Quarterly report pursuant to Section 13 or 15(d)

LEASES

v3.19.3
LEASES
9 Months Ended
Sep. 30, 2019
Leases [Abstract]  
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 8 years, and do not include an option to renew. These operating leases are included in "Operating lease assets" on the Company's September 30, 2019 Condensed 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 September 30, 2019 Condensed 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 September 30, 2019, the Company had an additional operating lease obligation of $5.5 million and operating lease asset of $5.3 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 September 30, 2019, total operating lease assets and operating lease liabilities were $9.0 million and $10.5 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 three and nine months ended September 30, 2019, the Company recognized approximately $0.5 million and $1.0 million, respectively, 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. The Company has certain contracts for real estate which may contain lease and non-lease components which it has elected to treat as a single lease component. Cash paid for operating lease liabilities for the nine months ended September 30, 2019 was $0.7 million. Information related to the Company's operating lease assets and related lease liabilities were as follows:
 
September 30,
2019
Weighted average remaining lease term (in months)
79.88

Weighted average discount rate
6.5
%

Maturities of lease liabilities as of September 30, 2019 were as follows (in thousands):
Year ending December 31,
 
2019 (remaining three months)
$
384

2020
1,370

2021
1,966

2022
1,993

2023
2,058

2024
2,120

Thereafter
3,260

 
13,151

Less imputed interest
(2,695
)
Total lease liabilities
$
10,456

 
 
Current operating lease liabilities
$
669

Non-current operating lease liabilities
9,787

Total lease liabilities
$
10,456



The following table provides the Company's operating lease commitment as of December 31, 2018 (in thousands):
 
Operating Lease Commitment
2019
$
925

2020
961

2021
923

2022
929

2023
957

Thereafter
2,085

 
$
6,780



The Company incurred rent expense of $0.2 million and $0.5 million for the three and nine months ended September 30, 2018, respectively.