The Company leases office space under operating leases with expirations ranging from April 2022 to March 2025, some of which include rent escalations or an option to extend the lease for up to three years per renewal. The

exercise of lease renewal options is at the sole discretion of the Company. Where real estate leases contain an option to renew, any period beyond the option date is only included as part of the lease term if the Company is reasonably certain to exercise the option.

As of December 31, 2021, the Company has not entered into any leases that have not yet commenced that would entitle the Company to significant rights or create additional obligations.

The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and direct the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment.

The Company has elected the practical expedient to not separate its lease component from non-lease component for its real estate leases. The Company has elected the practical expedient not to apply the lease recognition requirements to short-term leases with an initial term of 12 months or less.

The Company uses either its incremental borrowing rate or the implicit rate in the lease agreement as the basis to calculate the present value of future lease payments at lease commencement. The incremental borrowing rate represents the rate the Company would have to pay to borrow funds on a collateralized basis over a similar term and in a similar economic environment.

Future minimum lease payments under these leases are as follows:


	Lease Amounts
	(in thousands)
2022	$	1,225
2023		1,038
2024		618
2025		104
2026 and thereafter		—
Total future minimum lease payments		2,985
Less: Imputed Interest		(280	)
Present value of operating lease liabilities	$	2,705
Less: Current portion		975
Long-term operating lease liabilities	$	1,730

Weighted average remaining lease term in years		2.71
Weighted average discount rate		7.61	%

Variable operating lease expenses consist primarily real estate taxes and insurance. The components of lease expense and related cash flows were as follows:


	Year Ended December 31,
	2021		2020
	(in thousands)
Rent expense	$	1,204	$	1,122
Short-term lease costs		—		197
Variable lease costs		99		94
Total	$	1,303	$	1,413

Cash paid for operating leases	$	1,206	$	1,116


	Year Ended December 31,
	2021		2020
	(in thousands)
Cost of sales	$	219	$	239
Selling, general and administrative		1,084		1,174
Total	$	1,303	$	1,413