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Leases

12 Months Ended

Dec. 31, 2021

11.

Leases

We have operating leases for our corporate offices and our manufacturing facility, and finance leases for equipment. Our leases have remaining lease terms of six months to two years. One of our primary operating leases includes options to extend the lease for one to three years and the other primary lease includes an option to annually prolong; those operating leases also include options to terminate the leases within one year. Future renewal options that are not likely to be executed as of the balance sheet date are excluded from right-of-use assets and related lease liabilities.

Our operating leases represent building leases for our Stockholm corporate offices and our Kungsbacka manufacturing facility. Our Stockholm corporate office lease has a remaining lease term of one year and both of our leases are automatically renewed at a cost increase of 2% on an annual basis, unless we provide written notice nine months prior to the respective expiration dates.

We report operating lease right-of-use assets, as well as current and noncurrent operating lease obligations on our consolidated balance sheets for the right to use those buildings in our business. Our finance leases represent manufacturing equipment; we report the manufacturing equipment, as well as current and noncurrent finance lease obligations on our consolidated balance sheets for our manufacturing equipment.

Generally, interest rates are stated in our leases for equipment. When no interest rate is stated in a lease, however, we review the interest rates implicit in our recent finance leases to estimate our incremental borrowing rate. We determine the rate implicit in a lease by using the most recent finance lease rate, or other method we think most closely represents our incremental borrowing rate.

The components of lease expense were as follows (in thousands):

	Years ended December 31,
	2021		2020
Operating lease cost ⁽¹⁾	$	662	$	572

Finance lease cost:
Amortization of leased assets	$	585	$	636
Interest on lease liabilities		14		11
Total finance lease cost	$	599	$	647

⁽¹⁾

Includes short term lease costs of $127,000 and $145,000 for the years ended December 31, 2021 and 2020.

Supplemental cash flow information related to leases was as follows (in thousands):

	Years ended December 31,
	2021			2020
Cash paid for amounts included in leases:
Operating cash flows from operating leases	$	(505	)	$	(405	)
Operating cash flows from finance leases		(14	)		(11	)
Financing cash flows from finance leases		(487	)		(321	)

Right-of-use assets obtained in exchange for lease obligations:
Operating leases		239			864
Finance leases		-			-

Supplemental balance sheet information related to leases was as follows (in thousands):

	As of December 31,
	2021			2020
Operating leases
Operating lease right-of-use assets	$	584		$	919

Current portion of operating lease obligations	$	425		$	504
Operating lease liabilities, net of current portion		117			377
Total operating lease liabilities	$	542		$	881

Finance leases
Property and equipment, at cost	$	3,463		$	3,806
Accumulated depreciation		(3,199	)		(2,941	)
Property and equipment, net	$	264		$	865

Current portion of finance lease obligations	$	258		$	769
Finance lease liabilities, net of current portion		65			95
Total finance lease liabilities	$	323		$	864

	Year ended December 31, 2021
Weighted-Average Remaining Lease Term
Operating leases		1.6 years
Finance leases		1.0 years

Weighted-Average Discount Rate
Operating leases ⁽²⁾		5	%
Finance leases		2	%

⁽²⁾

Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

A summary of future minimum payments under non-cancellable operating lease commitments as of December 31, 2021 is as follows (in thousands):

Years ending December 31,	Total
2022	$	423
2023		82
2024		61
		566
Less imputed interest		(24	)
Total lease liabilities		542
Less current portion		(425	)
	$	117

The following is a schedule of minimum future rentals on the non-cancelable finance leases as of December 31, 2021 (in thousands):

Year ending December 31,	Total
2022	$	261
2023		65
Total minimum payments required:		326
Less amount representing interest:		(3	)
Present value of net minimum lease payments:		323
Less current portion		(258	)
	$	65