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Leases

9 Months Ended

Sep. 30, 2023

6. Leases

The Company has an operating lease for its corporate offices and operations facility, as well as certain equipment with a term of 12 months or less. As of September 30, 2023, the Company’s real estate lease has a remaining lease term of approximately 4.08 years, and the lease liability is measured using a discount rate of 6.25%.

Lease expense included in selling, general and administrative expenses on the Company’s unaudited condensed consolidated statements of operations was approximately $0.4 million for both the current quarter and prior year quarter, and approximately $1.2 million for both the current nine months and prior year nine months.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately $0.4 million in both the current quarter and prior year quarter, approximately $1.2 million in the current nine months, and approximately $1.3 million in the prior year nine months.

The Company is currently in discussions with the lessor of the operating lease for the Company’s corporate offices and operations facility, regarding a potential amendment to restructure such lease. In addition, this could include a requirement for the Company to fund a security deposit to the lessor of up to $0.73 million.

Also, the Company was previously a party to an operating lease for its former retail store location, which was closed in 2022. During the nine months ended September 30, 2023, the Company successfully negotiated a settlement with the lessor resulting in the termination of this lease. Under the settlement agreement, the Company paid $0.18 million to the lessor during the nine months ended September 30, 2023. The Company has recognized a liability of $0.11 million for the remaining settlement payment (due to be paid to the lessor in the fourth quarter of 2023) as part of “accounts payable, accrued expenses and other current liabilities” on the condensed consolidated balance sheet as of September 30, 2023. The Company recognized a gain of $0.44 million from this settlement transaction, which is classified within “other operating costs and expenses (income)” in the condensed consolidated statements of operations for the nine months ended September 30, 2023.

As of September 30, 2023, the maturities of lease obligations were as follows:


	Amount
Year	(in thousands)
2023 (October 1 through December 31)	$	388
2024		1,552
2025		1,552
2026		1,552
2027		1,294
Total lease payments		6,338
Less: Discount		757
Present value of lease liabilities		5,581
Current portion of lease liabilities		1,219
Non-current portion of lease liabilities	$	4,362