Quarterly report pursuant to Section 13 or 15(d)

Operating Leases

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Operating Leases
3 Months Ended
Mar. 31, 2021
Leases [Abstract]  
Operating Leases

NOTE 10 – OPERATING LEASES

 

The Company has two operating lease agreements for its warehouse and office spaces both with remaining lease terms at March 31, 2021, of 2.2 years. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Rent expense is recognized on a straight-line basis over the lease term. The Company also has another storage facility on a twelve-month lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

 

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical collateralized borrowing rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

  

The components of rent expense and supplemental cash flow information related to leases for the period are as follows:

 

   

Three Months
Ended

March 31, 2021

   

Three Months
Ended

March 31, 2020

 
Lease Cost                
Operating lease cost (of which $25 is included in general and administration and $150 is included in cost of sales in the Company’s statement of operations for the three months ended March 31, 2021, and $25 and $150 for the same period in 2020, respectively)   $ 175     $ 175  
                 
Other Information                
Weighted average remaining lease term – operating leases (in years)     2.2       3.2  
Average discount rate – operating leases     3.75 %     3.75 %

 

The supplemental balance sheet information related to leases for the period is as follows:

 

    At
March 31, 2021
    At
December 31, 2020
 
Operating leases                
Long-term right-of-use assets, net of amortization of $160 and $1,265 respectively   $ 1,403     $ 1,563  
                 
Short-term operating lease liabilities   $ 682     $ 670  
Long-term operating lease liabilities     815       990  
Total operating lease liabilities   $ 1,497     $ 1,660  

 

Maturities of the Company’s lease liabilities are as follows (in thousands):

 

Year Ending   Operating Leases  
2021 (remaining 9 months)     535  
2022     747  
2023     280  
Total lease payments     1,562  
Less: Imputed interest/present value discount     (65 )
Present value of lease liabilities   $ 1,497  

 

Rent expense for the three months ended March 31, 2021 and 2020 was $226 and $226, respectively.