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Leases

9 Months Ended

Sep. 30, 2021

10. LEASES

Operating Leases

The Company has operating leases for office, manufacturing and warehouse space, office equipment, and vehicles.

As part of the SKS business acquisition on February 25, 2021, the Company assumed a lease of flexible office space with a remaining term of approximately 22 months that will expire on July 1, 2023. Monthly payments are approximately $16 thousand during the remaining life of the lease. The lease did not include an implicit rate of return; therefore, the Company used an incremental borrowing rate based on other leases with similar terms.

As part of the SKS business acquisition on February 25, 2021, the Company assumed vehicle leases with a remaining weighted average term of approximately 11 months. Monthly average payments are approximately $2 thousand during the remaining life of the leases. The leases included an implicit rates of return from 5.41% to 6% and no renewal options.

In April 2021, the Company entered into 60-month office equipment lease with monthly payments and no renewal options. The lease did not include an implicit rate of return; therefore, the Company used an incremental borrowing rate based on other leases with similar terms.

In April 2021, SKS entered into several vehicle leases with approximately 36-month terms. Monthly payments range from approximately $1 thousand to approximately $2 thousand. Each lease had an implicit rate of 6.0% and no renewal options.

In May 2021, DragonWave entered into an amendment to its existing facility lease to extend the expiration date through June 20, 2022 and to increase the annual base to $12 thousand per month. The lease did not include an implicit rate of return; therefore, the Company used an incremental borrowing rate based on other leases with similar terms. The modification resulted in additional right-of-use asset and lease liability of $0.12 million

As part of the RVision business acquisition on April 1, 2021, the Company assumed a lease of office space with a remaining term of approximately 33 months that will expire on March 31, 2024. Monthly payments are $7 thousand during the remaining life of the lease. The lease did not include an implicit rate of return; therefore, the Company used an incremental borrowing rate based on other leases with similar terms.

Other information related to the Company’s operating leases are as follows:

(Amounts in thousands)	For the nine months ended September 30, 2021
Operating lease ROU Asset – December 31, 2020	$	2,725
Increase		1,890
Decrease		—
Amortization		(748	)
Operating lease ROU Asset – September 30, 2021	$	3,867

Operating lease liability – December 31, 2020	$	2,885
Increase		1,883
Decrease		(30	)
Amortization		(705	)
Operating lease liability – September 30, 2021	$	4,033

Operating lease liability – short term	$	1,021
Operating lease liability – long term		3,012
Operating lease liability – total	$	4,033

Operating lease cost	$	911
Variable lease cost	$	—
Short-term lease cost	$	129

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	890

The following table presents the weighted-average remaining lease term and weighted average discount rates related to the Company’s operating leases as of September 30, 2021 and December 31, 2020, respectively:

	September 30, 2021			December 31, 2020
Weighted average remaining lease term		6.13 years			4.19 years
Weighted average discount rate		4.4	%		5.95	%

The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Condensed Consolidated Balance Sheet as of September 30, 2021:

(Amounts in thousands)	Operating Leases
Remainder of 2021	$	358
2022		1,240
2023		1,104
2024		767
2025		444
Thereafter		983
Total minimum lease payments		4,896
Less: effect of discounting		(863	)
Present value of future minimum lease payments		4,033
Less: current obligations under leases		(1,021	)
Long-term lease obligations	$	3,012

Finance Leases

The Company has finance leases for certain manufacturing and office equipment.

Information related to the Company’s finance leases are as follows:

(Amounts in thousands)	For the nine months ended September 30, 2021
Finance lease ROU Asset – December 31, 2020	$	68
Increase		187
Decrease		(22	)
Amortization		(17	)
Finance lease ROU Asset – September 30, 2021	$	216

Finance lease liability – December 31, 2020	$	55
Increase		188
Interest accretion		1
Payment		(40	)
Operating lease liability – September 30, 2021	$	204

Finance lease liability – short term	$	66
Finance lease liability – long term		138
Finance lease liability – total	$	204

The following table presents the weighted-average remaining lease term and weighted average discount rates related to the Company’s finance leases as of September 30, 2021 and December 31, 2020, respectively:

	September 30, 2021			December 31, 2020
Weighted average remaining lease term		3.18 years			1.10 years
Weighted average discount rate		0.54	%		3.91	%

The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the finance lease liabilities recorded on the Condensed Consolidated Balance Sheet as of September 30, 2021:

(Amounts in thousands)	Finance Leases
Remainder of 2021	$	23
2022		72
2023		63
2024		49
2025		11
Thereafter		6
Total minimum lease payments		224
Less: effect of discounting		(20	)
Present value of future minimum lease payments		204
Less: current obligations under leases		(66	)
Long-term lease obligations	$	138