Leases

9 Months Ended

Sep. 30, 2022

Note 6 - Leases

We lease three facilities in Los Angeles, California and one facility in Austin, Texas, each providing office space. We also lease a facility in City of Industry, California, providing warehouse space, and a short-term residential property in Los Angeles, California. These leases expire through 2024. We currently occupy the warehouse space in City of Industry, and the office facility in Austin, Texas, and we have a sublease in place for one of the Los Angeles, California office spaces. With the exception of these spaces described above, we currently operate out of remote employment sites with a remote office located at 25587 Conifer Road, Suite 105-231, Conifer, Colorado 80433.

Lease expenses, including common charges and net of sublet proceeds, for the three and nine months ended September 30, 2022 and 2021 were $92,000, $307,000, $175,000, and $602,000, respectively.

The following provides balance sheet information related to leases as of September 30, 2022 and December 31, 2021 (in thousands):



		September 30, 2022		December 31, 2021
Assets
	Operating lease, right-of-use asset, net	$	201	$	659

Liabilities
	Current portion of operating lease liabilities	$	306	$	492
	Operating lease liabilities, net of current portion	43		236
	Total operating lease liabilities	$	349	$	728

During the three and nine months ended September 30, 2022 and 2021, payments of $110,000, $408,000, $189,000, and $640,000 were made on leases, respectively. The following table summarizes the future undiscounted cash payments reconciled to the lease liability (in thousands):


Remaining Lease Payments
2022	$	110
2023	225
2024	17
Total lease payments	352
Effect of discounting	(3)
Total lease liability	$	349

During the three and nine months ended September 30, 2022, we entered into a six-month residential lease in Los Angeles, CA. During the nine months ended September 30, 2022, we exited our Boston, Massachusetts and our Dallas, Texas leases upon expiration, and we vacated two of the properties in Los Angeles, California. The properties we vacated in Los Angeles, California are under leases until May 2023 and management does not expect to be able to sublet the properties given the limited

time remaining on the leases. Therefore, due to not utilizing the asset, management believes that the right-of-use assets attached to these leases have lost their value. An impairment charge of $179,000 was recorded for these assets in June 2022. During the year ended December 31, 2021, we entered into one new operating lease, modified one operating lease, and terminated two operating leases. The following table provides a reconciliation of activity for our right-of-use (“ROU”) assets and lease liabilities (in thousands):


	Right-of-Use Asset		Operating Lease Liabilities
Balance at December 31, 2020	$	903	$	1,432
Additions	60		60
Terminations and Modifications	192		156
Amortization and Payments	(496)		(920)

Balance at December 31, 2021	$	659	$	728
Additions	11		11

Amortization and Payments	(290)		(390)
Impairment Charges	(179)		—
Balance at September 30, 2022	$	201	$	349

The ROU assets and lease liabilities are recorded on the Company’s condensed consolidated Balance Sheets as of September 30, 2022 and December 31, 2021.