Rekor Systems, Inc. Leases Disclosure
NOTE 8 – LEASES
The Company has operating leases for office facilities in various locations throughout the United States and Israel. The Company’s leases have remaining terms of to years. Certain of the Company’s leases include options to extend the term of the lease or to terminate the lease prior to the end of the initial term. When it is reasonably certain that the Company will exercise the option, the Company will include the impact of the option in the lease term for purposes of determining total future lease payments.
Cash paid for amounts included in the measurement of operating lease liabilities from continuing operations was $858,000 and $260,000 for the year ended December 31, 2022 and 2021, respectively.
Operating lease expense from continuing operations for the year ended December 31, 2022 and 2021 was $2,040,000 and $621,000, respectively, and is part of general and administrative expenses in the consolidated statement of operations.
In the first quarter of 2022, the Company entered into a lease agreement for its new Israeli office. As part of the lease agreement, there were $919,000 in tenant improvement allowances provided to the Company which was used to update the structure of the leased space and furnish the leased space.
Supplemental balance sheet information related to leases as of December 31, 2022 was as follows (dollars in thousands):
| Operating lease right-of-use lease asset | $ | 9,662 | ||
| Current portion of lease liability | 1,069 | |||
| Long-term portion of lease liability | 14,237 | |||
| Total lease liability from continuing operations | $ | 15,306 | ||
| Weighted average remaining lease term - operating leases | 9.45 | |||
| Weighted average discount rate - operating leases | 9 | % |
Maturities of operating lease liabilities for continuing operations at December 31, 2022 were as follows (dollars in thousands):
| 2023 | $ | 2,385 | ||
| 2024 | 2,335 | |||
| 2025 | 2,310 | |||
| 2026 | 2,274 | |||
| 2027 | 2,319 | |||
| Thereafter | 11,240 | |||
| Total lease payments | 22,863 | |||
| Less imputed interest | 7,557 | |||
| Maturities of lease liabilities | $ | 15,306 |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2022 | Mar 29, 2023 | Showing above |
| 2021 | Mar 31, 2022 | |
| 2020 | Mar 12, 2021 | |
| 2019 | Mar 30, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.