Note 9 - Leases

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

9. LEASES

The Company determines if an arrangement is a lease at inception. The guidance in Topic 842 defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. Operating lease ROU assets and lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. The Company’s leases do not provide an implicit rate. Due to a lack of financing history or ability, the Company uses an estimate of low-grade debt rate published by the Federal Reserve Bank as its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The ROU asset includes any lease payments made and excludes lease incentives and initial direct costs incurred.

For leases beginning on or after January 1, 2019, lease components are accounted for separately from non-lease components for all asset classes. The Company’s leases may contain renewal provisions and escalating rental clauses and generally require the Company to pay utilities, insurance, taxes and other operating expenses. The renewal provisions of the existing lease agreement was not included in the determination of the operating lease liabilities and the ROU assets.

At December 31, 2021 the Company was party to one operating leases for office and production facilities under an agreement that expires in July 2022. The Company has elected the short-term lease exemption such that the new lease standard was applied to leases greater than one year in duration. Leases with an initial term of twelve months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Amortization of ROU operating lease assets was $88 and $122 for the years ended December 31, 2021 and 2020, respectively.

Operating lease expense for capitalized operating leases included in operating activities was $95 and $137 for the years ended December 31, 2021 and 2020, respectively. Operating lease obligations recorded on the balance sheet at December 31, 2021 are:

Operating lease liability- short term	$	56
Operating lease liability - long term		-
Total Operating Lease Liability	$	56

Future lease payments included in the measurement of lease liabilities on the balance sheet at December 31, 2021 for future periods are as follows:

2022	$	57
Total future minimum lease payments		57
Less imputed interest		(1	)
Total	$	56

The weighted average remaining lease term is 0.6 years and the weighted average discount rate is 7%. Variable lease payments totaled $29 and are comprised of taxes and other miscellaneous costs.

The Company did not have any short-term lease expense during the years ended December 31, 2021 and December 31, 2020. The Company does not have any finance leases.