The Company leases office and warehouse space in four locations: Del Mar, California, Hayward, California, San Diego, California and Edwardsville, Illinois. The Company determined that all of its lease arrangements are classified as operating leases.

On August 12, 2022, the Company entered into an agreement with Liberty Industrial Park, LLC pursuant to which the Company leases 6,627 square feet of industrial space in San Diego, California. The commencement date of the lease was September 1, 2022 and the lease term expires on August 30, 2027. It 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.

On June 1, 2023, the Company amended its Edwardsville office building lease with David Ludwig, extending the term of the agreement to May 31, 2027 and setting rent amounts for the new term. It provides for an initial monthly base rent of $9,412, which increases on an annual basis to $9,914 per month in the final year.

On September 23, 2024, the Company amended its Del Mar office lease with OF 09 Hacienda, LLC, extending the term of the agreement by 24 months to February 28, 2027 and setting rent amounts for the new term. The amended Del Mar office lease provides for an initial monthly base rent of $14,660 beginning March 1, 2025 and increases on an annual basis to $15,099 per month in the final year.

The right-of-use assets and lease liabilities for each lease location are as follows (in thousands):


	June 30,		December 31,
	2025		2024
Right-of-use assets:
Del Mar, CA	$	278	$	357
Hayward, CA		1,087		1,236
San Diego, CA		295		357
Edwardsville, IL		208		258
Total right-of-use assets	$	1,868	$	2,208

Lease liabilities
Del Mar, CA	$	286	$	364
Hayward, CA		1,160		1,311
San Diego, CA		317		381
Edwardsville, IL		212		261
Total lease liabilities	$	1,975	$	2,317

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 the same particular economic 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 September 1, 2022, June 1, 2023, and September 23, 2024, the Company’s incremental borrowing rate was 5.50%, 7.25%, and 6.25%, respectively. The weighted average remaining lease term for operating leases is 2.7 years and the weighted average discount rate is 5.5% as of June 30, 2025.

Lease expense is recognized on a straight-line basis over the lease term. For both the six month periods ended June 30, 2025 and 2024, lease expense was approximately $0.4 million. As of June 30, 2025, 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):


2025 (remainder of year from July 1, 2025 to December 31, 2025)	$	406
2026		830
2027		573
2028		299
Total undiscounted future minimum lease payments		2,108
Less: imputed interest		(133	)
Present value of lease liabilities	$	1,975