XML 28 R18.htm IDEA: XBRL DOCUMENT

LEASES

9 Months Ended

Sep. 30, 2022

NOTE (12) LEASES

The Company categorize leases at their inception as either operating or financing leases. Leases include various office and warehouse facilities which have been categorized as operating leases while certain equipment is leased under financing leases.

During March 2022, The Company entered into a lease agreement for approximately 4,162 square feet of office space for the operations of Kestrel Labs, Inc. in Boulder, Colorado. The lease began on April 1, 2022 and will run through April 1, 2025. The rent and common area maintenance charges are equal to $17.00 per square foot with annual increases of 3%. Upon lease commencement, the Company recorded an operating lease liability and corresponding right-of-use asset for $0.2 million each.

The Company’s operating leases do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring the lease liability. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The Company’s weighted average borrowing rate was determined to be 4.05% for its operating lease liabilities. The Company’s equipment lease agreements have a weighted average rate of 9.39% which was used to measure its finance lease liability. The weighted average remaining lease term was 4.90 years and 2.85 years for operating and finance leases, respectively, as of September 30, 2022.

As of September 30, 2022, the maturities of the Company’s future minimum lease payments were as follows (in thousands):


	Operating Lease Liability		Finance Lease Liability
October 1, 2022 through December 31, 2022		1,030		38
2023		3,055		152
2024		3,571		116
2025		3,586		76
2026		3,362		15
2027		3,150		—
Thereafter		1,064		—
Total undiscounted future minimum lease payments	$	18,818	$	397
Less: Difference between undiscounted lease payments and discounted lease liabilities:		(1,939)		(50)
Total lease liabilities	$	16,879	$	347

The components of lease expenses were as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Lease cost:
Operating lease cost:
Total operating lease expense	$	1,125	$	1,072	$	3,344	$	2,415
Finance lease cost:
Total amortization of leased assets		30		29		89		78
Interest on lease liabilities		9		11		28		31
Total net lease cost	$	1,164	$	1,112	$	3,461	$	2,524

Operating lease costs related to our manufacturing and warehouse facility were included in cost of sales while all other operating lease costs were included in general and administrative expenses on the consolidated statement of operations.