Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies.

Commitments and Contingencies

Note 8 – Commitments and Contingencies

Leases

In September 2018, the Company entered into a noncancelable operating lease agreement for office space for its corporate headquarters in Newark, California with an initial term of 5.25 years. The lease commenced in January 2019 and ends March 2024. Under the terms of the lease, the Company pays annual base rent, subject to an annual fixed percentage increase of 3% on March 1st of each year. The Company is obligated to pay for its share of direct expenses including operating expense and taxes, which are considered variable lease costs and are expensed as incurred.

In March 2020, Governor Newsom issued State of California Executive Order No. N-33-20 instructing all individuals in California to stay at home due to the COVID-19 pandemic. In connection with such order, the Company entered into an amendment to the noncancelable operating lease agreement in June 2020. The amendment provided the Company rent relief for three months in 2020. In consideration of the rent relief, the Company agreed to adjust the base rent annual fixed percentage increase of 3% on February 1st of each year and extend the lease until September 2024. The amendment was determined to be a lease modification that qualified as a change of accounting on the existing lease and not a separate contract. Remeasurement of the right-of-use asset and operating lease liabilities at the date of modification did not result in a material increase of the right-of-use asset and operating lease liabilities.

The future minimum lease payments required under the operating lease are summarized as follows (in thousands):

	As of June 30,
	2022
2022 - remainder	$	84
2023		171
2024		129
Total minimum lease payments	$	384
Less: amount representing interest		(37)
Present value of operating lease liabilities	$	347
Operating lease liabilities, current		162
Operating lease liabilities, non-current		185
Total operating lease liabilities	$	347
Weighted-average remaining lease term (in years)		2.2
Weighted-average incremental borrowing rate		0.10

The table below summarizes the Company’s lease costs and cash payments in connection with operating lease obligations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Total operating lease expense	$	40	$	40	$	80	$	80
Operating cash flows used for operating lease	$	41	$	41	$	82	$	81

Contingencies

In the event the Company becomes subject to claims or suits arising in the ordinary course of business, the Company would accrue a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated.