Note 5 - Leases

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

5. LEASES

The Company leases 7,300 square feet of corporate office space in Hong Kong with a term expiring in  June 2026, and 4,900 square feet of corporate office space in Rolling Hills Estates, California with a term expiring in  September 2030. To help further develop the market for its products in North America, the Company leases 1,600 square feet of retail space in each of Rowland Heights, California and Richmond, British Columbia, and 2,000 square feet of retail space in Metuchen, New Jersey. The Rowland Heights, Richmond and Metuchen locations have terms expiring in  November 2025,  February 2027, and  December 2028, respectively.

The Company leases seven branch offices throughout China, and additional office space in Peru, Japan, Taiwan, South Korea, Malaysia, Thailand, India, and the Cayman Islands. The Company contracts with third parties for fulfillment and distribution operations in all of its international markets. None of the Company’s third-party logistics contracts contain a lease, as the Company does not have the right to access the warehouses or move its inventories at will.

The components of lease cost were as follows (in thousands):

	Three Months Ended March 31,
	2024		2023
Operating leases	$	325	$	330
Short-term leases		36		37
Total lease cost	$	361	$	367

Cash paid for amounts included in the measurement of operating leases liabilities was $320,000 and $345,000 for the three months ended  March 31, 2024 and 2023, respectively.

The weighted-average remaining lease term and discount rate related to operating leases as of March 31, 2024 were as follows:

Weighted-average remaining lease term (in years)	4.0
Weighted-average discount rate	4.4	%

As most of our leases do not provide an implicit rate, the Company used its incremental borrowing rate, or the rate of each of its subsidiaries if available, based on the information available at the lease commencement date to determine the present value of lease payments.

The annual scheduled lease payments of the Company's operating lease liabilities as of March 31, 2024 were as follows (in thousands):

Remainder of 2024	$	930
2025		1,124
2026		670
2027		310
2028		304
Thereafter		375
Total lease payments		3,713
Less: imputed interest		(295	)
Present value of lease liabilities	$	3,418

For all asset classes, the Company elected not to recognize assets or liabilities at the acquisition date for leases that, at the acquisition date, have a remaining lease term of 12 months or less. Additionally, for all asset classes, the Company choose not to separate nonlease components from lease components and instead account for the combined lease and nonlease components associated with that lease component as a single lease component.