Leases

12 Months Ended

Dec. 31, 2023

The Company determines if an arrangement is a lease at inception by assessing whether it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company’s operating leases are primarily related to property leases for its field offices. The Company's operating leases have remaining lease terms of one to eight years. Renewal and termination options are included in the lease term when it is reasonably certain that the Company will exercise the option. The company's finance leases are primarily related to vehicles used in our rental business. The company's finance leases have lease terms of 3 years.

The Company's lease agreements do not contain any contingent rental payments, material residual guarantees or material restrictive covenants.

Right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As substantially all of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which is based on a fully collateralized loan over the lease term, to determine the present value of lease payments. The following table reflects the amounts related to leases that are recorded on our consolidated balance sheets as of December 31, 2023 and 2022:


	Classification on Consolidated	December 31,
	Balance Sheets	2023			2022
		($ in thousands)
Operating lease assets	Other assets	$	210		$	349
Finance lease assets	Other assets	$	1,045		$	—

Current lease liabilities	Accrued liabilities	$	58		$	155
Current lease liabilities	Accrued liabilities	307			—
Non-current lease liabilities	Other long-term liabilities	173			194
Non-current lease liabilities	Other long-term liabilities	723			—
Total lease liabilities		$	1,261		$	349

Weighted average remaining lease term in years		3.1			4.5
Implicit Rate		9.1		%	5.2		%

Operating lease costs are recognized on a straight-line basis over the lease term. Total operating lease costs for the years ended December 31, 2023 and December 31, 2022 were approximately $0.5 million and $0.4 million respectively.


	December 31,
	2023		2022
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating lease cost (1) (2)	$	485	$	384
Finance lease cost	$	95	$	—

(1) Lease costs are classified on the Consolidated Statements of Operations in cost of sales, cost of compressors and selling, general and administrative expenses.

(2) Includes costs of $0.3 million for leases with terms of 12 months or less and $0.2 million for leases with terms greater than 12 months for the year ended December 31, 2023. Includes costs of $0.2 million for leases with terms of 12 months or less and $0.2 million for leases with terms greater than 12 months for the year ended December 31, 2022.

The following table shows the future maturities of lease liabilities:


Year Ending December 31,	Lease Liabilities
	(in thousands)
2024	$	437
2025	419
2026	328
2027	38
2028	38
Thereafter	16
Total lease payments	1,276
Less: Imputed interest	(15)
Total	$	1,261

Rent expense under such leases was $0.2 million and $0.2 million for the years ended December 31, 2023 and 2022, respectively.