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Note 13 - Leases

9 Months Ended

Sep. 30, 2024

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 June 30, 2027. The lease terms include an option to extend the lease agreement for an additional five (5) year term. 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*				*Nine Months Ended*
	*September 30, 2024*		September 30, 2023		*September 30, 2024*		September 30, 2023
Operating lease cost	$	136	$	135	$	406	$	407
Variable lease cost		33		33		*100*		99
Total lease cost	$	169	$	168	$	506	$	506

Supplemental cash flow information related to leases was as follows:

	*Three Months Ended*				*Nine Months Ended*
	*September 30, 2024*		September 30, 2023		*September 30, 2024*		September 30, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows (fixed payments)	$	155	$	149	$	455	$	445
Operating cash flows (liability reduction)	$	135	$	123	$	390	$	360

ROU assets obtained in exchange for lease obligations:
Operating leases	$	4	$	—	$	27	$	—

Other information related to operating leases was as follows:

	*September 30, 2024*
Weighted average remaining lease term (in years)		2.59
Weighted average discount rate		5.50	%

Maturity of lease liabilities as of September 30, 2024, were as follows:

	*September 30, 2024*
Remaining three months of 2024	$	157
2025		624
2026		486
2027		248
2028		5
Thereafter		3
Total payments		1,523
Less: imputed interest		(101	)
Total present value of lease liabilities	$	1,422