The Company’s leases pertain primarily to engineering, manufacturing, sales and administrative facilities, with an initial term of one year or more. The Company has three leased facilities in Minnesota, two that expire in 2022 and one that expires in 2023, one leased facility in Illinois that expires in 2022, one leased facility in California that expires in 2022, two leased facilities in Singapore, one that expires in 2020 and one that expires in 2025, one leased facility in Indonesia that expires in 2024, and one leased facility in Germany that expires in 2022.

As discussed in Note 4, the Company incurred $326 for lease modification costs at Hearing Help Express to reduce square footage by approximately 65% in an effort to reduce future operating costs. The modification had no impact on the lease term.

Certain foreign leases allow for variable lease payments that depend on an index or a market rate adjustment for the respective country and are adjusted on an annual basis. The adjustment is recognized as incurred in profit and loss. The facility leases include options to extend for terms ranging from one year to five years. Lease options that the Company is reasonably certain to execute, are included in the determination of the ROU asset and lease liability. Our Indonesia lease includes embedded forward starting leases that will begin in 2022 and 2024 for additional square footage, which will result in the recognition of an additional ROU asset and lease liability in those periods of approximately $103 and $72, respectively. The Company also leases equipment that include bargain purchase options at termination. These leases have been classified as finance leases.

As of September 30, 2020, the Company has a weighted-average lease term of 0.9 years for its finance leases, and 3.1 years for its operating leases. As of September 30, 2020, the Company has a weighted-average discount rate of 5.56% for its finance leases, and 5.13% for its operating leases. Discount rates are determined based on 5 year term incremental borrowing rates at inception of the lease. Operating cash flows for the nine months ended September 30, 2020 from operating leases were $1,415. Financing lease assets are classified as machinery and equipment within the consolidated condensed balance sheet.


	Three Months Ended		Nine Months Ended
	September 30, 2020	September 30, 2019	September 30, 2020	September 30, 2019
Lease cost
Finance lease cost:
Amortization of right-of-use assets	$ 21	$ 27	$ 73	$ 76
Interest on lease liabilities	-	3	3	8

Operating lease cost	494	462	1,368	1,379
Variable lease cost*	147	138	446	417
Total lease cost	$ 662	$ 630	$ 1,890	$ 1,880

*Variable lease costs consist primarily of taxes, insurance, and common area or other maintenance costs for our domestic and foreign building leases.


		Operating Leases		Financing Leases		Total
2020	$	416	$	16	$	432
2021		1,687		24		1,711
2022		1,195		3		1,198
2023		595		-		595
2024		275		-		275
2025 and thereafter		156		-		156
Total lease payments		4,324		43		4,367
Less: Interest		(337)		(7)		(344)
Present value of lease liabilities	$	3,987	$	36	$	4,023