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LEASES

6 Months Ended

Jun. 30, 2024

NOTE 5. LEASES

We have operating leases for certain manufacturing sites, office space, and equipment. Most leases include the option to renew, with renewal terms that can extend the lease term from one to five years or more. Right-of-use lease assets and lease liabilities are recognized at the commencement date based on the present value of the remaining lease payments over the lease term which includes renewal periods we are reasonably certain to exercise. Our leases do not contain any material residual value guarantees or material restrictive covenants. As of June 30, 2024, we do not have material lease commitments that have not commenced. We extended our operating leases for part of our manufacturing facility in China and our corporate office in Maple Grove, MN during the first six months of 2024 which extended the lease through August of 2033 with monthly lease payments of $14 to $18.

The components of lease expense were as follows:


	Three Months Ended June 30,
Lease Cost	2024		2023
Operating lease cost	$	581	$	592
Finance lease interest cost		6		11
Finance lease amortization expense		129		182
Total lease cost	$	716	$	785


	Six Months Ended June 30,
Lease Cost	2024		2023
Operating lease cost	$	1,177	$	1,159
Finance lease interest cost		12		23
Finance lease amortization expense		129		364
Total lease cost	$	1,318	$	1,546

Supplemental condensed consolidated balance sheet information related to leases was as follows:

	Balance Sheet Location	June 30, 2024		December 31, 2023
Assets
Finance lease assets	Property and equipment, net	$	373	$	636
Operating lease assets	Operating lease assets, net		8,274		6,917
Total leased assets		$	8,647	$	7,553

Liabilities
Current
Current finance lease liabilities	Current portion of finance lease obligations	$	214	$	356
Current operating lease liabilities	Current portion of operating lease obligations		1,169		1,033
Noncurrent
Long-term finance lease liabilities	Long-term finance lease liabilities, net of current portion		146		209
Long-term operating lease liabilities	Long-term operating lease obligations, net of current portion		7,949		6,763
Total lease liabilities		$	9,478	$	8,361

Supplemental condensed consolidated statement of cash flows information for the six months ended June 30, 2024 related to leases was as follows:

	June 30,		June 30,
	2024		2023
Operating Leases
Cash paid for amounts included in the measurement of lease liabilities	$	933	$	934
Property acquired under operating lease	$	1,923	$	-

Future payments of lease liabilities as of June 30, 2024 were as follows:

	Operating Leases			Finance Leases			Total
2024	$	928		$	163		$	1,091
2025		1,792			106			1,898
2026		1,758			105			1,863
2027		1,470			-			1,470
2028		1,469			-			1,469
Thereafter		5,510			-			5,510
Total lease payments	$	12,927		$	374		$	13,301
Less: imputed interest		(3,809	)		(14	)		(3,519	)
Present value of lease liabilities	$	9,118		$	360		$	9,478

The lease term and discount rate as of June 30, 2024 were as follows:

Weighted-average remaining lease term (years)
Operating leases	8.1
Finance leases	1.7
Weighted-average discount rate
Operating leases	8.0	%
Finance leases	5.3	%