Leases

9 Months Ended

Sep. 30, 2023

(9) Leases

The Company has an operating lease for office space for its corporate headquarters in Seattle, Washington. It also has operating leases for office space in Wichita, Kansas. The Company leases its office facilities under operating lease agreements in accordance with ASC 842 and recognizes rent expense on a straight-line basis over the lease term with any lease incentives amortized as a reduction of rent expense over the lease term.

The Company’s prior lease agreement with respect to office space in Seattle, Washington, as amended, was terminated by the Company effective on March 31, 2023. In the first quarter of 2023, we paid approximately $671,000 as provided in the lease for the early termination. The new lease agreement with respect to office space in Seattle, Washington commenced in April 2023, with a lease term of 57 months, and expires on November 30, 2027.

Lease cost recognized in the Company’s Condensed Consolidated Statements of Operations and other information is summarized as follows (in thousands):


	Nine Months Ended September 30,
	2022			2023
Lease expense:
Operating lease cost	$	1,345		$	798
Finance lease cost
Amortization of right-of-use assets		-			134
Interest on lease liabilities		-			65
Short-term operating lease cost		181			182
Total lease cost	$	1,526		$	1,179
Other information:
Weighted average remaining lease terms (years):
Operating leases		1.4			3.8
Finance leases		-			2.2
Weighted average discount rate:
Operating leases (1)		4.7	%		6.6	%
Finance leases		-			14.1	%

(1)

The discount rate used to compute the present value of total lease liabilities as of September 30, 2023 was based on the Company's estimated incremental borrowing rate of similar secured borrowings available to the Company as of the commencement date of lease.


	Three Months Ended September 30,
	2022		2023
Lease expense:
Operating lease cost	$	464	$	155
Finance lease cost
Amortization of right-of-use assets		-		66
Interest on lease liabilities		-		27
Short-term operating lease cost		73		44
Total operating lease cost	$	537	$	292

Assets under finance leases, which primarily represent computer equipment, are included in property, plant and equipment, net, with the related liabilities included in finance lease liability, current and finance lease liability, non-current on the Condensed Consolidated Balance Sheets.

As of September 30, 2023, the Company’s operating and finance lease liabilities were as follows (in thousands):


	Operating Leases			Finance Leases
Gross future lease payments	$	2,044		$	763
Less: imputed interest		(256	)		(118	)
Present value of total lease liabilities		1,788			645
Less: current portion of lease liabilities		(452	)		(221	)
Total long-term lease liabilities	$	1,336		$	424