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Note 15 - Leases

3 Months Ended

Jun. 30, 2024

15. Leases

Operating Leases

All significant lease arrangements are recognized at lease commencement. Operating lease right–of-use assets and lease liabilities are recognized at commencement. The operating lease right-of-use asset includes any lease payments related to initial direct cost and prepayments and excludes any lease incentives. Lease expense is recognized on a straight-line basis over the lease term. The Company enters into a variety of operating lease agreements through the normal course of its business, but primarily real estate leases to support its operations. The real estate lease agreements generally provide for fixed minimum rental payments and the payment of real estate taxes and insurance. Many of these real estate leases have one or more renewal options that allow the Company, at its discretion, to renew the lease for varying periods up to five years or to terminate the lease. Only renewal options or termination rights that the Company believed were likely to be exercised were included in the lease calculations.

The Company also enters into leases for vehicles, IT equipment and service agreements, and other leases related to its manufacturing operations that are also included in the right-of-use assets and lease liability accounts if they are for a term of longer than twelve months. However, many of these leases are either short-term in nature or immaterial. The Company has made the policy election to exclude short-term leases from the condensed consolidated balance sheet.

Finance Leases

As of June 30, 2024, the right-of-use asset related to the finance lease is fully amortized, and is included in the property and equipment, net on the Company's condensed consolidated balance sheet.

Finance lease right-of-use assets and lease liabilities are recognized similar to an operating lease, at the lease commencement date or the date the lessor makes the leased asset available for use. Finance lease right-of-use assets are generally amortized on a straight-line basis over the lease term, and the carrying amount of the finance lease liabilities are (1) accreted to reflect interest using the incremental borrowing rate if the rate implicit in the lease is not readily determinable, and (2) reduced to reflect lease payments made during the period. Amortization expense for finance lease right-of-use assets and interest accretion on finance lease liabilities are recorded to depreciation expense and interest expense, respectively in the Company's condensed consolidated statement of operations.

Supplemental balance sheet information related to leases at June 30, 2024, and March 31, 2024 are as follows (in thousands):

	June 30, 2024			March 31, 2024
Leases:
Right-of-use assets – Operating	$	4,096		$	2,557
Total right-of-use assets		4,096			2,557

Lease liabilities – ST Operating	$	862		$	716
Lease liabilities – LT Operating		3,359			1,968
Total lease liabilities	$	4,221		$	2,684

Weighted-average remaining lease term		5.41			3.49
Weighted-average discount rate		12.65	%		9.83	%

The costs related to the Company's finance lease are not material. The costs related to the Company's operating leases for the three months ended June 30, 2024 and 2023 are as follows (in thousands):

	*Three Months Ended*
	*June 30, 2024*
Operating Leases:
Operating lease costs – fixed	$	309
Operating lease costs – variable		45
Short-term lease costs		38
Total lease costs	$	392

	*Three Months Ended*
	*June 30, 2023*
Operating Leases:
Operating lease costs – fixed	$	259
Operating lease costs – variable		40
Short-term lease costs		37
Total lease costs	$	336

The Company’s estimated minimum future lease obligations under the Company's leases are as follows (in thousands):

	*Leases*
Year ending March 31,
2025	$	986
2026		1,319
2027		1,181
2028		823
2029		404
Thereafter		1,511
Total minimum lease payments		6,224
Less: interest		(2,003	)
Present value of lease liabilities	$	4,221