REORGANIZATION

9 Months Ended

Sep. 30, 2022

Restructuring and Related Activities [Abstract]

5. REORGANIZATION

During the nine month period ended September 30, 2022, the Company undertook a number of reorganization initiatives:

Closure of Phoenix Aluminum Manufacturing Facility (the “Phoenix Facility”)

On February 22, 2022, we commenced the process of closing our Phoenix Facility, shifting related manufacturing to both our Savannah and Calgary aluminum manufacturing facilities. The closure of the Phoenix Facility was substantially completed in the second quarter of 2022. The Company entered into a sublease arrangement during the second quarter of 2022, commencing July 1, 2022, which exceeds the contractual lease commitments under the Right of Use assets.

Workforce Reductions, Board and Management Changes

In February and July of 2022, we announced our intention to eliminate a portion of our salaried workforce including manufacturing and office positions along with other cost reduction initiatives. The Company’s Board of Directors was reconstituted following a contested proxy contest in April 2022 which was deemed a change of control under the Company’s insurance policy resulting in additional insurance expenditures. Further, the Company made changes to several executive officer roles during the nine months ended September 30, 2022, which resulted in incurring certain termination benefits and recruitment costs.

Temporary Suspension of Operations at Rock Hill, South Carolina (the "Rock Hill Facility")

On August 23, 2022, we announced the temporary suspension of operations at our Rock Hill Facility, shifting related manufacturing to our Calgary manufacturing facility.

Reorganization costs incurred:


	For the Three Months Ended			For the Nine Months Ended
	September 30, 2022			September 30, 2022
Termination benefits		2,843			6,870
Insurance costs on change of control		-			3,676
Phoenix Facility closure		-			853
Rock Hill temporary suspension of operations		144			144
Other costs		439			738
Total reorganization costs		3,426			12,281

	For the Three Months Ended			For the Nine Months Ended
	September 30, 2022			September 30, 2022
Opening reorganization costs in accounts payable and accrued liabilities		1,555			-
Reorganization expense		3,426			12,281
Reorganization costs paid		(3,228	)		(10,528	)
Reorganization costs in accounts payable and accrued liabilities at September 30, 2022		1,753			1,753

Of the $1.8 million payable, $1.5 million relates to termination benefits and $0.3 million relates to other reorganization costs.

Discontinuation of Reflect Product Line and Other Charges Incurred

In August 2022, the Company discontinued the Reflect and other product lines, resulting in a one time inventory write-down of $1.0 million, and an acceleration of amortization expense associated with ICE development for Reflect of $1.0 million in cost of sales.

Additionally, the Company accelerated the depreciation of certain items of property, plant and equipment associated with the closure of the Phoenix Facility resulting in an additional $1.1 million of depreciation and amortization incurred in the first quarter of 2022.

These costs were included in cost of sales:


	For the Three Months Ended		For the Nine Months Ended
	September 30, 2022		September 30, 2022
Accelerated depreciation and amortization associated with closure of the Phoenix Facility		-		1,054
Accelerated amortization associated with product line discontinuation		1,019		1,019
Provision for inventory of discontinued product lines		1,035		1,035
Incremental cost of sales		2,054		3,108