CAPITAL LEASE OBLIGATIONS

12 Months Ended

Dec. 31, 2022

Leases of Lessee Disclosure [Text Block]

LEASES

The Company leases office space and equipment from third-party lessors and accounts for leases in accordance with ASC Topic 842. Right of use assets represent the Company’s right to use an underlying asset over the lease term and lease liabilities represent the Company’s obligation to make future lease payments arising from the lease.

Operating lease liabilities and finance lease liabilities with terms greater than 12 months are recorded at the present value of the lease payments at the commencement date. The related right of use assets are recorded on the same date at the amount of the initial liability, adjusted for incentives received, prepayments made to the lessor, and any initial direct costs incurred, as applicable. The Company uses the discount rate implicit in the lease when it is readily determinable. When it is not readily available, future lease payments are discounted using the incremental borrowing rate available to the Company. The incremental borrowing rate is the rate available to the Company for a fully collateralized, fully amortizing loan with the same term as the lease. Lease components, such as office space, are accounted for separately from the non-lease components, such as maintenance fees. Certain of the Company's leases may also include rent escalation clauses or options to extend or terminate the lease. These options are included in the present value recorded for the leases when it is reasonably certain that the Company will exercise that option. None of the Company’s current leases contain guarantees of residual value. Leases with an initial term of 12 months or less are considered short term and are not recorded on the balance sheet. The Company recognizes a lease expense for short term leases on a straight-line basis over the lease term.

Generally, the Company’s operating leases relate to office space used in Mannatech’s operations, including its headquarters in Flower Mound, Texas and office space in international locations in which the Company does business. As of December 31, 2022, all of the Company’s finance leases pertain to certain equipment used in the business.

As of December 31, 2022 and 2021, our leased assets and liabilities consisted of the following (in thousands):


Leases	Classification	December 31, 2022		December 31, 2021
Right of Use Assets
Operating leases	Other assets	$	4,649	$	4,625
Finance leases	Property and equipment, net	182		180
Total leased assets		4,831		4,805

Lease Liabilities
Current Portion
Operating leases	Accrued expenses	1,600		1,493
Finance leases	Current portion of finance leases	61		68

Long-Term Portion
Operating leases	Other long-term liabilities	4,153		4,318
Finance leases	Finance leases, excluding current portion	88		66
Total leased liabilities		$	5,902	$	5,945

Operating lease costs are recognized on a straight-line basis over the lease term. Finance lease costs are composed of the amortization of the right of use asset and the amounts recorded as interest. For the years ended December 31, 2022 and 2021, we incurred the following lease costs related to our operating and finance leases (in thousands):


Lease Cost	Classification	2022		2021
Operating leases
Operating lease costs	Other operating costs	$	2,137	$	2,201
Short term lease costs	Other operating costs	279		339

Finance leases
Amortization of leased assets	Depreciation and amortization	89		108
Interest on lease liabilities	Interest expense	9		28
Total lease cost		$	2,514	$	2,676

For the twelve months ended December 31, 2022 and 2021, cash paid for amounts included in the measurement of lease liabilities included (in thousands):


	2022		2021

Operating cash flows from operating leases	$	2,017	$	2,164
Financing cash flows from finance leases	$	76	$	87

As of December 31, 2022 and 2021 the Company's lease terms and discount rates were:


	2022		2021
Operating leases
Weighted-average remaining lease term (years)	4.07		5.04
Weighted-average discount rate	4.35	%	4.5	%

Finance leases
Weighted-average remaining lease term (years)	3.25		2.14
Weighted-average discount rate	7.43	%	6.57	%

As of December 31, 2022 future minimum lease payments were as follows (in thousands):


	December 31, 2022
Maturity of lease liabilities	Operating Leases		Finance Leases


2022	$	1,829	$	69
2023	1,772		43
2024	1,106		22
2025	704		21
2026	650		9
Thereafter	268		—
Total future minimum lease payments	$	6,329	$	164
Imputed interest	(576)		(15)
Present value of minimum lease payments	$	5,753	$	149