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LEASES | 9 Months Ended
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Sep. 30, 2024
Leases [Abstract] |
LEASES | LEASES The Company leases certain equipment, manufacturing, warehouse and office space under non-cancellable operating leases with expirations through 2027 under which it is responsible for related maintenance, taxes and insurance. As of March 25, 2022, the terms of our real estate operating lease have been modified beginning July 1, 2022 and extended through 2027. Effective July 1, 2024, our warehouse and office lease was amended to reduce the rentable square feet from 62,335 square feet to 29,692 square feet and the rent expenses were decreased in proportion to the reduction in rentable square. The Company recorded this as a lease modification in accordance with ASC 842 Leases (“ASC 842”)and recorded a reduction to the right of use asset and lease liability of approximately $395 thousand using an incremental borrowing rate of approximately 13.64%. The Company recognized a gain on the lease modification of $63 thousand which was recorded as other income in the Statement of Operations. Prior to the lease modification, the present value of the lease obligations for the lease was calculated using an incremental borrowing rate of 16.96%, which was the Company’s blended borrowing rates (including interest, annual facility fees, collateral management fees, bank fees and other miscellaneous lender fees) on its revolving lines of credit with Crossroads Financial Group, LLC (as described below in Note 6, “Debt”) and Factors Southwest L.L.C. (as described below in Note 6, “Debt”). The weighted average remaining lease term for the operating leases is 2.8 years. Components of the operating lease costs recognized in net loss were as follows (in thousands):
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Operating lease cost (income) |  |  |  |  |  |  |
Lease cost | 72 |  |  | 122 |  |  | 267 |  |  | 354 |
Total lease cost, net | $ | 72 |  |  | $ | 122 |  |  | $ | 267 |  |  | $ | 354 |
Supplemental balance sheet information related to the Company’s operating and finance leases as of September 30, 2024 and December 31, 2023 are as follows (in thousands):
| September 30, 2024 |  | December 31, 2023
Operating Leases |  |  |
Operating lease right-of-use assets | $ | 408 |  |  | $ | 899 |
Operating lease liabilities | $ | 441 |  |  | $ | 1,021 |
The maturities of lease liabilities under operating leases by years at September 30, 2024 are as follows (in thousands):
|  | Operating Leases |  |  |
October 2024 to September 2025 |  | $ | 197 |  |  |  |
October 2025 to September 2026 |  | 185 |  |  |  |
October 2026 to September 2027 |  | 141 |  |  |  |
Total future undiscounted lease payments |  | 523 |  |  |  |
Less: interest |  | 82 |  |  |  |
Present Value of Lease Liabilities |  | $ | 441 |  |  |  |
Supplemental cash flow information related to leases for the three and nine months ended September 30, 2024 and 2023, was as follows (in thousands):
| Three months ended September 30, |  | Nine months ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Supplemental cash flow information |  |  |  |  |  |  |
Cash paid, net, for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |
Operating cash flows from operating leases | $ | 94 |  |  | $ | 97 |  |  | $ | 281 |  |  | $ | 286 |
LEASES | LEASES The Company leases certain equipment, manufacturing, warehouse and office space under non-cancellable operating leases with expirations through 2027 under which it is responsible for related maintenance, taxes and insurance. As of March 25, 2022, the terms of our real estate operating lease have been modified beginning July 1, 2022 and extended through 2027. Effective July 1, 2024, our warehouse and office lease was amended to reduce the rentable square feet from 62,335 square feet to 29,692 square feet and the rent expenses were decreased in proportion to the reduction in rentable square. The Company recorded this as a lease modification in accordance with ASC 842 Leases (“ASC 842”)and recorded a reduction to the right of use asset and lease liability of approximately $395 thousand using an incremental borrowing rate of approximately 13.64%. The Company recognized a gain on the lease modification of $63 thousand which was recorded as other income in the Statement of Operations. Prior to the lease modification, the present value of the lease obligations for the lease was calculated using an incremental borrowing rate of 16.96%, which was the Company’s blended borrowing rates (including interest, annual facility fees, collateral management fees, bank fees and other miscellaneous lender fees) on its revolving lines of credit with Crossroads Financial Group, LLC (as described below in Note 6, “Debt”) and Factors Southwest L.L.C. (as described below in Note 6, “Debt”). The weighted average remaining lease term for the operating leases is 2.8 years. Components of the operating lease costs recognized in net loss were as follows (in thousands):
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Operating lease cost (income) |  |  |  |  |  |  |
Lease cost | 72 |  |  | 122 |  |  | 267 |  |  | 354 |
Total lease cost, net | $ | 72 |  |  | $ | 122 |  |  | $ | 267 |  |  | $ | 354 |
Supplemental balance sheet information related to the Company’s operating and finance leases as of September 30, 2024 and December 31, 2023 are as follows (in thousands):
| September 30, 2024 |  | December 31, 2023
Operating Leases |  |  |
Operating lease right-of-use assets | $ | 408 |  |  | $ | 899 |
Operating lease liabilities | $ | 441 |  |  | $ | 1,021 |
The maturities of lease liabilities under operating leases by years at September 30, 2024 are as follows (in thousands):
|  | Operating Leases |  |  |
October 2024 to September 2025 |  | $ | 197 |  |  |  |
October 2025 to September 2026 |  | 185 |  |  |  |
October 2026 to September 2027 |  | 141 |  |  |  |
Total future undiscounted lease payments |  | 523 |  |  |  |
Less: interest |  | 82 |  |  |  |
Present Value of Lease Liabilities |  | $ | 441 |  |  |  |
Supplemental cash flow information related to leases for the three and nine months ended September 30, 2024 and 2023, was as follows (in thousands):
| Three months ended September 30, |  | Nine months ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Supplemental cash flow information |  |  |  |  |  |  |
Cash paid, net, for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |
Operating cash flows from operating leases | $ | 94 |  |  | $ | 97 |  |  | $ | 281 |  |  | $ | 286 |

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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