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. 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.

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


	March 31,		December 31,
	2024		2023
Right-of-use assets:
Del Mar, CA	$	147	$	186
Hayward, CA		1,455		1,525
San Diego, CA		447		477
Edwardsville, IL		328		351
Total right-of-use assets	$	2,377	$	2,539

Lease liabilities
Del Mar, CA	$	161	$	203
Hayward, CA		1,527		1,594
San Diego, CA		470		498
Edwardsville, IL		331		353
Total lease liabilities	$	2,489	$	2,648

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 September 1, 2022 and June 1, 2023, the Company’s incremental borrowing rate was 5.50% and 7.25%, respectively. The weighted average remaining lease term for operating leases is 3.9 years and the weighted average discount rate is 5.35% as of March 31, 2024.

Lease expense is recognized on a straight-line basis over the lease term. For the three months ended March 31, 2024 and March 31, 2023, lease expense was approximately $0.2 million. As of March 31, 2024, 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):


2024 (remainder of year from April 1, 2024 to December 31, 2024)	$	594
2025		661
2026		649
2027		543
2028		299
Total undiscounted future minimum lease payments		2,746
Less: imputed interest		(257	)
Present value of lease liabilities	$	2,489