LEASES

9 Months Ended

Sep. 30, 2022

LEASES

LEASES

NOTE 7 – LEASES

The Company has entered into various operating leases for certain office, support locations and vehicles with terms extending through February 2027. Generally, these leases have initial lease terms of five years or less. Many of the leases have one or more lease renewal options. The exercise of lease renewal options is at its sole discretion. The Company does not consider exercise of any lease renewal options reasonably certain. Certain of the Company’s lease agreements contain early termination options. No renewal options or early termination options have been included in the calculation of the operating right-of-use assets or operating lease liabilities. Certain of the Company’s lease agreements provide for periodic adjustments to rental payments for inflation. As the majority of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments. The incremental borrowing rate is based on the term of the lease. In connection with

the adoption of ASC 842, the Company used incremental borrowing rates on January 1, 2022 for operating leases that commenced prior to that date. Leases with an initial term of 12 months or less are not recorded on the balance sheet. For these short-term leases, lease expense is recognized on a straight-line basis over the lease term. At September 30, 2022, the Company had no leases classified as finance leases. The Company is not a lessor in any lease arrangement.

Operating lease expense was $439 thousand for the three months ended September 30, 2022 and $1.5 million for the nine months ended September 30, 2022. Variable lease costs and short-term lease cost were not material for the three and nine months ended September 30, 2022. Cash paid for amounts included in the measurement of lease liabilities was $267 thousand for the three months ended September 30, 2022 and $1.4 million for the nine months ended September 30, 2022. During the three months ended September 30, 2022, the Company obtained new operating lease right-of-use assets totaling $143 thousand and for the nine months ended September 30, 2022, the Company obtained $2.0 million in operating right-of-use assets.

Future maturities of the Company's operating lease liabilities are summarized as follows (in thousands):

Fiscal year ended,

2022	$	647
2023		2,000
2024		1,271
2025		1,068
2026		731
		5,717
Less imputed interest		(1,356)
Total	$	4,361

Supplemental lease information

Weighted-average remaining lease term (years)	3.5
Weighted-average discount rate	15.5	%