Leases

6 Months Ended

Jun. 30, 2022

7. Leases

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 June 30, 2022, 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 (remaining six months)	$	633
2023		1,089
2024		681
2025		169
2026 and thereafter		23
Total future minimum lease payments		2,595
Less: Imputed Interest		(213	)
Present value of operating lease liabilities	$	2,382
Less: Current portion		1,002
Long-term operating lease liabilities	$	1,380

Weighted average remaining lease term in years		2.45
Weighted average discount rate		7.55	%

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


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2022		2021		2022		2021
	(in thousands)
Rent expense	$	320	$	260	$	637	$	589
Variable lease costs		27		5		53		47
Total	$	347	$	265	$	690	$	636

Cash paid for operating leases	$	317	$	280	$	630	$	578


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2022		2021		2022		2021
	(in thousands)
Cost of sales	$	58	$	47	$	116	$	107
Selling, general and administrative		289		218		574		529
Total	$	347	$	265	$	690	$	636