Note 16 - Commitments

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Commitments Disclosure [Text Block]

16.   Commitments

Operating Leases

We adopted ASC Topic 842 (Leases) on January 1, 2019 using the modified retrospective method. This standard requires us to record certain operating lease liabilities and corresponding right-of-use assets on our balance sheet. We elected the package of practical expedients available for expired or existing contracts, which allowed us to carryforward our historical assessments of whether contracts are (or contain) leases, as well as lease classification tests and treatment of initial direct costs. We also elected to not separate lease components from non-lease components for all fixed payments, and we exclude variable lease payments in the measurement of right-of-use assets and lease obligations.

Upon adoption of ASC 842 we recorded a $2.8 million increase in other assets, a $1.1 million increase in current liabilities, and a $1.7 million increase in non-current liabilities. We did not record any cumulative effect adjustments in opening retained earnings, and adoption of ASC 842 had no impact on cash flows from operating, investing, or financing activities.

We determine if an arrangement is a lease at inception. Most of our operating leases do not provide an implicit rate of interest so we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments. We lease various assets in the course of ordinary business including warehouses and manufacturing facilities, as well as vehicles and equipment used in our operations. Leases with an initial term of 12 months or less are not recorded on the balance sheet as we recognize lease expense for these leases on a straight-line basis over the lease term. The depreciable life of assets and related improvements are limited by the expected lease term, unless there is a reasonably certain expected transfer or title or purchase option. Some lease agreements include renewal options at our sole discretion. Any guaranteed residual value is included in our lease liability.

The table below describes our lease position as of December 31, 2021 and 2020:

Assets	As of December 31, 2021			As of December 31, 2020
Operating lease right-of-use assets		4,031,000			115,489
Accumulated amortization		(501,000	)		(73,000	)
Net lease assets		3,530,000			42,489
Liabilities
Current
Operating		670,000			38,475
Noncurrent
Operating		2,860,000			4,013
Total lease liabilities		3,530,000			42,489
Weighted average remaining term (years) – operating leases		9			1
Weighted average discount rate – operating leases		11.25	%		11.25	%

During the year ended December 31, 2021 and 2020, we recorded expenses related to

	Year ended December 31
	2021		2020
Operating right-of-use lease asset amortization		501,000		471,000
Financing lease asset amortization		-		-
Related interest expense		-		-
Total expense during twelve months ended December 31		501,000		471,000

The following table summarizes the maturities of our lease liabilities for all operating leases as of December 31, 2021

(in thousands)	12/31/2021
2022		782
2023 and thereafter		4,889
Total lease payments		5,671
less: Imputed interest		(2,141	)
Present value of lease liabilities		3,530