Annual report pursuant to Section 13 and 15(d)

Leases

v3.24.0.1
Leases
 12 Months Ended
Dec. 31, 2023
Leases [Abstract]  
Leases Leases
The Company leases administrative, manufacturing, research and distribution facilities through operating leases. Several leases include fixed payments including rent and non-lease components such as common-area or other maintenance costs.
The components of total lease expense for the years ended were as follows:
December 31,
(in thousands) 2023 2022 2021
Finance lease costs
Amortization of right-of-use assets $ 4  $ 20  $ 22 
Interest on lease obligations 3  2  2 
Operating lease costs
Operating lease costs 3,316  4,077  4,326 
Short-term lease costs 520  72  10 
Variable lease costs 1,438  1,241  744 
Total lease expense $ 5,282  $ 5,412  $ 5,104 
Supplemental balance sheet information related to the operating and financing leases is as follows:
(In thousands, except lease term and discount rate) December 31, 2023 December 31, 2022
Operating Leases
Right-of-use operating assets $ 15,562  $ 14,369 
Current maturities of long-term lease obligations $ 1,541  $ 1,303 
Long-term lease obligations $ 21,123  $ 20,387 
Financing Leases
Right-of-use financing leases (1)
$ 28  $ 41 
Current maturities of long-term lease obligations $ 6  $ 7 
Long-term lease obligations $ 19  $ 18 
Weighted average operating lease term (in years): 9.6 11
Weighted average financing term (in years): 6.5 4
Weighted average discount rate operating leases 10.99  % 10.58  %
Weighted average discount rate financing leases 13.22  % 11.91  %
(1) Financing leases are included in property and equipment, net on the consolidated balance sheets.
Future minimum lease payments under operating and financing leases as of December 31, 2023, were as follows:
(In thousands)
Year ending December 31,
2024 $ 3,925 
2025 4,134 
2026 4,269 
2027 3,106 
2028 3,104 
Thereafter 18,566 
Total $ 37,104 
Less: Imputed interest (14,415)
Total lease liability 22,689 
Less: Current lease liability (1,547)
Long-term lease liability $ 21,142 
New leases
The Company accounts for new leases in accordance with ASC 842, Leases.
On May 9, 2023, the Company entered into a Commercial Lease with JA-Cole L.P., with an effective date of May 9, 2023 (the "2023 JA-Cole Lease"). The 2023 JA-Cole Lease is for an additional 2,500 square feet of office and warehouse facility located in Burleson, Texas. The Commercial Lease has a commencement date of September 1, 2023, and an expiration date of September 30, 2027. The Company valued the 2023 JA-Cole Lease using a 13.9% incremental borrowing rate and recorded a right-of-use asset and a lease liability of $98 on the commencement date.
On October 6, 2023, the Company entered into a Commercial Lease with JA-Cole L.P., with an effective date of September 27, 2023 (the "2023 JA-Cole Lease No. 2"). The 2023 JA-Cole Lease No. 2 is for an additional 2,500 square feet of office and warehouse facility located in Burleson, Texas. The Commercial Lease has a commencement date of October 6, 2023, and an expiration date of April 30, 20230. The Company valued the 2023 JA-Cole Lease No. 2 using a 14.2% incremental borrowing rate and recorded a right-of-use asset and a lease liability of $138 on the commencement date.
On December 27, 2023, the Company entered into the Ninth Amendment to License and Service Agreement ("Ninth Amendment") with Community Blood Center (d/b/a Community Tissue Services) with an effective date of December 21, 2023, pursuant to the original License and Services Agreement dated August 6, 2015. The Ninth Amendment has a commencement date of December 21, 2023, and an expiration date of December 31, 2026. The Company valued the Ninth Amendment using a 13.6% incremental borrowing rate and recorded a right-of-use asset and lease liability of $1,787 on the commencement date.
Lease modifications
The Company accounts for lease revisions as a lease modification in accordance with ASC 842, Leases, when the modification effectively terminates the existing lease and creates a new lease.
On January 27, 2022, the Company entered into a Commercial Lease Amendment ("Amendment") with JA-Cole L.P., with an effective date of February 1, 2022, pursuant to the original Commercial Lease dated April 21, 2015, as amended (the "2015 JA-Cole Lease"). The 2015 JA-Cole Lease is for the office and warehouse facility located in Burleson, Texas. The Amendment revised the commencement date to May 1, 2022, and the expiration date to April 30, 2027. The Company valued the 2015 JA-Cole Lease using a 11.3% incremental borrowing rate and recorded a right-of-use asset and a lease liability of $641 as a result of this amendment.
On August 22, 2022, the Company entered into the First Amendment to Lease Agreement (the “First Amendment”) with JA-Cole, L.P. with an effective date of October 1, 2022, pursuant to the original Commercial Lease dated October 1, 2020, as amended (the "2020 JA-Cole Lease"). The 2020 JA-Cole Lease is for the office and warehouse facility located in Burleson, Texas. The First Amendment adds an additional 2,500 square feet to the Leased Premises, for a total of 5,000 square feet and revises the expiration date of the 2020 JA-Cole Lease to mean September 30, 2027. The Company valued the 2020 JA Cole Lease using a 12.8% incremental borrowing rate and recorded a right-of-use asset and a lease liability of $221 as a result of this amendment.
