Note 5 - LEASES

9 Months Ended

Sep. 30, 2022

LEASES

5. 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 September 30, 2022, and December 31, 2021.

In the first quarter of 2022, the Company early terminated an office lease contract. The termination of this lease reduced 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 accompanying Condensed Consolidated Statement of Comprehensive Income (Loss) for the nine months ended September 30, 2022.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Operating lease expense (1)	$	375	$	448	$	1,073	$	1,417
Short-term lease and variable lease expense (2)		244		196		801		602
Total lease expense	$	619	$	644	$	1,874	$	2,019

(1) Net of gain recognized upon lease termination of $0.1 million in the nine months ended September 30, 2022.

(2) Leases with an initial term of 12 months or less are not recorded on the accompanying 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 condensed consolidated balance sheets information related to operating leases was as follows:

	September 30,			December 31,
	2022			2021
Weighted average remaining lease term under operating ROU leases (in years)		5.6			5.7
Weighted average discount rate for operating lease liabilities		4.82	%		5.25	%

Maturities of operating lease liabilities as of September 30, 2022, were as follows (in thousands):

Year Ending December 31,	Amount (1)
2022 (remaining three months)	$	400
2023		1,600
2024		1,538
2025		1,454
2026		1,355
2027 and thereafter		2,286
Total future minimum lease payments	$	8,633
Less: Interest (2)		(1,111)
Present value of future minimum lease payments under operating lease liabilities (3)	$	7,522

(1) As of September 30, 2022, the total operating lease liability includes approximately $0.9 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 $1.4 million as of September 30, 2022.