LEASES LEASES |
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| Leases |
LEASES
The Company has entered into operating leases primarily for real estate. These leases are for the Company's operations, production, warehouse, sales, marketing and back office functions and have terms which range from 2 to 3 years, and do not include an option to renew. These operating leases are included in "Operating lease assets" on the Company's December 31, 2019 Consolidated Balance Sheet, and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make lease payments are included in "Operating lease liability - current" and "Operating lease liability" on the Company's December 31, 2019 Consolidated Balance Sheet. Based on the present value of the lease payments for the remaining lease term of the Company's existing leases, the Company recognized operating lease assets of $4.1 million and lease liabilities for operating leases of $5.5 million on January 1, 2019, which includes derecognition of previously recorded deferred rent of $1.3 million. As of December 31, 2019, the Company had an additional operating lease obligation of $5.4 million and operating lease asset of $5.1 million related to the lease for the new 45,500 square foot production and warehouse facility located in San Diego, California with a lease term of 7.0 years. As of December 31, 2019, total operating lease assets and operating lease liabilities were $8.7 million and $10.2 million, respectively. The Company has entered into one short-term facility operating lease, with an initial term of twelve months or less. This lease is not recorded on the Company's balance sheet. All operating lease expense is recognized on a straight-line basis over the lease term.
In the year ended December 31, 2019, the Company recognized approximately $1.5 million, in total lease costs, which was mostly comprised of operating lease costs. Short-term lease costs related to short-term operating leases and variable lease costs were immaterial.
Because the rate implicit in each lease is not readily determinable, the Company uses the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment, which the Company determined based on comps obtained from lenders for similar financing. The Company has certain contracts for real estate which may contain lease and nonlease components which it has elected to treat as a single lease component. Cash paid for operating lease liabilities for the year ended December 31, 2019 was $1.1 million. Information related to the Company's operating lease assets and related lease liabilities were as follows:
Maturities of lease liabilities as of December 31, 2019 were as follows (in thousands):
Prior to January 1, 2019, the Company accounted for leases under the previous U.S. GAAP lease guidance, Accounting Standards Codification Topic 840, Leases. The following table provides the Company's operating lease commitment as of December 31, 2018 (in thousands):
The Company incurred rent expense of $0.7 million for the year ended December 31, 2018.
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