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Note 4 - Leases

9 Months Ended

Sep. 30, 2023

Lessee, Operating and Finance Leases [Text Block]

Note 4. Leases

The Company leases space under non-cancellable operating leases for manufacturing facilities, research and development offices and certain storage facilities and apartments. These leases do not contain contingent rent provisions. The Company also leases certain machinery, office equipment and a vehicle under an operating lease. Many of its leases include both lease (e.g. fixed payments including rent, taxes, and insurance costs) and non-lease components (e.g. common-area or other maintenance costs) which are accounted for as a single lease component as the Company has elected the practical expedient to group lease and non-lease components for all leases. Several of the leases include one or more options to renew which have been assessed and either included or excluded from the calculation of the lease liability of the right of use ("ROU") asset based on management’s intentions and individual fact patterns. Several warehouses and apartments have non-cancellable lease terms of less than one-year and therefore, the Company has elected the practical expedient to exclude these short-term leases from its ROU asset and lease liabilities.

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Based on the applicable lease terms and current economic environment, the Company applies a location approach for determining the incremental borrowing rate.

Lease expense is included under general and administrative expenses and was $0.3 million for the three months ended September 30, 2023 and 2022, respectively; the lease expense was $0.9 million for the nine months ended September 30, 2023 and was $1 million for the nine months ended September 30, 2022. Th e components of lease expense were as follows for the periods indicated ( in thousands):

	*Three months ended September 30,*				*Nine months ended September 30,*
	*2023*		*2022*		*2023*		*2022*
Operating lease expense	$	287	$	283	$	849	$	882
Financing lease expense		8		8		24		24
Short Term lease expense		3		34		9		55
Total lease expense	$	298	$	325	$	882	$	961

Maturities of lease liabilities are as follows for the future one-year periods ending September 30, 2023 (in thousands):

		*Operating*			*Financing*
2024	$	1,241		$	49
2025		1,248			—
2026		1,110			—
2027		1,028			—
2028		1,038			—
2029 and thereafter		699			—
Total lease payments		6,364			49
Less imputed interest		(538	)		—
Present value	$	5,826		$	49

The weighted average remaining lease term and discount rate for the leases were as follows for the periods indicated:

	*Nine months ended September 30,*
	*2023*			*2022*
Weighted Average Remaining Lease Term (Years) - operating leases		5.33			6.41
Weighted Average Remaining Lease Term (Years) - financing leases		0.08			1.08
Weighted Average Discount Rate - operating leases		3.28	%		3.22	%
Weighted Average Discount Rate - financing leases		5.00	%		5.00	%

Supplemental cash flow information related to the leases was as follows for the periods indicated (in thousands):

	*Nine months ended September 30,*
	*2023*		*2022*
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	934	$	903
Operating cash flows from financing lease		3		3
Financing cash flows from financing lease		15		14