Note 12 - Leases

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

12. Leases

The Company is a lessee under certain operating leases for office space and equipment. 

ASC 842 requires lessees to recognize leases on the balance sheet as a lease liability with a corresponding right of use ("ROU") asset, subject to certain permitted accounting policy elections.

Under ASC 842, SPAR determines, at the inception of the contract, whether the contract is or contains a lease based on whether the contract provides SPAR the right to control the use of a physically distinct asset or substantially all of the capacity of an asset.

Many of SPAR's equipment leases are short-term or cancellable with notice. SPAR’s office space leases have remaining lease terms between one and approximately eleven (11) years, many of which include one (1) or more options to extend the term for periods thereafter. Certain leases contain options to terminate the lease early, which may include a penalty for exercising the option. Many of the termination options require notice within a specified period, after which the option is no longer available to SPAR if not exercised. The extension options and termination options may be exercised at SPAR’s sole discretion. SPAR does not consider in the measurement of ROU assets and lease liabilities an option to extend or terminate a lease if SPAR is not reasonably certain to exercise the option. As of the end of this reporting period, SPAR has not included any options to extend or terminate in its measurement of ROU assets or lease liabilities.

Certain of SPAR’s leases include covenants that oblige SPAR, at its sole expense, to repair and maintain the leased asset periodically during the lease term. SPAR is not a party to any leases that contain residual value guarantees nor is SPAR a party to any leases that provide an option to purchase the underlying asset.

Many of SPAR's office space leases include fixed and variable payments. Variable payments relate to real estate taxes, insurance, operating expenses, and common area maintenance, which are usually billed at actual amounts incurred proportionate to SPAR's rented square feet of the building. Variable payments that do not depend on an index or rate are expensed by SPAR as they are incurred and are not included in the measurement of the lease liability.

Some of SPAR's leases contain both lease and non-lease components. Fixed and variable payments are allocated to each component relative to observable or estimated standalone prices. SPAR measures its variable lease costs as the portion of variable payments that are allocated to lease components.

SPAR measures its lease liability for each leased asset as the present value of lease payments, as defined in ASC 842, allocated to the lease component, discounted using an incremental borrowing rate specific to the underlying asset. SPAR's ROU assets are equal to the lease liability. SPAR estimates its incremental borrowing rate based on the interest rate SPAR would incur to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment.

The components of SPAR's lease expenses for the three (3) months period ended March 31, 2022 and 2021, which are included in the condensed consolidated income statement, are as follows (in thousands):

		Three Months Ended
		March 31,
Lease Costs	Classification	2022		2021
Operating lease cost	Selling, General and Administrative Expense	$	141	$	217
Short-term lease cost	Selling, General and Administrative Expense		124	$	302
Variable costs	Selling, General and Administrative Expense		29	$	50
Total lease cost		$	294	$	569

Supplemental cash flow information related to SPAR’s leases for three (3) months period ended March 31, 2022 and 2021 is as follows (in thousands):

	Three Months Ended
	March 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities	$	272	$	520
Assets obtained in exchange for new operating lease liabilities
Operating lease	$	-	$	-

At March 31, 2022, SPAR had the following maturities of lease liabilities related to office space and equipment, all of which are under non-cancellable operating leases (in thousands):

Period Ending December 31,	Amount
2022	$	748
2023		384
2024		247
2025		392
2026		45
Thereafter		96
Total Lease Payments	$	1,912
Less: imputed interest		373
Total	$	1,539