Leases

12 Months Ended

Dec. 31, 2022

Leases

Leases

7. Leases

The Company accounts for its leasing arrangements in accordance with FASB 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 June 30, 2027.  Rental, maintenance and tax expenses for this facility were approximately $688 and $556 in 2022 and 2021, respectively. 

In February 2020, 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, 2020.  Annual rental, maintenance and tax expenses for the facility were approximately $203 and $208 in 2022 and 2021, respectively. 

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 termination lease expense of approximately $53.  The original term of the lease was through December 31, 2021.

Lease costs consist of the following:

	December 31,
	2022		2021
Operating lease cost	$	544	$	573
Variable lease cost		132		131
Total lease cost	$	676	$	704

Supplemental cash flow information related to leases was as follows:

	December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows (fixed payments)	$	583	$	639
Operating cash flows (liability reduction)		447		481
ROU assets obtained in exchange for lease obligations:
Operating leases		—		14

Other information related to operating leases was as follows:

	December 31, 2022
Weighted average remaining lease term (in years)		4.22
Weighted average discount rate		5.50	%

Maturity of lease liabilities as of December 31, 2022 were as follows:

	Year ending December 31,
2023	$	595
2024		608
2025		618
2026		479
2027		243
Thereafter		—
Total payments		2,543
Less: imputed interest		(273	)
Total liability	$	2,270