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Fixed Assets and Operating Leases

12 Months Ended

Dec. 31, 2021

Note 3 – Fixed Assets and Operating Leases

Fixed Assets


	December 31,
(in thousands)	2021		2020

Machinery and equipment	$	722	$	720
Office furniture and equipment		218		180
Leasehold improvements		192		149
		1,132		1,049
Less: Accumulated depreciation and amortization		(1,055)		(1,017)
Construction in progress		—		11
		77		43
Operating lease ROU assets		453		384
Total	$	530	$	427

Depreciation expense for the years ended December 31, 2021 and 2020 totaled $38 thousand and $54 thousand, respectively.

Operating Leases

The Company leases office space in Seattle Washington, Tulsa Oklahoma and Beijing China. The Beijing lease is treated as a short-term lease. The monthly rent for the Beijing lease is approximately $5 thousand.

The Seattle and Tulsa leases are classified as operating leases, with remaining terms ranging from one to six years; contractual language requires renewal negotiations to occur at or near termination. These leases are normal and customary for office space, in that, contractual guarantees exist requiring the lessee to return the premises to its original functional state. In 2021, the Company accrued an estimated cost of $32 thousand to prepare for the restoration of the Seattle office. The Company plans to exit the Seattle lease on or before contract termination as part of our headquarters move from Seattle to Tulsa. In preparation for this move, the Company entered into the Tulsa operating lease agreement in April 2021.

The Seattle and Tulsa leases contain fixed annual lease payments that increase annually, which is customary for long-term lease agreements. Lease payments increase annually by factors that range between 2% to 3%. Total monthly minimum rent is approximately $24 thousand. Contractual agreements contain expiration dates ranging from less than twelve months to less than six years.

Supplemental balance sheet information related to operating leases is as follows:


	December 31,
(in thousands)	2021			2020
Right-of-use assets, net	$	453		$	384
Lease Liabilities:
Current lease liabilities	$	205		$	169
Long term lease liabilities		350			249
Total lease liabilities	$	555		$	418

Operating lease costs	$	257		$	242

Weighted average remaining lease term (in years):		2.6
Weighted average discount rate:		5.8	%

Supplemental cash flow information related to leases is as follows:
	For the Year Ended
	2021			2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	218		$	215
Non-cash impact of new leases and lease modifications
New operating lease liabilities		320			—
Impairment of ROU assets		63			—

Minimum future payments under the Company’s lease liabilities at December 31, 2021 are as follows:


	Discounted		Payments
	lease		due under
(in thousands)	liability		lease
	payments		agreements
2022	$	207	$	233
2023		122		136
2024		54		65
2025		59		66
2026		63		67
Thereafter		50		51
Total	$	555	$	618

At December 31, 2021, $63 thousand of our future minimum lese payments represented interest.