Leases

3 Months Ended

Mar. 31, 2024

Leases

Leases

Note 13. 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 an expiration date of September 30, 2027. Annual rental, maintenance, and tax expenses for the facility are approximately $491.

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 will be approximately $196 for the first year, increasing by approximately 3% for each subsequent 12-month period.

Lease costs consisted of the following:

	Three Months Ended
	March 31, 2024		March 31,  2023
Operating lease cost	$	135	$	136
Short-term lease cost		—		—
Variable lease cost		33		33
Total lease cost	$	168	$	169

Supplemental cash flow information related to leases was as follows:

	Three Months Ended
	March 31, 2024		March 31,  2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows (fixed payments)	$	150	$	148
Operating cash flows (liability reduction)	$	127	$	118
ROU assets obtained in exchange for lease obligations:
Operating leases	$	—	$	—

Other information related to operating leases was as follows:

	March 31, 2024
Weighted average remaining lease term (in years)		3.02
Weighted average discount rate		5.50	%
Maturity of lease liabilities as of March 31, 2024, were as follows:

	March 31, 2024
Remaining nine months of 2024	$	458
2025		618
2026		479
2027		242
Total payments		1,797
Less: imputed interest		(139	)
Total present value of lease liability	$	1,658