Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.22.2.2
Leases
 9 Months Ended
Sep. 30, 2022
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.
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 "Lease"). The 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 accounted for the Lease revisions as a lease modification in accordance with ASC 842, Leases, as the modification effectively terminated the existing lease and created a new lease which commenced on February 1, 2022. The Company valued the 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 "Lease"). The 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 Lease to mean September 30, 2027. The Company accounted for the Lease revisions as a lease modification in accordance with ASC 842, Leases, as the modification effectively terminated the existing lease and created a new lease. The Company valued the 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.
Total operating lease expense for the three months ended September 30, 2022, and 2021 was $1,337 and $1,211 respectively and $4,100 and $3,652 for the nine months ended September 30, 2022, and 2021, respectively.
Supplemental balance sheet information related to the operating and financing leases is as follows:
(In thousands, except lease term and discount rate) September 30, 2022 December 31, 2021
Operating Leases
Right-of-use operating assets $ 14,751  $ 15,193 
Current maturities of long-term lease obligations $ 1,523  $ 1,825 
Long-term lease obligations $ 20,615  $ 20,794 
Financing Leases
Right-of-use financing leases (1)
$ 46  $ 42 
Current maturities of long-term lease obligations $ 7  $ 9 
Long-term lease obligations $ 19  $ 4 
Weighted average operating lease term (in years): 10.9 12.1
Weighted average operating financing term (in years): 4.2 2.2
Weighted average discount rate operating leases 10.48  % 10.32% 
Weighted average discount rate financing leases 11.69%  7.23% 
(1) Financing leases are included within property and equipment, net on the condensed consolidated balance sheets.
Future minimum lease payments under operating and financing leases at September 30, 2022, were as follows:
(In thousands)  
2022 (excluding the nine months ended September 30, 2022) $ 1,092 
2023 3,476 
2024 3,253 
2025 3,336 
2026 3,348 
2027 2,921 
Thereafter 20,931 
Total $ 38,356 
Less: Imputed interest (16,192)
Total lease liability $ 22,164 
Less: Current lease liability (1,530)
Long-term lease liability $ 20,634 
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.
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 "Lease"). The 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 accounted for the Lease revisions as a lease modification in accordance with ASC 842, Leases, as the modification effectively terminated the existing lease and created a new lease which commenced on February 1, 2022. The Company valued the 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 "Lease"). The 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 Lease to mean September 30, 2027. The Company accounted for the Lease revisions as a lease modification in accordance with ASC 842, Leases, as the modification effectively terminated the existing lease and created a new lease. The Company valued the 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.
Total operating lease expense for the three months ended September 30, 2022, and 2021 was $1,337 and $1,211 respectively and $4,100 and $3,652 for the nine months ended September 30, 2022, and 2021, respectively.
Supplemental balance sheet information related to the operating and financing leases is as follows:
(In thousands, except lease term and discount rate) September 30, 2022 December 31, 2021
Operating Leases
Right-of-use operating assets $ 14,751  $ 15,193 
Current maturities of long-term lease obligations $ 1,523  $ 1,825 
Long-term lease obligations $ 20,615  $ 20,794 
Financing Leases
Right-of-use financing leases (1)
$ 46  $ 42 
Current maturities of long-term lease obligations $ 7  $ 9 
Long-term lease obligations $ 19  $ 4 
Weighted average operating lease term (in years): 10.9 12.1
Weighted average operating financing term (in years): 4.2 2.2
Weighted average discount rate operating leases 10.48  % 10.32% 
Weighted average discount rate financing leases 11.69%  7.23% 
(1) Financing leases are included within property and equipment, net on the condensed consolidated balance sheets.
Future minimum lease payments under operating and financing leases at September 30, 2022, were as follows:
(In thousands)  
2022 (excluding the nine months ended September 30, 2022) $ 1,092 
2023 3,476 
2024 3,253 
2025 3,336 
2026 3,348 
2027 2,921 
Thereafter 20,931 
Total $ 38,356 
Less: Imputed interest (16,192)
Total lease liability $ 22,164 
Less: Current lease liability (1,530)
Long-term lease liability $ 20,634