|12 Months Ended|
Dec. 31, 2022
The Company leases office space in Irvine, California that houses office space and a manufacturing facility, which commenced on October 1, 2018 and expires in September 2023. In 2022, the Company modified the lease agreement to extend the lease until September 2024 and amended the lease payments. The modification did not result in the
identification of a separate contract. The Company also leases office space in Solana Beach, California that serves as its corporate headquarters and houses certain management and research and development personnel. The lease term commenced on December 15, 2020, is set to expire on December 31, 2026, and is renewable for an additional five-year period, at the Company’s option, provided that the Company’s landlord has entered into an extension of its lease for the office space that encompasses the Company’s office space for at least five years. The optional period is not considered in the determination of the right-of-use asset or the lease liability as the Company does not consider it reasonably certain that it would exercise such option.
In November 2022, the Company entered into a lease agreement to lease an approximately 19,462 square foot industrial building in Carlsbad, California to use as an office and manufacturing facility. The lease term will commence on June 1, 2023 and end on May 31, 2033. The base rent payable under the lease agreement is $36,977.80 per month and subject to annual increases of 3.5% during the lease term. The Company has two options to extend the lease term for or sixty months, at the fair market rental value. The total minimum lease payments related to this lease are $5.1 million. Given that this lease has not yet commenced, the lease liability is excluded from the table below.
Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used the published U.S. High Yield CCC corporate bond rates at the lease commencement date. Upon modification of the Irvine lease, the lease liability was remeasured using the current estimate of the Company's incremental borrowing rate and the amount of the remeasurement of the lease liability was recognized as an adjustment to the corresponding right-of-use asset. The effect of the modification was to increase the lease liability and corresponding right-of-use asset by approximately $0.2 million. As of December 31, 2022, the weighted average remaining lease term of the Company's operating leases was approximately 3.75 years and the weighted average discount rate used to determine the operating lease liability was 8.8%.
The lease cost, included in general and administrative expense, was $0.5 million for both years ended December 31, 2022 and 2021.
As of December 31, 2022, future minimum lease payments are as follows:
The Company is a party to various purchase arrangements related to our manufacturing and research and development activities. At December 31, 2022 there was approximately $3.4 million of open purchase orders and contractual obligations in the ordinary course of business, the majority of which are due within one year. Additionally, the Company is also a party to license and collaboration agreements which require minimum purchase commitments for a five-year period starting in 2022. The total remaining minimum purchase commitment related to these agreements is $2.1 million over the next five years.
The entire disclosure for commitments and contingencies.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef