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LEASES | 12 Months Ended
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Dec. 31, 2021
Leases [Abstract] |
LEASES | LEASESOur lease portfolio primarily consists of operating leases for certain facilities and office spaces, and financing leases for equipment. Our leases have remaining terms of 1 year to 5 years and may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease assets also include any upfront lease payments made and exclude lease incentives and initial direct cost incurred. Lease expense for operating leases is recognized on a straight-line basis over the lease term. The following table summarizes our operating and finance lease assets and liabilities as of December 31, 2021 and 2020 (in thousands):
|  |  | December 31,
| Balance sheet line item classification |  | 2021 |  | 2020
Assets |  |  |  |  |
Operating lease assets | Right-of-use assets and other noncurrent assets |  | $ | 273 |  | $ | 786
Finance lease assets | Property and equipment, net of accumulated depreciation |  | 85 |  | 6,781
Total lease assets |  |  | $ | 358 |  | $ | 7,567
Liabilities |  |  |  |  |
Current |  |  |  |  |
Operating | Current portion of operating lease obligations |  | $ | 310 |  | $ | 362
Finance | Current portion of finance lease obligation (includes related parties) |  | 17 |  | 648
Noncurrent |  |  |  |  |
Operating | Long-term portion of operating lease obligation |  | 329 |  | 490
Finance | Long-term portion of finance lease obligations |  | 64 |  | —
Total lease liabilities |  |  | $ | 720 |  | $ | 1,500
Lease termination and impairment of ROU lease asset On July 30, 2021, the Company terminated its office lease with Millenium-Windfall Partners, Ltd for a fixed settlement of $0.4 million, payable in 43 monthly payments. In accordance with the termination, the Company was released from all future rights and obligations under the lease. In accordance with the termination of the lease, the Company recorded an impairment charge of $0.4 million related to its remaining right-of-use asset for this lease during the third quarter 2021 which is included within selling, general and administrative expenses of the Company's Consolidated Statement of Operations for the year-ended December 31, 2021. The Company also remeasured the lease obligation as of July 30, 2021 and the remaining obligation of $0.4 million under the termination settlement is included in the Company's liabilities at December 31, 2021. Other On August 14, 2021, the Company executed a lease agreement for office space in Monterrey, Mexico. The lease has monthly payments of $4 thousand, for a 36-month period. On January 25, 2021, the Company entered into three finance lease agreements for vehicles. Under the terms of the lease agreements, the Company has total monthly principal and interest payments of $2 thousand for a 36-month period at an annual rate of 10.7%. The leases include purchase options, which are reasonably certain to occur. The following table summarizes the components of lease expense for the year ended December 31, 2021 and 2020 (in thousands):
Lease Cost |  | Classification |  | Year Ended December 31,
| 2021 |  | 2020
Operating lease cost |  | Cost of sales |  | $ | 155 |  |  | $ | 164 |
Operating lease cost |  | Selling, general and administrative expenses |  | 274 |  |  | 253 |
Finance lease cost: |  |  |  |  |  |
Amortization of leased assets |  | Depreciation expense |  | 19 |  |  | 1,171 |
Interest on lease liabilities |  | Interest expense |  | 18 |  |  | 498 |
Net lease cost |  |  |  | $ | 466 |  |  | $ | 2,086 |
In February 2021, our lease of an office in Denver, Colorado expired. The total rent expense incurred under the lease for the years ended December 31, 2021 and 2020 totaled $11 thousand and $67 thousand, respectively. In December 2021, the Company extended its one year lease for equipment used at our liquefaction plant in George West, Texas. The lease called for monthly payments of $13 thousand through November 2022. The Company leases certain buildings and facilities, including office space in Bellevue, Washington; Houston, Texas; Monterrey, Mexico and certain equipment under non-cancellable operating leases expiring at various dates through August 2024. M&I