Note 4 - Leases, Right-to-use Assets and Related Liabilities

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

4.

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

June 30, 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

June 30, 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 June 30,
	2020		2019
Lease Cost
Financing lease cost	$	1	$	—
Operating lease cost		63		386
Short-Term lease cost		10		15
Variable lease cost		40		32
Total lease cost	$	114	$	433

	Six Months Ended June 30,
	2020			2019
Lease Cost
Financing lease cost	$	2		$	—
Operating lease cost		534			731
Short-Term lease cost		23			32
Variable lease cost		72			65
Total lease cost	$	631		$	828
Other Information
Cash paid for the measurement of lease liabilities:
Operating cash flows from finance lease	$	2		$	—
Operating cash flows from operating leases		534			731
Finance cash flows from finance lease		1			—
Right-to-use asset obtained in exchange for new financing lease liability		13			—
Weighted-average remaining lease term, financing lease (months)		56			—
Weighted-average remaining lease term, operating leases (months)		13			25
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

June 30, 2020 (

in thousands):

Year Ending December 31,	Financing Leases			Operating Leases
2020 (remaining)	$	2		193
2021		4			178
2022		4			—
2023		4			—
2024 and thereafter		5			—
Total		19			371
Less: Amounts representing present value discounts		(7	)	(18		)
Total lease liabilities		12		353