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.