Brazil leases offices and facilities in three cities in Brazil that are under operating lease agreements. The M&I Brazil leases expire at various dates through March 2024. The assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments based on Brazil’s General Market Price Index rate. Brazil also has multiple short-term equipment leases which are less than twelve months and have no cancellation penalties, therefore they are not recorded on the Consolidated Balance Sheets. Rent expense totaled approximately $202 thousand and $262 thousand for the years ended December 31, 2021 and 2020, respectively. The following schedule presents the future minimum lease payments for our operating and finance lease obligations at December 31, 2021 (in thousands):
| Operating Leases |  | Finance Leases |  | Total
2022 | $ | 339 |  |  | $ | 25 |  |  | $ | 364 |
2023 | 164 |  |  | 25 |  |  | 189 |
2024 | 148 |  |  | 42 |  |  | 190 |
2025 | 38 |  |  | — |  |  | 38 |
2026 | 1 |  |  | — |  |  | 1 |
Thereafter | — |  |  | — |  |  | — |
Total lease payments | 690 |  |  | 92 |  |  | 782 |
Less: Interest | (51) |  |  | (11) |  |  | (62) |
Present value of lease liabilities | $ | 639 |  |  | $ | 81 |  |  | $ | 720 |
Lease term and discount rates for our operating and finance lease obligations are as follows:
|  | December 31,
Lease Term and Discount Rate |  | 2021 |  | 2020
Weighted-average remaining lease term (years) |  |  |  |
Operating leases |  | 2.6 |  | 3.1
Finance leases |  | 2.1 |  | 0.1
Weighted-average discount rate |  |  |  |
Operating leases |  | 6.0% |  | 7.3%
Finance leases |  | 10.7% |  | 8.9%
The following table summarizes the supplemental cash flow information related to leases as of December 31, 2021 and 2020:
Other information |  | December 31, 2021 |  | December 31, 2020
|  | (In thousands)
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |
Operating cash flows from operating leases |  | $ | 168 |  |  | $ | 399 |
Financing cash flows from finance leases |  | 671 |  |  | 3,439 |
Interest paid |  | 18 |  |  | 374 |
Noncash activities from right-of-use assets obtained in exchange for lease obligations: |  |  |  |
Operating leases |  | $ | 104 |  |  | $ | 1,159 |
LEASES | LEASESOur lease portfolio primarily consists of operating leases for certain facilities and office spaces, and financing leases for equipment. Our leases have remaining terms of 1 year to 5 years and may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease assets also include any upfront lease payments made and exclude lease incentives and initial direct cost incurred. Lease expense for operating leases is recognized on a straight-line basis over the lease term. The following table summarizes our operating and finance lease assets and liabilities as of December 31, 2021 and 2020 (in thousands):
|  |  | December 31,
| Balance sheet line item classification |  | 2021 |  | 2020
Assets |  |  |  |  |
Operating lease assets | Right-of-use assets and other noncurrent assets |  | $ | 273 |  | $ | 786
Finance lease assets | Property and equipment, net of accumulated depreciation |  | 85 |  | 6,781
Total lease assets |  |  | $ | 358 |  | $ | 7,567
Liabilities |  |  |  |  |
Current |  |  |  |  |
Operating | Current portion of operating lease obligations |  | $ | 310 |  | $ | 362
Finance | Current portion of finance lease obligation (includes related parties) |  | 17 |  | 648
Noncurrent |  |  |  |  |
Operating | Long-term portion of operating lease obligation |  | 329 |  | 490
Finance | Long-term portion of finance lease obligations |  | 64 |  | —
Total lease liabilities |  |  | $ | 720 |  | $ | 1,500
Lease termination and impairment of ROU lease asset On July 30, 2021, the Company terminated its office lease with Millenium-Windfall Partners, Ltd for a fixed settlement of $0.4 million, payable in 43 monthly payments. In accordance with the termination, the Company was released from all future rights and obligations under the lease. In accordance with the termination of the lease, the Company recorded an impairment charge of $0.4 million related to its remaining right-of-use asset for this lease during the third quarter 2021 which is included within selling, general and administrative expenses of the Company's Consolidated Statement of Operations for