Leases

9 Months Ended

Sep. 30, 2023

Leases [Line Items]

Lessee, Operating Leases [Text Block]

Note 9 – Leases

The Company leases administrative and manufacturing facilities through operating lease agreements. The Company has no finance leases as of September 30, 2023.  Our leases include both lease (e.g., fixed payments including rent) and non-lease components (e.g., common area or other maintenance costs). The facility leases include one or more options to renew.  The exercise of lease renewal options is typically at our sole discretion, therefore, the renewals to extend the lease terms are not included in our right of use (“ROU”) assets or lease liabilities as they are not reasonably certain of exercise.  We regularly evaluate the renewal options and, when they are reasonably certain of exercise, we include the renewal period in our lease term.  In April 2023, the Company exercised its 5-year renewal option at its Hazelwood, MO facility.  In connection with the renewal, the Company remeasured its lease liability, which increased the ROU asset and lease liability by $1.6 million on the remeasurement date.

Operating leases result in the recognition of ROU assets and lease liabilities on the Condensed Consolidated Balance Sheets.  ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments.  Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.  As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate at the commencement date to determine the present value of lease payments.  Most real estate leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 5 years or more.  Lease expense is recognized on a straight-line basis over the lease term.  Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets.  The primary leases we enter into with initial terms of 12 months or less are for equipment.

Supplemental information regarding leases:

	September 30 2023
In thousands, unless otherwise noted
Balance Sheet:
ROU assets	$	2,046
Current lease liabilities – operating		471
Non-current lease liabilities - operating		1,600
Total lease liabilities		2,071
Weighted average remaining lease term (years)		4.2
Weighted average discount rate		10.4%
Future minimum lease payments:
Remainder of 2023	$	99
2024		545
2025		560
2026		577
2027		451
Thereafter		414
Total		2,646
Less: Imputed interest		575
Total lease liabilities		2,071
Less: Current lease liabilities		471
Long-term lease liabilities	$	1,600

Supplemental cash flow information regarding leases:

In thousands	For the three months ended September 30, 2023		For the nine months ended September 30, 2023
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	124	$	372
Non-cash activity:
ROU assets obtained in exchange for lease liabilities		-		1,601

Total operating lease expense was $355,000 and $357,000 for the nine months ended September 30, 2023 and 2022, respectively.  Total operating lease expense was $118,000 and $118,000 for the three months ended September 30, 2023 and 2022, respectively.  There was no short-term lease expense for the nine months or three months ended September 30, 2023 and 2022.