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

9 Months Ended

Sep. 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 is

one

 contractual agreement related to equipment improvements at the Luverne Facility that was 

not

recognized as of

September 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 asset and related lease liability relating to this contract was approximately

$2.0

 million as of

September 30, 2020.

There are

two

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

not

recognized as of

December 31, 2019

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

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 September 30,
	2020		2019
Lease Cost
Financing lease cost	$	1	$	—
Operating lease cost		11		435
Short-Term lease cost		376		110
Variable lease cost		36		21
Total lease cost	$	424	$	566

	Nine Months Ended September 30,
	2020		2019
Lease Cost
Financing lease cost	$	3	$	—
Operating lease cost		545		1,166
Short-Term lease cost		556		315
Variable lease cost		108		86
Total lease cost	$	1,212	$	1,567
Other Information
Cash paid for the measurement of lease liabilities:
Operating cash flows from finance lease	$	2	$	—
Operating cash flows from operating leases		545		1,166
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)		53		—
Weighted-average remaining lease term, operating leases (months)		10		22
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

September 30, 2020 (

in thousands):

Year Ending December 31,	Financing Leases			Operating Leases
2020 (remaining)	$	1		77
2021		4			180
2022		4			—
2023		4			—
2024 and thereafter		5			—
Total		18			257
Less: Amounts representing present value discounts		(6	)	(10		)
Total lease liabilities		12		247