LEASES

12 Months Ended

Dec. 31, 2021

We lease our office space under lease arrangements with expiration dates on or before February 29, 2024. We recognize lease expense on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. We combine lease and non-lease components for new and reassessed leases. We apply discount rates to operating leases using a portfolio approach.

Below is a summary of our ROU assets and lease liabilities as of December 31, 2021 and 2020, respectively (in thousands):


		December 31,
	Balance Sheets Classification	2021		2020
Assets
Right-of-use assets	Other assets	$	912	$	1,607
Liabilities
Operating lease liabilities - current	Other current liabilities	1,098		1,382
Operating lease liabilities - long-term	Other long-term liabilities	550		1,677
Total lease liabilities		$	1,648	$	3,059

The table below provides supplemental information related to operating leases during the years ended December 31, 2021 and 2020 (in thousands except for lease term):


	For the Year Ended December 31,
	2021		2020
Cash paid within operating cash flow	$	1,491	$	1,431
Weighted average lease terms (in years)	1.40		2.25
Weighted average discount rates	N/A		3.50		%

On January 31, 2020, we entered into an agreement to lease approximately 5,000 square feet of office space in San Francisco, California (“SF Facility”). This facility is used for administrative functions. The lease commenced in the first quarter of 2020 and expires in 2022. In the first quarter of 2020, we recorded a lease liability of $0.6 million, which represents the present value of the lease payments using an estimated incremental borrowing rate of 3.50%. We also recognized lease right-of-use assets (“ROU”) of $0.6 million which represents our right to use an underlying asset for the lease term. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

As a result of COVID-19, we implemented work-from-home policy in the first quarter of 2020. Our San Francisco office has been closed since the first quarter of 2020 and we expect our San Francisco-based employees to continue to work-from-home in the foreseeable future. We have been actively seeking a sublease tenant for the SF Facility without success since early 2020. In the fourth quarter of 2020, we recorded $0.3 million impairment charge to the SF Facility ROU asset. In the second quarter of 2021, we recorded an additional $32,000 impairment charge to the SF Facility ROU asset.

On November 12, 2014, we entered into an amendment to the lease of approximately 42,000 square feet office space in San Jose, California facilities (“SJ Facility”). The lease commenced in May 2015 and expires as of April 2023.

During 2019, we began to shift general and administrative, research and development and executive functions and employees from the SJ Facility to our San Francisco, California and Montreal, Canada offices. In the fourth quarter of 2019, we announced our decision to exit the SJ Facility by March 31, 2020. We accelerated the amortization of our SJ Facility leasehold improvements over their remaining estimated life. The SJ Facility leasehold improvements were fully amortized by March 31, 2020. In the fourth quarter of 2019, we recorded a $0.9 million impairment charge to the SJ Facility ROU asset.

On March 12, 2020, we entered into a sublease agreement with Neato Robotics, Inc. (“Neato”) for the SJ Facility. This sublease commenced in June 2020 and ends on April 30, 2023 which is the lease termination date of the original SJ Facility lease. In accordance with provisions of ASC 842 Leases (“ASC 842”), we treated the sublease as a separate lease as we were not relieved of the primary obligation under the original lease. We continue to account for the original SJ Facility, as a lessee, in the same manner as prior to the commencement date of the sublease. We accounted for the sublease as a lessor of the lease. We classified the sublease as an operating lease as it did not meet the criteria of a Sale-Type or Direct Financing lease.

At the commencement date of the sublease, we recognized initial direct costs of $0.3 million. These deferred costs will be amortized over the term of the sublease payments. As of December 31, 2021, $0.1 million was recorded in Prepaid expenses and other current assets and $0.1 million was recorded in Other assets, net on our Consolidated Balance Sheets.

We recognize operating lease expense and lease payments from the sublease, on a straight-line basis, in our Consolidated Statements of Income and Comprehensive Income over the lease terms. During the years ended December 31, 2021 and 2020, our net operating lease expenses are as follows (in thousands):


	For the Year Ended December 31,
	2021		2020
Operating lease cost	$	1,226	$	1,139
Sublease income	(1,030)		(585)
Total lease cost	$	196	$	554

Minimum future lease payments obligations as of December 31, 2021 are as follows (in thousands):


For the Years Ending December 31,
2022	$	1,220
2023	460
2024	25
Total	$	1,705

Future lease payments from our sublease agreement as of December 31, 2021 are as follows (in thousands):


For the Years Ending December 31,
2022	$	1,077
2023	351
Total	$	1,428

On January 31, 2022, we entered into an agreement to lease for 1,390 square feet of office space in Aventura, Florida (“Aventura Lease”). We plan to use this facility for administrative functions. This lease commenced in the first quarter of 2022 and expires in the first quarter of 2024. We expect to pay approximately $0.1 million in lease payments under the terms of the Aventura Lease.