Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

LEASES

7. 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 one year to three years, and our two primary operating leases include options to extend the leases for one to three years; 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 corporate office lease is automatically renewed at a cost increase of 2% on a yearly basis, unless we provide written notice three months prior to expiration date.

We report operating leased assets, as well as operating lease current and noncurrent obligations on our 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 finance lease current and noncurrent obligations on our 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):

	Three Months Ended March 31, 2019
Operating lease cost (1)	$	136
Finance lease cost:
Amortization of leased assets	$	161
Interest on lease liabilities		10
Total finance lease cost	$	171

⁽¹⁾ Includes short term lease costs of $16,000

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

	Three Months Ended March 31, 2019
Cash paid for amounts included in leases:
Operating cash flows from operating leases	$	(122	)
Operating cash flows from finance leases		(10	)
Financing cash flows from finance leases		(137	)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		-
Finance leases		-

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

	March 31, 2019
Operating leases
Operating lease right-of-use assets	$	798
Current portion of operating lease obligations	$	455
Operating lease liabilities, net of current portion		351
Total operating lease liabilities	$	806
Finance leases
Property and equipment, at cost	$	3,363
Accumulated depreciation		(1,487	)
Property and equipment, net	$	1,876
Current portion of finance lease obligations	$	546
Finance lease obligations, net of current portion		944
Total finance lease liabilities	$	1,490

	Three Months Ended March 31, 2019
Weighted Average Remaining Lease Term
Operating leases		2.0 years
Finance leases		2.2 years
Weighted Average Discount Rate
Operating leases (2)		5	%
Finance leases		3	%

⁽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 March 31, 2019 is as follows (in thousands):

Years ending December 31,	Total
2019 (remaining months)	$	363
2020		422
2021		60
		845
Less imputed interest		(39	)
Total lease liabilities	$	806

The following is a schedule of minimum future rentals on the non-cancelable finance leases as of March 31, 2019 (in thousands):

Year ending December 31,	Total
2019 (remaining months)	$	430
2020		588
2021		479
2022		37
Total minimum payments required:		1,534
Less amount representing interest:		(44	)
Present value of net minimum lease payments:		1,490
Less current portion		(546	)
	$	944
Equipment under finance lease	$	3,363
Less: accumulated depreciation		(1,487	)
Net book value	$	1,876