Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.23.3
Leases
9 Months Ended
Sep. 30, 2023
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 not expected to be renewed, and instead, recognize the lease payments in the income statement on a straight-line basis over the lease term. 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, 2023 and December 31, 2022 consist of the following:

September 30, 2023 December 31, 2022
Operating Finance   Operating Finance
Assets
Right-of-use assets, net (1)
$ 6,718 $ 928 $ 7,735 $ 893
Liabilities        
Lease obligation - current portion (2)
$ 1,913 $ 212 $ 1,649 $ 179
Lease obligation - long-term portion (3)
6,263 586 7,735 619
Total lease obligations $ 8,176 $ 798 $ 9,384 $ 798
Weighted average remaining lease terms (in years) 3.4 4.1 4.2 4.8
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, 2023 and 2022 was immaterial.

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Operating Lease Cost    
Cost of revenues $ 404 $ 356 $ 1,211 $ 878
Research and development 76 77 228 232
Selling, general and administrative 183 230 548 857
Total operating lease cost $ 663 $ 663 $ 1,987 $ 1,967

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

September 30, 2023
Operating Finance
2023 (remainder of year)
$ 733  $ 59 
2024 2,997  237 
2025 3,043  192 
2026 3,105  160 
2027 518  113 
Thereafter —  95 
Total future minimum lease payments 10,396  856 
Less: imputed interest (2,220) (58)
Total maturities $ 8,176  $ 798 
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 not expected to be renewed, and instead, recognize the lease payments in the income statement on a straight-line basis over the lease term. 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, 2023 and December 31, 2022 consist of the following:

September 30, 2023 December 31, 2022
Operating Finance   Operating Finance
Assets
Right-of-use assets, net (1)
$ 6,718 $ 928 $ 7,735 $ 893
Liabilities        
Lease obligation - current portion (2)
$ 1,913 $ 212 $ 1,649 $ 179
Lease obligation - long-term portion (3)
6,263 586 7,735 619
Total lease obligations $ 8,176 $ 798 $ 9,384 $ 798
Weighted average remaining lease terms (in years) 3.4 4.1 4.2 4.8
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, 2023 and 2022 was immaterial.

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Operating Lease Cost    
Cost of revenues $ 404 $ 356 $ 1,211 $ 878
Research and development 76 77 228 232
Selling, general and administrative 183 230 548 857
Total operating lease cost $ 663 $ 663 $ 1,987 $ 1,967

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

September 30, 2023
Operating Finance
2023 (remainder of year)
$ 733  $ 59 
2024 2,997  237 
2025 3,043  192 
2026 3,105  160 
2027 518  113 
Thereafter —  95 
Total future minimum lease payments 10,396  856 
Less: imputed interest (2,220) (58)
Total maturities $ 8,176  $ 798