Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.23.3
Leases
 9 Months Ended
Sep. 30, 2023
Leases [Abstract]  
Leases Leases
The Company leases administrative, processing, research and distribution facilities through operating leases. Several of the leases include fixed payments, including rent and non-lease components such as common area or other maintenance costs.
Operating lease expense is as follows:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2023 2022 2023 2022
Operating lease expense $ 1,327  $ 1,337  $ 3,871  $ 4,100 
Supplemental balance sheet information related to the operating and financing leases is as follows:
(In thousands, except lease term and discount rate) September 30, 2023 December 31, 2022
Operating Leases
Right-of-use operating assets $ 13,873  $ 14,369 
Current maturities of long-term lease obligations $ 1,091  $ 1,303 
Long-term lease obligations $ 19,913  $ 20,387 
Financing Leases
Right-of-use financing leases (1)
$ 25  $ 41 
Current maturities of long-term lease obligations $ 5  $ 7 
Long-term lease obligations $ 14  $ 18 
Weighted average operating lease term (in years): 10.4 11.0
Weighted average financing lease term (in years): 3.6 4.0
Weighted average discount rate operating leases 10.69%  10.58% 
Weighted average discount rate financing leases 12.50%  11.91% 
(1) Financing leases are included in property and equipment, net on the condensed consolidated balance sheets.
Future minimum lease payments under operating and financing leases at September 30, 2023, are as follows:
(In thousands)  
2023 (excluding nine months ended September 30, 2023) $ 831 
2024 3,313 
2025 3,398 
2026 3,412 
2027 3,104 
Thereafter 21,668 
Total 35,726 
Less: Imputed interest (14,703)
Total lease liability 21,023 
Less: Current lease liability (1,096)
Long-term lease liability $ 19,927 
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 will value the 2023 JA-Cole Lease using a 13.9% incremental borrowing rate and record a right-of-use asset and a lease liability of $98 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 May 9, 2023, the Company entered into a Commercial Lease Amendment ("Amendment") with JA-Cole L.P., with an effective date of May 1, 2023, pursuant to the original Commercial Leases dated April 21, 2015, as amended (the "2015 JA-Cole Lease"). The 2015 JA-Cole Lease is for 15,000 square feet of office and warehouse facility located in Burleson, Texas. The Amendment revised the commencement date to May 1, 2023, and the expiration date to April 30, 2030. The Company valued the 2015 JA-Cole Lease using a 13.1% incremental borrowing rate and recorded a right-of-use asset and a lease liability of $268 as a result of this amendment.
Leases Leases
The Company leases administrative, processing, research and distribution facilities through operating leases. Several of the leases include fixed payments, including rent and non-lease components such as common area or other maintenance costs.
Operating lease expense is as follows:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2023 2022 2023 2022
Operating lease expense $ 1,327  $ 1,337  $ 3,871  $ 4,100 
Supplemental balance sheet information related to the operating and financing leases is as follows:
(In thousands, except lease term and discount rate) September 30, 2023 December 31, 2022
Operating Leases
Right-of-use operating assets $ 13,873  $ 14,369 
Current maturities of long-term lease obligations $ 1,091  $ 1,303 
Long-term lease obligations $ 19,913  $ 20,387 
Financing Leases
Right-of-use financing leases (1)
$ 25  $ 41 
Current maturities of long-term lease obligations $ 5  $ 7 
Long-term lease obligations $ 14  $ 18 
Weighted average operating lease term (in years): 10.4 11.0
Weighted average financing lease term (in years): 3.6 4.0
Weighted average discount rate operating leases 10.69%  10.58% 
Weighted average discount rate financing leases 12.50%  11.91% 
(1) Financing leases are included in property and equipment, net on the condensed consolidated balance sheets.
Future minimum lease payments under operating and financing leases at September 30, 2023, are as follows:
(In thousands)  
2023 (excluding nine months ended September 30, 2023) $ 831 
2024 3,313 
2025 3,398 
2026 3,412 
2027 3,104 
Thereafter 21,668 
Total 35,726 
Less: Imputed interest (14,703)
Total lease liability 21,023 
Less: Current lease liability (1,096)
Long-term lease liability $ 19,927 
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 will value the 2023 JA-Cole Lease using a 13.9% incremental borrowing rate and record a right-of-use asset and a lease liability of $98 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 May 9, 2023, the Company entered into a Commercial Lease Amendment ("Amendment") with JA-Cole L.P., with an effective date of May 1, 2023, pursuant to the original Commercial Leases dated April 21, 2015, as amended (the "2015 JA-Cole Lease"). The 2015 JA-Cole Lease is for 15,000 square feet of office and warehouse facility located in Burleson, Texas. The Amendment revised the commencement date to May 1, 2023, and the expiration date to April 30, 2030. The Company valued the 2015 JA-Cole Lease using a 13.1% incremental borrowing rate and recorded a right-of-use asset and a lease liability of $268 as a result of this amendment.