Leases

9 Months Ended

Sep. 30, 2022

On January 1, 2019, the Company adopted a new accounting standard, Topic 842, that amends the guidance for the accounting and reporting of leases. Leases with terms of 12 months or less are expensed on a straight-line basis over the term and are not recorded in the Company's Condensed Consolidated Balance Sheets.

The Company has two operating leases with terms greater than 12 months as of September 30, 2022. In accordance with the guidance of Topic 842, the leases which are classified as operating leases must be included in the Company's Condensed Consolidated Balance Sheets. The Santa Monica operating lease contains an option to renew once for five years, which the Company does not expect to exercise, the other lease does not contain a renewal option. The operating leases do not contain residual value guarantees, do not have variable lease components, or impose significant restrictions or covenants.

Right of use assets, "ROU assets", represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments over the respective lease term, with the ROU asset adjusted for deferred rent liability. Lease expense is recognized on a straight line basis over the lease term. As the implicit rate on the leases is not determinable, the Company uses judgement to estimate the incremental borrowing rate which is used as the discount rate to determine the present value of lease payments. The weighted average discount rate used was 8.8% and the weighted average remaining lease term is 4.6 years.

The following table summarizes information related to the Company's operating leases and are included in the Company's Balance Sheet as of September 30, 2022.


Balance Sheet descriptions	September 30, 2022
Assets:	(in thousands)
Right of use assets - operating leases	$	2,739
Liabilities:
Operating leases - current	669
Operating leases - long term	2,084
Total lease liabilities:	$	2,753

The following table summarizes the components of operating lease cost for the three and nine months ended September 30, 2022:


Lease costs, (in thousands)	Three months ended September 30, 2022		Nine months ended September 30, 2022
Operating expenses lease costs	$	149	$	395

As of September 30, 2022, future minimum operating leases payments related to the Company’s operating lease liabilities were as follows:


(in thousands)	September 30, 2022
2022 (three months remaining)	$	179
2023	709
2024	737
2025	780
2026 and thereafter	1,036
Total lease payments	3,441
Less imputed interest	(688)
Present value of operating lease liabilities	$	2,753