Leases

3 Months Ended

Mar. 31, 2022

Note 14 - Leases

We have lease agreements with lease and non-lease components, which are accounted for as a single lease. We apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

Lease contracts are evaluated at inception to determine whether they contain a lease and whether we obtain the right to control an identified asset. The following table summarizes the classification of operating ROU assets and lease liabilities on the consolidated balance sheets (in thousands):

		As of
Operating Leases	Classification	March 31, 2022		December 31, 2021

Leased Assets
Operating lease - right of use assets	Long term assets	$	1,047	$	1,200

Lease Liabilities
Operating lease liabilities - Current	Other current liabilities		1,227		1,205
Operating lease liabilities	Long term liabilities		502		790
		$	1,729	$	1,995

We executed a sublease agreement with a tenant to sublease 850 square feet from the Sykesville office space on September 13, 2021. This agreement is in addition to the previous sublease for 3,650 square feet entered into on May 1, 2019. The addition of the second sublease is for a portion of the space previously abandoned in December 2019. The sublease does not relieve us of our primary lease obligation. The lessor agreements are all considered operating leases, maintaining the historical classification of the underlying lease. We do not recognize any underlying assets for the subleases as a lessor of operating leases. The net amount received from the sublease is recorded within selling, general and administrative expenses.

The table below summarizes lease income and expense recorded in the consolidated statements of operations incurred during three months ended March 31, 2022 and 2021, (in thousands):

		Three months ended
Lease Cost	Classification	March 31, 2022			March 31, 2021

Operating lease cost ⁽¹⁾	Selling, general and administrative expenses	$	186		$	192
Short-term leases costs ⁽²⁾	Selling, general and administrative expenses		15			16
Sublease income⁽³⁾	Selling, general and administrative expenses		(18	)		(32	)
Net lease cost			183		$	176

(1) Includes variable lease costs which are immaterial.

(2) Includes leases maturing less than twelve months from the report date.

(3) ^{Sublease portfolio consists of two tenants, which sublease parts of our principal executive office located
at 1332 Londontown Blvd, Suite 200, Sykesville, MD.}

The Company is obligated under certain noncancelable operating leases for office facilities and equipment. Future minimum lease payments under noncancelable operating leases as of March 31, 2022 are as follows (in thousands):

(in thousands)	Gross Future Minimum Lease Payments
2022 remainder	$	993
2023		675
2024		122
2025		10
2026		-
Total lease payments	$	1,800
Less: Interest		71
Present value of lease payments	$	1,729

We calculated the weighted-average remaining lease term, presented in years below and the weighted-average discount rate for our operating leases. As noted in our lease accounting policy, we use the incremental borrowing rate as the lease discount rate.

Lease Term and Discount Rate	March 31, 2022		December 31, 2021
Weighted-average remaining lease term (years)
Operating leases		1.58		1.80
Weighted-average discount rate
Operating leases		5.00%		5.00%

The table below sets out the classification of lease payments in the consolidated statement of cash flows.

(in thousands)	Three months ended
Cash paid for amounts included in measurement of liabilities	March 31, 2022		March 31, 2021
Operating cash flows used in operating leases	$	299	$	327