7. Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

7. Leases

The Company leases approximately 54,000 square feet (not in thousands) of industrial space in West Melbourne, Florida, under a non-cancellable operating lease. The lease has the expiration date of June 30, 2027. Rental, maintenance, and tax expenses for this facility were approximately $502 and $490 in 2019 and 2018, respectively. The Company also leases 8,100 square feet (not in thousands) of office space in Lawrence, Kansas, to accommodate a portion of the Company’s engineering team. In November 2019, this lease was amended to extend the lease term until December 31, 2021. Rental, maintenance and tax expenses for this facility were approximately $108 in 2019 and 2018.

In February 2020, the Company entered into a lease for 6,857 (not in thousands) square feet of office space at Sawgrass Technology Park, 1619 NW 136th Avenue in Sunrise, Florida, for a period of 64 months. Annual rental, maintenance and tax expenses for the facility will be approximately $196 for the first year, increasing by approximately 3% for each subsequent twelve month period.

The Company adopted ASU No. 2016-02, “Leases” (Topic 842) on January 1, 2019 and applied the modified retrospective approach to adoption whereby the standard is applied only to the current and future periods. The Company leases manufacturing and office facilities and equipment under operating leases and determines if an arrangement is a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

As most of its leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company has lease agreements with lease and non-lease components, which are accounted for separately.

Lease costs consist of the following:

	December 31, 2019
Operating lease cost	$	573
Short-term lease cost		2
Variable lease cost		128
Total lease cost	$	703

Supplemental cash flow information related to leases was as follows:

	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows (fixed payments)	$	522
Operating cash flows (liability reduction)	$	369

Other information related to operating leases was as follows:

	December 31, 2019
Weighted average remaining lease term (in years)		6.23
Weighted average discount rate		5.50	%

Maturity of lease liabilities as of December 31, 2019 were as follows:

	December 31, 2019
2020	$	522
2021		552
2022		439
2023		448
2024		456
Thereafter		1,190
Total payments		3,607
Less: imputed interest		632
Total liability	$	2,975