Leases

6 Months Ended

Jun. 30, 2022

Note 8 – Leases

The Company has operating and finance leases for facilities and certain equipment. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheets. Lease expense for operating

leases is recognized on a straight-line basis over the lease term. The Company does not combine lease and non-lease components in the recognition of lease expense.

As of June 30, 2022 the Company held four leases for office, manufacturing and warehouse facilities in Aliso Viejo, California. The four leases are for approximately 121,000 square feet in the aggregate and expire between August 31, 2024 and January 31, 2026. For one of the facilities operating leases, the lessor provided $900,000 in tenant allowances.

On April 4, 2022, the Company entered into a thirty-four-month sublease agreement for a portion of the 5 Columbia Building, in Aliso Viejo, CA. The sublease commencement date was June 13, 2022 and will expire on March 31, 2025. The base rent receivable is $11,410 per month.

The following table presents the lease balances within the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021 (in thousands):


		June 30,		December 31,
Leases	Classification	2022		2021

Assets
Operating	Operating leases right-of-use assets		4,704	$	4,284
Finance	Property and equipment, net		265	$	33
Total lease assets			4,969		4,317
Liabilities
Current
Operating	Lease liabilities		1,716		1,509
Finance	Lease liabilities		126		20
Noncurrent
Operating	Long-term lease liabilities		3,744		3,625
Finance	Long-term lease liabilities		107		17
Total lease liabilities		$	5,693	$	5,171

For the three and six months ended June 30, 2022 and 2021, the components of operating and finance lease expenses were as follows (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,
Lease Cost	Classification	2022		2021		2022		2021

Operating lease cost	Cost of sales	$	3	$	3	$	7	$	7
	Research and development		85		79		159		158
	Selling, general and administrative		429		402		833		803

Finance lease cost	Research and development		32		—		46		—
	Selling, general and administrative		4		7		9		14

Finance lease cost	Interest expense		4		1		7		3

Maturities of the Company’s operating and finance lease liabilities as of June 30, 2022 were as follows (in thousands):


	Operating			Finance
Year Ended December 31,	Leases			Leases
2022 (remainder)	$	1,024		$	65
2023		2,058			149
2024		1,788			36
2025		1,002			6
2026		80			—
2027		—			—
Total lease payments		5,952			256
Less: imputed interest		(492	)		(23	)
Total lease liabilities	$	5,460		$	233

The weighted average remaining lease term and weighted average discount rate used to determine lease liabilities related to the Company’s operating and finance leases as of June 30, 2022 and December 31, 2021 were:


	June 30,			December 31,
Lease Term and Discount Rate	2022			2021
Weighted average remaining lease term (years)
Operating leases		2.87			3.30
Finance leases		1.78			1.72
Weighted average discount rate
Operating leases		10.3	%		10.5	%
Finance leases		9.5	%		10.5	%