The Company leases office and warehouse space primarily in three locations: Del Mar, CA; Hayward, 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. The Burlingame, CA warehouse lease was terminated on April 30, 2021.

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

	June 30,		December 31,
Right-of-use assets:	2021		2020
Del Mar, CA	$	546	$	613
Hayward, CA		2,191		99
Edwardsville, IL		203		251
	$	2,940	$	963

	June 30,		December 31,
Lease liabilities:	2021		2020
Del Mar, CA	$	575	$	641
Hayward, CA		2,199		109
Edwardsville, IL		205		253
	$	2,979	$	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 uses 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 both six month periods ended June 30, 2021 and 2020, lease expense was approximately $0.3 million. Undiscounted future minimum lease payments as of June 30, 2021 that have initial or remaining lease terms in excess of one year are as follows (in thousands):

2021 (remainder of year from July 1, 2021 to December 31, 2021)	$	300
2022		612
2023		563
2024		532
2025		396
Thereafter		1,064
Total undiscounted future minimum lease payments		3,467
Less imputed interest		(488	)
Present value of lease liabilities	$	2,979