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Leases

3 Months Ended

Mar. 31, 2022

12. Leases

The Company accounts for its leasing arrangements in accordance with Topic 842, “Leases”. 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.

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 September 30, 2027. Annual rental, maintenance and tax expenses for the facility are approximately $491.

In February 2021, the Company entered into a lease for 6,857 square feet (not in thousands) of office space at Sawgrass Technology Park, 1619 NW 136th Avenue in Sunrise, Florida, for a period of 64 months commencing July 1, 2021. Annual rental, maintenance and tax expenses for the facility will be approximately $196 for the first year, increasing by approximately 3% for each subsequent 12-month period.

In March 2021, the Company executed an agreement for the termination of its lease for 8,100 square feet (not in thousands) of office space in Lawrence, Kansas, effective March 31, 2021, and recognized a “Lease Termination” expense of approximately $53. The original term of the lease was through December 31, 2021.

Lease costs consisted of the following:

	Three Months Ended
	March 31, 2022		March 31, 2021
Operating lease cost	$	136	$	166
Short-term lease cost		—		—
Variable lease cost		33		32
Total lease cost	$	169	$	198

Supplemental cash flow information related to leases was as follows:

	Three Months Ended
	March 31, 2022		March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows (fixed payments)	$	143	$	211
Operating cash flows (liability reduction)	$	108	$	171

ROU assets obtained in exchange for lease obligations:
Operating leases	$	—	$	14

Other information related to operating leases was as follows:

	March 31, 2022
Weighted average remaining lease term (in years)		4.95
Weighted average discount rate		5.50	%
Maturities of lease liabilities as of March 31, 2022, were as follows:

	March 31, 2022
Remaining nine months of 2022	$	438
2023		595
2024		608
2025		618
2026		479
Thereafter		243
Total payments		2,981
Less: imputed interest		(373	)
Total present value of lease liabilities	$	2,608