Operating Leases and Right-of-Use Assets

12 Months Ended

Dec. 31, 2021

Operating Leases and Right-of-Use Assets

We lease three facilities in Los Angeles, California, one facility in Dallas, Texas, and one facility in Austin, Texas, all providing office space. We also lease a facility in City of Industry, California, providing warehouse space. These leases expire between 2022 and 2024. During 2021, and through the date of this filing, we exited leases in Munich, Germany; Los Altos, California, and Boston, Massachusetts. Although subject to COVID restrictions, we currently occupy two of the facilities in Los Angeles and the warehouse space in City of Industry; we have subleases in place for the third Los Angeles property and the Dallas property. With the exception of these spaces described above, we currently operate out of remote employment sites with a remote office located at 25587 Conifer Road, Suite 105-231, Conifer, Colorado 80433.

Lease expenses, net of common charges and sublet proceeds, for the years ended December 31, 2021 and 2020 were $778,000 and $997,000, respectively.

The following provides balance sheet information related to leases as of December 31, 2021 and 2020 (in thousands):


		December 31,
		2021		2020
Assets
	Operating lease, right-of-use asset, net	$	659	$	903

Liabilities
	Current portion of operating lease liabilities	$	492	$	830
	Operating lease liabilities, net of current portion	236		602
	Total operating lease liabilities	$	728	$	1,432

The following table summarizes the future undiscounted cash payments reconciled to the lease liability (in thousands):


Year Ending December 31,
2022	$	519
2023	225
2024	17
Total lease payments	$	761
Effect of discounting	(33)
Total lease liability	$	728

During the year ended December 31, 2021, we entered into one new operating lease, modified one operating lease, and terminated two operating leases. During the year ended December 31, 2020, the Company entered into one new operating lease, terminated six operating leases, and recorded aggregate impairment charges of $465,000 on two right-of-use assets. The following table provides a reconciliation of activity for our right-of-use (“ROU”) assets and lease liabilities (in thousands):


	Right-of-Use Asset		Operating Lease Liability
Balance at December 31, 2019	$	3,117	$	3,314
Additions	116		116
Terminations and Modifications	(864)		(860)
Amortizations and Reductions	(1,001)		(1,138)
Impairment Charges	(465)		—
Balance at December 31, 2020	903		1,432
Additions	60		60
Terminations and Modifications	192		156
Amortizations and Reductions	(496)		(920)

Balance at December 31, 2021	$	659	$	728

The ROU assets and lease liabilities are recorded on the Company’s consolidated balance sheets as of December 31, 2021 and December 31, 2020.

During the December 31, 2021, the Company entered into one new lease, in Austin Texas, for office space. The new lease commenced in December 2021, has rent payments commencing on February 1, 2022, and has a term of 12 months. The new lease resulted in an addition to ROU Assets, and corresponding increase to lease liability, of $60,000.

During the year ended December 31, 2021, the Company exited two of its leases, one in Los Altos, California and one in Munich, Germany. The Los Altos lease expired in the first quarter of 2021, and the Company elected to not renew the lease, and the Munich lease was exited in second quarter 2021, when the Company negotiated early termination of the lease.

In June 2021, the Company entered into a settlement agreement with the landlord of our Munich, Germany office space to exit the lease early in exchange for €125,000. At the time of the settlement, the remaining liability was €316,000, resulting in a

gain of €191,000 ($227,000), which is recorded as other income on the consolidated Statement of Operations during the year ended December 31, 2021. The ROU asset for the Munich lease had been fully impaired as of December 31, 2020.On December 31, 2020, the Company determined it was not going to be able to sublet the remainder of the Boston property and impaired the ROU asset value of the lease. In February 2022, this lease expired and was exited at that time.