Leases, Right-to-Use Assets and Related Liabilities

The Company enters into various arrangements which constitute a lease as defined by Accounting Standards Codification ("ASC")

842,

Leases,

as part of its ongoing business activities and operations. Leases represent a contract or part of a contract that conveys the right to control the use of identified property, plant or equipment (an identified asset) for a period of time in exchange for consideration. Such contracts result in both (a) right-to-use assets, which represent the Company’s right to use an underlying asset for the term of the contract; and (b) a corresponding lease liability which represents the Company’s obligation to make the lease payments arising from the contract, measured on a discounted basis.

The contracts for the Company are comprised of facility, equipment and transportation leases necessary to conduct the Company’s day-to-day operations for which the Company maintains control of right-to-use assets and incurs the related liabilities. The facility lease includes variable payments for common area maintenance. In addition, the Company has

one

financing lease for certain office equipment which is included in "

Loans payable - other

" on the Consolidated Balance Sheets.

There are

two

contractual agreements related to equipment improvements at the Luverne Facility that were

not

recognized as of

March 31, 2020

as a result of operating contingencies which must be satisfied before the Company is obligated under the terms of the contract. The total estimated fair value of unrecognized right-to-use assets and related lease liabilities relating to these contracts was approximately

$3.0

million as of

March 31, 2020

and

December 31, 2019.

The following table presents the (a) costs by lease category and (b) other quantitative information relating to the Company’s leases (dollars in thousands):

	Three Months Ended
	March 31, 2020			March 31, 2019
Lease Cost
Financing lease cost	$	1		$	—
Operating lease cost		471			345
Short-Term lease cost		13			17
Variable lease cost		32			33

Total lease cost	$	517		$	395

Other Information
Cash paid for the measurement of lease liabilities:
Operating cash flows from finance lease	$	1		$	—
Operating cash flows from operating leases		471			345
Right-to-use asset obtained in exchange for new financing lease liability		13			—
Weighted-average remaining lease term, financing lease (months)		59			—
Weighted-average remaining lease term, operating leases (months)		18			20
Weighted-average discount rate - financing lease		21	%		—
Weighted-average discount rate - operating leases		12	%		12	%

The table below shows the future minimum payments under non-cancelable financing and operating leases at

March

31,

2020

(in thousands):

Year Ending December 31,	Financing Leases			Operating Leases

2020 (remaining)	$	3		545
2021		4			336
2022		4			—
2023		4
2024 and thereafter		5
Total		20			881
Less: Amounts representing present value discounts		(7	)	(64		)

Total lease liabilities		13		817