Quarterly report pursuant to Section 13 or 15(d)


9 Months Ended
Sep. 30, 2020
Leases [Abstract]  



The Company has two operating lease agreements for its warehouse and office spaces with one have a remaining lease term of 2.9 years and the other 2.4 years. The Company also has another storage facility on a twelve-month lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Rent expense is recognized on a straight-line basis over the lease term.


Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.


The components of rent expense and supplemental cash flow information related to leases for the period are as follows:



Nine Months

September 30, 2020


Nine Months

September 30, 2019

Lease Cost                
Operating lease cost (of which $74 is included in general and administration and $451 is included in cost of sales in the Company’s statement of operations for the nine months ended September 30, 2020, and for the same period in 2019, respectively)   $ 525     $ 525  
Other Information                
Weighted average remaining lease term – operating leases (in years)     2.7       3.7  
Average discount rate – operating leases     3.75 %     3.75 %


The supplemental balance sheet information related to leases for the period is as follows:


September 30, 2020
December 31, 2019
Operating leases                
Long-term right-of-use assets, net of amortization of $89 and $155, respectively   $ 1,721     $ 2,187  
Short-term operating lease liabilities   $ 657     $ 618  
Long-term operating lease liabilities     1,162       1,660  
Total operating lease liabilities   $ 1,819     $ 2,278  


Maturities of the Company’s lease liabilities are as follows (in thousands):


Year Ending   Operating Leases  
2020     168  
2021     721  
2022     747  
2023     272  
Total lease payments     1,908  
Less: Imputed interest/present value discount     (89 )
Present value of lease liabilities   $ 1,819  


Rent expense for the nine months ended September 30, 2020 and 2019 was $604 and $602, respectively.