Note 5 - LEASES

3 Months Ended

Mar. 31, 2022

LEASES

LEASES

5. LEASES

The Company leases administrative and sales offices and certain equipment under non-cancellable operating leases, which contain various renewal options and, in some cases, require payment of common area costs, taxes and utilities. These operating leases expire at various dates through 2028. The Company had no leases that were classified as a financing lease as of March 31, 2022, and December 31, 2021.

In the first quarter of 2022, the Company early terminated an office lease contract. The termination of this lease reduces the Company’s operating lease right-of-use assets and lease liabilities by approximately $0.5 million and $0.6 million, respectively. The gain from the lease termination of approximately $0.1 million was recorded under selling, general and administrative expense in the Condensed Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2022.

Lease expense was comprised of the following (in thousands):

	Three Months Ended March 31,
	2022		2021
Operating lease expense (1)	$	345	$	485
Short-term lease and variable lease expense (2)		283		174
Total lease expense	$	628	$	659

(1) Net of gain recognized upon lease termination of $0.1 million in three month ended March 31, 2022.

(2) Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Variable lease expense for the periods presented primarily included common area maintenance charges.

Supplemental balance sheets information related to operating leases was as follows:

	March 31,			December 31,
	2022			2021
Weighted average remaining lease term under operating ROU leases (in years)		6.0			5.7
Weighted average discount rate for operating lease liabilities		5.25	%		5.25	%

Maturities of operating lease liabilities as of March 31, 2022, were as follows (in thousands):

Year Ending December 31,	Amount (1)
2022 (remaining nine months)	$	960
2023		1,137
2024		1,070
2025		1,086
2026		1,053
2027 and thereafter		1,650
Total future minimum lease payments	$	6,956
Less: Interest (2)		(990)
Present value of future minimum lease payments under operating lease liabilities (3)	$	5,966

(1) As of March 31, 2022, the total operating lease liability includes approximately $1.1 million related to an option to extend a lease term that is reasonably certain to be exercised.

(2) Calculated using incremental borrowing interest rate for each lease.

(3) Includes the current portion of operating lease liabilities of $1.2 million as of March 31, 2022.