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OPERATING LEASES
9 Months Ended
Sep. 30, 2023
Operating Leases  
OPERATING LEASES

NOTE 8 – OPERATING LEASES

 

The Company has two operating lease agreements for its warehouse and office facilities. The first lease, originally signed in 2019, expired in February 2023. In January 2023, the Company signed an amendment to the first lease and extended the first lease for three years commencing March 1, 2023 to February 28, 2026. Lease payments for the amended first lease total $2,596, with monthly lease payments ranging from $58 beginning in March 2023, to $74 beginning in March 2024, to $84 from March 2025 to February 2026. The lease amendment to the first operating lease was considered a new lease agreement and as a result, the Company recognized an operating lease right-of-use asset and related operating lease liability of $2,392.

 

 

The Company’s second operating lease, originally signed in 2018, expired in August 2023. In May 2023, the Company signed an amendment to the second lease and extended the second lease for three years commencing September 1, 2023 to August 31, 2026. Lease payments for the amended second lease will total $1,300, with monthly lease payments ranging from $31 beginning in September 2023, to $37 beginning in September 2024, to $41 from September 2025 to August 2026. The lease amendment to the second operating lease is also considered a new lease agreement and as a result, the Company recognized an operating lease right-of-use asset and related operating lease liability of approximately $1,184 upon commencement of the new term.

 

The Company also has a third lease on a month-to-month basis and is charged $25 per month. 

 

The components of rent expense and supplemental cash flow information related to leases for the period are as follows:

 

  

Nine Months
Ended

September 30,
2023

  

Nine Months
Ended

September 30,
2022

 
Lease Cost          
Operating lease cost  $1,013   $726 
Operating lease cost (of which $327 is included in general and administration and $686 is included in cost of sales in the Company’s statement of operations for the nine months ended September 30, 2023, and $275 and $451 for the same period in 2022, respectively)  $1,013   $726 
           
Other Information          
Weighted average remaining lease term – operating leases (in years)   2.7    0.7 
Average discount rate – operating leases   5.13%   3.75%

 

The supplemental balance sheet information related to leases for the period is as follows:

 

   At
September 30,
2023
   At
September 30,
2022
 
Operating leases          
Long-term operating right-of-use assets, net of accumulated amortization of $409 and $2,406, respectively  $3,103   $411 
           
Short-term operating lease liabilities  $1,045   $453 
Long-term operating lease liabilities   2,162     
Total operating lease liabilities  $3,207   $453 

 

Maturities of the Company’s lease liabilities are as follows (in thousands):

 

Year Ending  Operating Leases 
2023 (remaining 3 months)  $267 
2024   1,250 
2025   1,446 
2026   496 
Total lease payments   3,459 
Less: Imputed interest/present value discount   (252)
Present value of lease liabilities  $3,207 

 

Rent expense for the nine months ended September 30, 2023 and 2022 was $1,023 and $726, respectively.