Leases

12 Months Ended

Dec. 31, 2023

Leases

Leases

7. 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 June 30, 2027. Rental, maintenance and tax expenses for this facility were approximately $596 and $688 in 2023 and 2022, 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 $212 and $203 in 2023 and 2022, respectively.

Lease costs consist of the following:

	December 31,
	2023		2022
Operating lease cost	$	542	$	544
Variable lease cost		132		132
Total lease cost	$	674	$	676

Supplemental cash flow information related to leases was as follows:

	December 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows (fixed payments)	$	595	$	583
Operating cash flows (liability reduction)		485		447

Other information related to operating leases was as follows:

	December 31, 2023
Weighted average remaining lease term (in years)		3.26
Weighted average discount rate		5.50	%

Maturity of operating lease liabilities as of December 31, 2023 were as follows:

	Year ending December 31,
2024	$	608
2025		618
2026		479
2027		243
Thereafter		—
Total payments		1,948
Less: imputed interest		(163	)
Total liability	$	1,785