Quarterly report pursuant to Section 13 or 15(d)


9 Months Ended
Sep. 30, 2022
Leases [Abstract]  
Leases Leases
A contract is or contains a lease when, (1) the contract contains an explicitly or implicitly identified asset and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract in exchange for consideration. The Company assesses whether an arrangement is or contains a lease at inception of the contract. For all leases, other than those that qualify for the short-term recognition exemption, the Company recognizes as of the lease commencement date on the balance sheet a liability for its obligation related to the lease and a corresponding asset representing the Company’s right to use the underlying asset over the period of use.

The Company leases its manufacturing center, distribution center, and office space (collectively “Operating Facility”) and certain information technology (“IT”) equipment under non-cancelable operating leases. The Company also leases equipment utilized in the manufacturing process under non-cancelable financing leases. These financing leases include either a bargain purchase option or the equipment reverts ownership to the Company at the end of the lease term.

The Company assesses the expected lease term at lease inception and discounts the lease using a fully-secured, annual incremental borrowing rate (or rate implicit in the lease, if readily determinable), adjusted for time value corresponding with the expected lease term. The Company elected, for all classes of underlying assets, to not apply the balance sheet recognition requirements of ASC 842, Leases, to leases with a term of one year or less, and instead, recognize the lease payments in the income statement on a straight-line basis over the lease term. The Company also elected, for certain classes of underlying assets, to combine lease and non-lease components. The Company elected to combine lease and non-lease components for its Operating Facility, IT equipment and manufacturing equipment leases.

Right-of-use assets and lease liabilities as of September 30, 2022 and December 31, 2021 consist of the following:

September 30, 2022 December 31, 2021
Operating Finance   Operating Finance
Right-of-use assets, net (1)
$ 8,046 $ 932 $ 8,742 $ 208
Lease obligation - current portion (2)
$ 1,544 $ 177 $ 1,166 $ 36
Lease obligation - long-term portion (3)
8,176 664 9,260 159
Total lease obligations $ 9,720 $ 841 $ 10,426 $ 195
Weighted average remaining lease terms (in years) 4.4 5.0 5.2 5.0
Weighted average discount rate 15% 4% 15% 4%

(1)Finance right-of-use assets, net are included in “Other assets” on the consolidated balance sheets.
(2)Finance lease obligation – current portion is included in “Accrued expenses and other current liabilities” on the consolidated balance sheets.
(3)Finance lease obligation – long-term portion is included in “Other long-term liabilities” on the consolidated balance sheets.
The Company’s lease cost is presented below. The Company does not have any short-term leases or leases with variable lease payments. The financing lease cost for the three and nine months ended September 30, 2022 and 2021 was immaterial.

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Operating Lease Cost    
Cost of revenues $ 356 $ 121 $ 878 $ 410
Research and development 77 40 232 110
Selling, general and administrative 230 475 857 1,401
Total operating lease cost $ 663 $ 636 $ 1,967 $ 1,921

The maturities of the Company’s lease liabilities are as follows:

September 30, 2022
Operating Finance
2022 (remainder of year)
$ 687  $ 51 
2023 2,912  205 
2024 2,997  205 
2025 3,043  160 
2026 3,105  128 
Thereafter 518  166 
Total future minimum lease payments 13,262  915 
Less: imputed interest (3,542) (74)
Total maturities $ 9,720  $ 841