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Note 5 - Leases

9 Months Ended

Sep. 30, 2022

Lessee, Operating and Finance Leases [Text Block]

NOTE 5 - LEASES

The Company leases certain vehicles, real property, production equipment and office equipment under lease agreements. The Company evaluates each lease to determine its appropriate classification as an operating lease or finance lease for financial reporting purposes. The majority of our operating leases are non-cancelable operating leases for production and office space in Hobro, Aarhus and Copenhagen, Denmark. During the second quarter of 2022, the Company terminated the lease agreement for the office and production space in Taicang, China.

During the nine months ended September 30, 2022, cash paid for finance lease liabilities was $316,246, and the Company recorded finance lease expenses in other income (expenses) of $221,928.

During the nine months ended September 30, 2022, cash paid for operating lease liabilities was $733,390, and the Company recorded operating lease expense of $812,032.

Supplemental balance sheet information related to leases as of September 30, 2022, and December 31, 2021 was as follows:

	September 30, 2022			December 31, 2021
Operating leases:
Operating lease right-of-use assets	$	3,119,806		$	6,925,807

Operating lease liabilities – current	$	511,240		$	846,544
Operating lease liabilities – long-term		2,608,566			6,154,064
Total operating lease liabilities	$	3,119,806		$	7,000,608

Finance leases:
Property and equipment, at cost	$	2,852,356		$	3,334,830
Accumulated depreciation		(424,959	)		(336,337	)
Property and equipment, net	$	2,427,397		$	2,998,494

Finance lease liabilities – current	$	321,788		$	373,824
Finance lease liabilities – long-term		1,911,361			2,499,591
Total finance lease liabilities	$	2,233,149		$	2,873,415

Weighted average remaining lease term:
Operating leases		9.6			8.9
Finance leases		5.2			5.9

Weighted average discount rate:
Operating leases		6.2	%		6.5	%
Finance leases		2.8	%		2.8	%

Maturities of lease liabilities at September 30, 2022 were as follows:

	Operating Lease			Finance lease
2022 (remaining 3 months)	$	176,803		$	97,263
2023		681,709			389,052
2024		552,318			389,876
2025		287,898			386,752
2026		278,383			354,565
Thereafter		2,157,468			846,130
Total payment under lease agreements		4,134,579			2,463,638
Less imputed interest		(1,014,773	)		(230,489	)
Total lease liability	$	3,119,806		$	2,233,149