NOTE
5. LEASES
We
have operating leases for certain manufacturing sites, office space, and equipment. Most leases include the option to renew, with renewal
terms that can extend the lease term from one1 to five5 years or more. Right-of-use lease assets and lease liabilities are recognized at
the commencement date based on the present value of the remaining lease payments over the lease term which includes renewal periods we
are reasonably certain to exercise. Our leases do not contain any material residual value guarantees or material restrictive covenants.
We have financing leases for certain property and equipment used in the normal course of business.
The
components of lease expense were as follows:
SCHEDULE OF COMPONENTS OF LEASE EXPENSE
| | |
| | | |
| | |
| | |
Three Months Ended March 31, | |
| Lease Cost | |
2026 | | |
2025 | |
| Operating lease cost | |
$ | 588 | | |
$ | 565 | |
| Finance lease interest cost | |
| 14 | | |
| 6 | |
| Finance lease amortization expense | |
| 62 | | |
| 42 | |
| Total lease cost | |
$ | 664 | | |
$ | 613 | |
Supplemental
condensed consolidated balance sheet information related to leases was as follows:
SCHEDULE OF SUPPLEMENTAL CONDENSED CONSOLIDATED BALANCE SHEETS INFORMATION RELATED TO LEASES
| | |
Balance Sheet Location | |
March 31, 2026 | | |
December 31, 2025 | |
| Assets | |
| |
| | | |
| | |
| Finance lease assets | |
Property and equipment, net | |
$ | 668 | | |
$ | 714 | |
| Operating lease assets | |
Operating lease assets, net | |
| 6,720 | | |
| 7,016 | |
| Total leased assets | |
| |
$ | 7,388 | | |
$ | 7,730 | |
| | |
| |
| | | |
| | |
| Liabilities | |
| |
| | | |
| | |
| Current | |
| |
| | | |
| | |
| Current operating lease liabilities | |
Current portion of operating lease obligations | |
$ | 1,309 | | |
$ | 1,332 | |
| Current finance lease liabilities | |
Current portion of finance lease obligations | |
| 259 | | |
| 274 | |
| Noncurrent | |
| |
| | | |
| | |
| Long-term operating lease liabilities | |
Long-term operating lease obligations, net of current portion | |
| 6,186 | | |
| 6,476 | |
| Long-term finance lease liabilities | |
Long-term finance lease obligations, net of current portion | |
| 577 | | |
| 626 | |
| Total lease liabilities | |
| |
$ | 8,331 | | |
$ | 8,708 | |
Supplemental
condensed consolidated statements of cash flows information for the three months ended March 31, 2026 and 2025 related to leases was
as follows:
SCHEDULE OF SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION
| | |
March 31, | | |
March 31, | |
| | |
2026 | | |
2025 | |
| Operating Leases | |
| | | |
| | |
| Cash paid for amounts included in the measurement of lease liabilities | |
$ | 471 | | |
$ | 433 | |
Future
annual payments of lease liabilities as of March 31, 2026 were as follows:
SCHEDULE OF FUTURE PAYMENTS OF LEASE LIABILITIES
| | |
Operating Leases | | |
Finance Leases | | |
Total | |
| Remainder of 2026 | |
$ | 1,406 | | |
$ | 248 | | |
$ | 1,654 | |
| 2027 | |
| 1,580 | | |
| 211 | | |
| 1,791 | |
| 2028 | |
| 1,569 | | |
| 211 | | |
| 1,780 | |
| 2029 | |
| 979 | | |
| 196 | | |
| 1,175 | |
| 2030 | |
| 900 | | |
| 76 | | |
| 976 | |
| Thereafter | |
| 3,769 | | |
| - | | |
| 3,769 | |
| Total lease payments | |
$ | 10,203 | | |
$ | 942 | | |
$ | 11,145 | |
| Less: imputed interest | |
| (2,708 | ) | |
| (106 | ) | |
| (2,814 | ) |
| Present value of lease liabilities | |
$ | 7,495 | | |
$ | 836 | | |
$ | 8,331 | |
The
lease term and discount rate as of March 31, 2026 and 2025 were as follows:
SCHEDULE OF LEASE TERM AND DISCOUNT RATE
| | |
March 31, 2026 | | |
March 31, 2025 | |
| Weighted-average remaining lease term (years) | |
| | | |
| | |
| Operating leases | |
| 7.0 | | |
| 7.6 | |
| Finance leases | |
| 3.7 | | |
| 3.3 | |
| Weighted-average discount rate | |
| | | |
| | |
| Operating leases | |
| 8.1 | % | |
| 7.8 | % |
| Finance leases | |
| 6.6 | % | |
| 5.7 | % |
|