Leases Leases
The Company leases administrative, manufacturing, research and distribution facilities through operating leases. Several leases include fixed payments including rent and non-lease components such as common-area or other maintenance costs.
The components of total lease expense for the years ended were as follows:
December 31,
(in thousands) 2023 2022 2021
Finance lease costs
Amortization of right-of-use assets $ 4  $ 20  $ 22 
Interest on lease obligations 3  2  2 
Operating lease costs
Operating lease costs 3,316  4,077  4,326 
Short-term lease costs 520  72  10 
Variable lease costs 1,438  1,241  744 
Total lease expense $ 5,282  $ 5,412  $ 5,104 
Supplemental balance sheet information related to the operating and financing leases is as follows:
(In thousands, except lease term and discount rate) December 31, 2023 December 31, 2022
Operating Leases
Right-of-use operating assets $ 15,562  $ 14,369 
Current maturities of long-term lease obligations $ 1,541  $ 1,303 
Long-term lease obligations $ 21,123  $ 20,387 
Financing Leases
Right-of-use financing leases (1)
$ 28  $ 41 
Current maturities of long-term lease obligations $ 6  $ 7 
Long-term lease obligations $ 19  $ 18 
Weighted average operating lease term (in years): 9.6 11
Weighted average financing term (in years): 6.5 4
Weighted average discount rate operating leases 10.99  % 10.58  %
Weighted average discount rate financing leases 13.22  % 11.91  %
(1) Financing leases are included in property and equipment, net on the consolidated balance sheets.
Future minimum lease payments under operating and financing leases as of December 31, 2023, were as follows:
(In thousands)
Year ending December 31,
2024 $ 3,925 
2025 4,134 
2026 4,269 
2027 3,106 
2028 3,104 
Thereafter 18,566 
Total $ 37,104 
Less: Imputed interest (14,415)
Total lease liability 22,689 
Less: Current lease liability (1,547)
Long-term lease liability $ 21,142 
New leases
The Company accounts for new leases in accordance with ASC 842, Leases.
On May 9, 2023, the Company entered into a Commercial Lease with JA-Cole L.P., with an effective date of May 9, 2023 (the "2023 JA-Cole Lease"). The 2023 JA-Cole Lease is for an additional 2,500 square feet of office and warehouse facility located in Burleson, Texas. The Commercial Lease has a commencement date of September 1, 2023, and an expiration date of September 30, 2027. The Company valued the 2023 JA-Cole Lease using a 13.9% incremental borrowing rate and recorded a right-of-use asset and a lease liability of $98 on the commencement date.
On October 6, 2023, the Company entered into a Commercial Lease with JA-Cole L.P., with an effective date of September 27, 2023 (the "2023 JA-Cole Lease No. 2"). The 2023 JA-Cole Lease No. 2 is for an additional 2,500 square feet of office and warehouse facility located in Burleson, Texas. The Commercial Lease has a commencement date of October 6, 2023, and an expiration date of April 30, 20230. The Company valued the 2023 JA-Cole Lease No. 2 using a 14.2% incremental borrowing rate and recorded a right-of-use asset and a lease liability of $138 on the commencement date.
On December 27, 2023, the Company entered into the Ninth Amendment to License and Service Agreement ("Ninth Amendment") with Community Blood Center (d/b/a Community Tissue Services) with an effective date of December 21, 2023, pursuant to the original License and Services Agreement dated August 6, 2015. The Ninth Amendment has a commencement date of December 21, 2023, and an expiration date of December 31, 2026. The Company valued the Ninth Amendment using a 13.6% incremental borrowing rate and recorded a right-of-use asset and lease liability of $1,787 on the commencement date.
Lease modifications
The Company accounts for lease revisions as a lease modification in accordance with ASC 842, Leases, when the modification effectively terminates the existing lease and creates a new lease.
On January 27, 2022, the Company entered into a Commercial Lease Amendment ("Amendment") with JA-Cole L.P., with an effective date of February 1, 2022, pursuant to the original Commercial Lease dated April 21, 2015, as amended (the "2015 JA-Cole Lease"). The 2015 JA-Cole Lease is for the office and warehouse facility located in Burleson, Texas. The Amendment revised the commencement date to May 1, 2022, and the expiration date to April 30, 2027. The Company valued the 2015 JA-Cole Lease using a 11.3% incremental borrowing rate and recorded a right-of-use asset and a lease liability of $641 as a result of this amendment.
On August 22, 2022, the Company entered into the First Amendment to Lease Agreement (the “First Amendment”) with JA-Cole, L.P. with an effective date of October 1, 2022, pursuant to the original Commercial Lease dated October 1, 2020, as amended (the "2020 JA-Cole Lease"). The 2020 JA-Cole Lease is for the office and warehouse facility located in Burleson, Texas. The First Amendment adds an additional 2,500 square feet to the Leased Premises, for a total of 5,000 square feet and revises the expiration date of the 2020 JA-Cole Lease to mean September 30, 2027. The Company valued the 2020 JA Cole Lease using a 12.8% incremental borrowing rate and recorded a right-of-use asset and a lease liability of $221 as a result of this amendment.