Leases

9 Months Ended

Sep. 30, 2023

Leases

Leases

Note 8 – Leases

The Company leases certain machinery and equipment with fixed base rent payments and variable costs based on usage. Remaining lease terms for these leases range from less than one year to six years. The Company includes lease extension options, if applicable and reasonably certain to be exercised, in the calculation of the right-of-use asset and lease liabilities. Lifeway includes only fixed payments for lease components in the measurement of the right-of-use asset and lease liability. Variable lease payments are those that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time. There are no residual value guarantees. Lifeway does not currently have leases which meet the finance lease classification as defined under ASC 842.

Lifeway treats contracts as a lease when the contract conveys the right to use a physically distinct asset for a period of time in exchange for consideration, it directs the use of the asset and obtains substantially all the economic benefits of the asset.

Right-of-use assets and lease liabilities are measured and recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Lifeway has elected the practical expedient to combine lease and non-lease components into a single component for all of its leases. When the Company is unable to determine an implicit interest rate, it uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments for those leases. Lifeway includes options to extend or terminate the lease in the measurement of the right-of-use asset and lease liability when it is reasonably certain that it will exercise such options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company does not record leases with an initial term of 12 months or less on the balance sheet. Expense for these short-term leases is recorded on a straight-line basis over the lease term. Total lease expense was $102 and $191 (including short term leases) for the nine months ended September 30, 2023 and 2022, respectively. Total lease expense was $41 and $44 (including short term leases) for the three months ended September 30, 2023 and 2022, respectively.

Future maturities of lease liabilities were as follows:

Year	Operating Leases
Three months ended December 31, 2023	$	22
2024		86
2025		52
2026		29
2027		21
Thereafter		–
Total lease payments		210
Less: Interest		(7	)
Present value of lease liabilities	$	203

The weighted-average remaining lease term for its operating leases was 3.50 years as of September 30, 2023. The weighted average discount rate of its operating leases was 10.08% as of September 30, 2023. Cash paid for amounts included in the measurement of lease liabilities was $70 and $121 for the nine months ended September 30, 2023 and 2022, respectively. Cash paid for amounts included in the measurement of lease liabilities was $24 and $35 for the three months ended September 30, 2023 and 2022, respectively.