the year-ended December 31, 2021. The Company also remeasured the lease obligation as of July 30, 2021 and the remaining obligation of $0.4 million under the termination settlement is included in the Company's liabilities at December 31, 2021. Other On August 14, 2021, the Company executed a lease agreement for office space in Monterrey, Mexico. The lease has monthly payments of $4 thousand, for a 36-month period. On January 25, 2021, the Company entered into three finance lease agreements for vehicles. Under the terms of the lease agreements, the Company has total monthly principal and interest payments of $2 thousand for a 36-month period at an annual rate of 10.7%. The leases include purchase options, which are reasonably certain to occur. The following table summarizes the components of lease expense for the year ended December 31, 2021 and 2020 (in thousands):
Lease Cost |  | Classification |  | Year Ended December 31,
| 2021 |  | 2020
Operating lease cost |  | Cost of sales |  | $ | 155 |  |  | $ | 164 |
Operating lease cost |  | Selling, general and administrative expenses |  | 274 |  |  | 253 |
Finance lease cost: |  |  |  |  |  |
Amortization of leased assets |  | Depreciation expense |  | 19 |  |  | 1,171 |
Interest on lease liabilities |  | Interest expense |  | 18 |  |  | 498 |
Net lease cost |  |  |  | $ | 466 |  |  | $ | 2,086 |
In February 2021, our lease of an office in Denver, Colorado expired. The total rent expense incurred under the lease for the years ended December 31, 2021 and 2020 totaled $11 thousand and $67 thousand, respectively. In December 2021, the Company extended its one year lease for equipment used at our liquefaction plant in George West, Texas. The lease called for monthly payments of $13 thousand through November 2022. The Company leases certain buildings and facilities, including office space in Bellevue, Washington; Houston, Texas; Monterrey, Mexico and certain equipment under non-cancellable operating leases expiring at various dates through August 2024. M&I Brazil leases offices and facilities in three cities in Brazil that are under operating lease agreements. The M&I Brazil leases expire at various dates through March 2024. The assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments based on Brazil’s General Market Price Index rate. Brazil also has multiple short-term equipment leases which are less than twelve months and have no cancellation penalties, therefore they are not recorded on the Consolidated Balance Sheets. Rent expense totaled approximately $202 thousand and $262 thousand for the years ended December 31, 2021 and 2020, respectively. The following schedule presents the future minimum lease payments for our operating and finance lease obligations at December 31, 2021 (in thousands):
| Operating Leases |  | Finance Leases |  | Total
2022 | $ | 339 |  |  | $ | 25 |  |  | $ | 364 |
2023 | 164 |  |  | 25 |  |  | 189 |
2024 | 148 |  |  | 42 |  |  | 190 |
2025 | 38 |  |  | — |  |  | 38 |
2026 | 1 |  |  | — |  |  | 1 |
Thereafter | — |  |  | — |  |  | — |
Total lease payments | 690 |  |  | 92 |  |  | 782 |
Less: Interest | (51) |  |  | (11) |  |  | (62) |
Present value of lease liabilities | $ | 639 |  |  | $ | 81 |  |  | $ | 720 |
Lease term and discount rates for our operating and finance lease obligations are as follows:
|  | December 31,
Lease Term and Discount Rate |  | 2021 |  | 2020
Weighted-average remaining lease term (years) |  |  |  |
Operating leases |  | 2.6 |  | 3.1
Finance leases |  | 2.1 |  | 0.1
Weighted-average discount rate |  |  |  |
Operating leases |  | 6.0% |  | 7.3%
Finance leases |  | 10.7% |  | 8.9%
The following table summarizes the supplemental cash flow information related to leases as of December 31, 2021 and 2020:
Other information |  | December 31, 2021 |  | December 31, 2020
|  | (In thousands)
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |
Operating cash flows from operating leases |  | $ | 168 |  |  | $ | 399 |
Financing cash flows from finance leases |  | 671 |  |  | 3,439 |
Interest paid |  | 18 |  |  | 374 |
Noncash activities from right-of-use assets obtained in exchange for lease obligations: |  |  |  |
Operating leases |  | $ | 104 |  |  | $ | 1,159 |

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