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Note 9 - Leases

12 Months Ended

Dec. 31, 2021

9.	Leases

Lessee:

The following information pertains to those operating lease agreements where the Company is the lessee.

On February 1, 2017, the Company entered into a sublease agreement (the “Sublease”) for approximately 12,400 square feet of building space for the relocation of the Company’s corporate headquarters to Englewood, Colorado (the “Sublease Premises”), which was effective as of January 26, 2017. The lease term commenced on June 1, 2017 and was to terminate in May 2020. In November 2019, the Company exercised the option to extend the lease for one year through May 2021. The Company relocated its corporate headquarters from Sunnyvale, California to Englewood, Colorado in June 2017.

The monthly base rent under the Sublease was equal to $20.50 per rentable square foot of the Sublease Premises during the first year. The monthly base rent was equal to $21.12 and $21.75 per rentable square foot during the second and third years, respectively. In connection with the execution of the Sublease, the Company also agreed to pay a security deposit of approximately $22,000. The Company was also provided an allowance of approximately $88,000 for certain tenant improvements relating to the engineering, design and construction of the Sublease Premises which has been reimbursed.

In March 2021, the Company amended the Sublease for its office building space. The lease term was extended for a period of 34 months and will terminate on March 31, 2024. The monthly gross rent for the first, second and third years of the lease extension is $21,028, $21,643 and $22,258 per month, respectively. The Company was also provided a rent abatement for the month of June 2021. Additionally, the sublandlord agreed to perform certain construction, repair, maintenance or other tenant improvements to the Subleased Premises with estimated costs of approximately $19,000.

In September 2018, the Company entered into a 36-month noncancelable operating lease agreement for office equipment. The lease commenced in September 2018 and it was terminated in November 2020. The monthly lease payment was approximately $3,000.

In October 2020, the Company entered into a new 36-month noncancelable operating lease agreement for office equipment. The lease term commenced in December 2020 and will terminate in December 2023. The monthly lease payment is approximately $2,000.

Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the date the Company takes possession of the property. At lease inception, the Company determines the lease term by assuming the exercise of those renewal options that are reasonably assured. The lease term is used to determine whether a lease is financing or operating and is used to calculate straight-line rent expense. Additionally, the depreciable life of leasehold improvements is limited by the expected lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The following table reflects the Company's lease assets and lease liabilities at December 31, 2021 and 2020 (in thousands):

	December 31,
	2021		2020

Assets:
Operating lease right-of-use assets	$	534	$	130

Liabilities:
Current operating lease liabilities	$	225	$	132
Noncurrent operating lease liabilities		327		-
	$	552	$	132

The operating lease right-of-use assets are included in other assets on the consolidated balance sheets. The operating lease liabilities are included in accrued liabilities and other noncurrent liabilities on the consolidated balance sheets.

The operating lease expense for the years ended December 31, 2021 and 2020 was $280,000 and $300,000, respectively.

As of December 31, 2021, the maturity of operating lease liabilities was as follows (in thousands):

Year Ending December 31,
2022	$	282
2023		287
2024		67
Total lease payments		636
Less: Amount representing interest		(84	)
Present value of lease liabilities	$	552

The weighted average remaining lease term was approximately 27 months as of December 31, 2021. The weighted average discount rate for the year ended December 31, 2021 was 12.5%.

Lessor:

The following information pertains to those operating lease agreements where the Company is the lessor.

As of December 31, 2021, minimum future rentals from customers on non-cancellable operating leases of Viveve Systems are as follows (in thousands):

Year Ending December 31,
2022	$	448
2023		4
Total	$	452

As of December 31, 2021, the Company included rental program equipment related to these operating leases agreements with a net value of $464,000 in property and equipment, net. The depreciation expense for rental program equipment for the years ended December 31, 2021 and 2020 is $325,000 and $462,000, respectively.