Quarterly report pursuant to Section 13 or 15(d)

Note 5 - Leases

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Note 5 - Leases
3 Months Ended
Mar. 31, 2023
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]

5. LEASES

 

The Company leases 7,300 square feet of office space in Hong Kong with a term expiring in June 2026, and 4,900 square feet of office space in Rolling Hills Estates, California for its corporate staff with a term expiring in September 2030. To help further develop the market for its products in North America, the Company leases 1,600 square feet of retail space in each of Rowland Heights, California and Richmond, British Columbia and 2,000 square feet of retail space in Metuchen, New Jersey. The Rowland Heights, Richmond and Metuchen locations have terms expiring in November 2025, February 2024 and December 2028, respectively.

 

The Company leases seven branch offices throughout China, and additional office space in Peru, Japan, Taiwan, South Korea, Malaysia, Singapore, Thailand, India and the Cayman Islands. The Company contracts with third parties for fulfillment and distribution operations in all of its international markets. None of the Company’s third party logistics contracts contain a lease as the Company does not have the right to access the warehouses or move its inventories at will.

 

The components of lease cost were as follows (in thousands):

 

   

Three Months Ended March 31,

 
   

2023

   

2022

 

Operating leases

  $ 330     $ 334  

Short-term leases

    37       46  

Total lease cost

  $ 367     $ 380  

 

Cash paid for amounts included in the measurement of operating leases liabilities was $345,000 and $322,000 for the three months ended  March 31, 2023 and 2022, respectively.

 

The weighted-average remaining lease term and discount rate related to operating leases as of March 31, 2023 were as follows:

 

Weighted-average remaining lease term (in years)

    4.8  

Weighted-average discount rate

    4.2 %

 

As most of our leases do not provide an implicit rate, the Company used its incremental borrowing rate, or the rate of each of its subsidiaries if available, based on the information available at the lease commencement date to determine the present value of lease payments.

 

The annual scheduled lease payments of our operating lease liabilities as of March 31, 2023 were as follows (in thousands):

 

Remainder of 2023

  $ 909  

2024

    1,022  

2025

    963  

2026

    579  

2027

    299  

Thereafter

    679  

Total lease payments

    4,451  

Less: imputed interest

    (424 )

Present value of lease liabilities

  $ 4,027  

 

For all asset classes, the Company elected not to recognize assets or liabilities at the acquisition date for leases that, at the acquisition date, have a remaining lease term of 12 months or less. Additionally, for all asset classes, the Company choose not to separate nonlease components from lease components and instead account for the combined lease and nonlease components associated with that lease component as a single lease component.