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Note 8 - Leases

6 Months Ended

Jun. 30, 2022

8.	Leases

Lessee:

The following information pertains to those operating lease agreements where the Company is the lessee.

In February 2017, the Company entered into a sublease for approximately 12,400 square feet of building space for the relocation of the Company’s corporate headquarters to Englewood, Colorado. The lease term was 36 months. In connection with the execution of the sublease, the Company paid a security deposit of approximately $22,000. The Company was also entitled to an allowance of approximately $88,000 for certain tenant improvements relating to the engineering, design and construction of the sublease premises. The lease term commenced in June 2017 and was to terminate in May 2021. In March 2021, the Company amended the sublease for its office building space. The lease term was extended for a period of 34 months and will terminate on March 31, 2024. The Company was also provided a rent abatement for the month of June 2021. Additionally, the sublandlord agreed to perform certain construction, repair, maintenance or other tenant improvements to the subleased premises with estimated costs of approximately $19,000.

In October 2020, the Company entered into a 36-month noncancelable operating lease agreement for office equipment. The lease term commenced in December 2020 and will terminate in December 2023.

Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the date the Company takes possession of the property. At lease inception, the Company determines the lease term by assuming the exercise of those renewal options that are reasonably assured. The lease term is used to determine whether a lease is financing or operating and is used to calculate straight-line rent expense. Additionally, the depreciable life of leasehold improvements is limited by the expected lease term. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The following table reflects the Company’s lease assets and lease liabilities as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30,		December 31,
	2022		2021

Assets:
Operating lease right-of-use assets	$	426	$	534

Liabilities:
Current operating lease liabilities	$	244	$	225
Noncurrent operating lease liabilities		200		327
	$	444	$	552

The operating lease right-of-use assets are included in other assets on the condensed consolidated balance sheets. The operating lease liabilities are included in accrued liabilities and other noncurrent liabilities on the condensed consolidated balance sheets.

The operating lease expense for the three months ended June 30, 2022 and 2021 was $69,000 and $69,000, respectively. The operating leases expense for the six months ended June 30, 2022 and 2021 was $138,000 and $149,000, respectively.

As of June 30, 2022, the maturity of operating lease liabilities was as follows (in thousands):

Year Ending December 31,
2022 (remaining six months)	$	142
2023		287
2024		67
Total lease payments		496
Less: Amount representing interest		(52	)
Present value of lease liabilities	$	444

The weighted average remaining lease term was approximately 21 months as of June 30, 2022. The weighted average discount rate for the three months ended June 30, 2022 was 12.5%.

Lessor:

The following information pertains to those operating lease agreements where the Company is the lessor.

As of June 30, 2022, minimum future rentals from customers on operating leases of Viveve Systems were as follows (in thousands):

Year Ending December 31,
2022 (remaining six months)	$	346
2023		118
Total	$	464

As of June 30, 2022, the Company included rental program equipment related to these operating lease agreements with a net value of $397,000 in property and equipment, net on the condensed consolidated balance sheets. The depreciation expense for that property and equipment for the three and six months ended June 30, 2022 was $55,000 and $113,000, respectively. The depreciation expense for that property and equipment for the three and six months ended June 30, 2021, was $60,000 and $170,000, respectively.