for an initial monthly base rent of $27,289, which increases on an annual basis to $33,562 per month in the final year. In addition, the Company is obligated to pay its share of maintenance costs of common areas. On August 12, 2022, the Company entered into an agreement (the “Lease”) with Liberty Industrial Park, LLC (“Landlord”) pursuant to which the Company leases 6,627 square feet of industrial space in San Diego, California from Landlord. The Lease has a commencement date of September 1, 2022. The Lease provides for an initial monthly base rent of $11,266, which increases on an annual basis to $13,180 per month in the final year. In addition, the Company is obligated to pay its share of maintenance costs of common areas. The right-of-use assets and lease liabilities for each location are as follows (in thousands):
|  | September 30, |  |  | December 31, |
Right-of-use assets: |  | 2022 |  |  | 2021 |
Del Mar, CA |  | $ | 371 |  |  | $ | 477 |
Hayward, CA |  |  | 1,867 |  |  |  | 2,064 |
San Diego, CA |  |  | 618 |  |  |  | — |
Edwardsville, IL |  |  | 77 |  |  |  | 153 |
|  | $ | 2,933 |  |  | $ | 2,694 |
|  | September 30, |  |  | December 31, |
Lease liabilities: |  | 2022 |  |  | 2021 |
Del Mar, CA |  | $ | 398 |  |  | $ | 506 |
Hayward, CA |  |  | 1,913 |  |  |  | 2,089 |
San Diego, CA |  |  | 619 |  |  |  | — |
Edwardsville, IL |  |  | 77 |  |  |  | 155 |
|  | $ | 3,007 |  |  | $ | 2,750 |
The Company’s leases generally do not provide an implicit rate, and, therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. The Company used its incremental borrowing rate as of January 1, 2019 for operating leases that commenced prior to that date. As of January 1, 2019, the Company’s incremental borrowing rate was 5.25%. For leases commencing after January 1, 2019 the Company uses its incremental borrowing rate at time of commencement. On April 1, 2021 and September 1, 2022 the Company’s incremental borrowing rate was 4.95% and 5.5%, respectively. Lease expense for leases determined to be operating leases is recognized on a straight-line basis over the lease term. For the nine month periods ended September 30, 2022 and 2021, lease expense was approximately $0.5 million. As of September 30, 2022, undiscounted future minimum lease payments related to leases that have initial or remaining lease terms in excess of one year are as follows (in thousands):
2022 (remainder of year from October 1, 2022 to December 31, 2022) |  | $ | 176 |
2023 |  |  | 705 |
2024 |  |  | 675 |
2025 |  |  | 546 |
2026 |  |  | 531 |
Thereafter |  |  | 808 |
Total undiscounted future minimum lease payments |  |  | 3,441 |
Less imputed interest |  |  | (434 | )
Present value of lease liabilities |  | $ | 3,007 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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