The Company leases office and warehouse space primarily in three locations: Del Mar, CA; Hayward, CA; and Edwardsville, IL. In connection with the Burlingame lease termination, which took effect on April 30, 2021, the Company executed a new warehouse lease in Hayward, CA with an effective date of April 1, 2021. As each contract does not meet any of the four criteria of ASC Topic 842, Leases, for financing lease classification, the Company has determined that each lease arrangement should be classified as an operating lease. The right-of-use assets and lease liabilities for each location are as follows (in thousands):


Right-of-use assets:	December 31, 2021		December 31, 2020
Del Mar, CA	$	477	$	613
Hayward, CA		2,064		—
Burlingame, CA		—		99
Edwardsville, IL		153		251
	$	2,694	$	963

Lease liabilities:	December 31, 2021		December 31, 2020
Del Mar, CA	$	506	$	641
Hayward, CA		2,089		—
Burlingame, CA		—		109
Edwardsville, IL		155		253
	$	2,750	$	1,003

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. As of April 1, 2021, the Company’s incremental borrowing rate was 4.95%.

Lease expense for these leases is recognized on a straight-line basis over the lease term. For 2021 and 2020, lease expense was approximately $0.5 million and $0.6 million, respectively. Undiscounted future minimum lease commitments as of December 31, 2021 that have initial or remaining lease terms in excess of one year are as follows (in thousands):


2022	$	612
2023		563
2024		532
2025		396
2026		377
Thereafter		687
Total undiscounted future minimum lease payments		3,167
Less: imputed interest		(417	)
Present value of lease liabilities	$	2,750