Right-of-Use Assets and Lease Obligations

3 Months Ended

Mar. 31, 2023

Right-of-Use Assets and Lease Obligations

The Company leases all realty used as its production and warehouse facilities, corporate headquarters, commercialization operations center and research and laboratory facilities. None of these three leases include the characteristics specified in ASC 842, Leases, that require classification as financing leases and, accordingly, these leases are accounted for as operating leases. These leases, as amended, provide remaining terms between 5.0 and 10.5 years, including renewal options expected to be exercised to extend the lease periods.

The Company does not recognize a right-to use asset and lease liability for short-term leases, which have terms of 12 months or less on its consolidated balance sheet. For longer-term lease arrangements that are recognized on the Company's consolidated balance sheet, the right-of-use asset and lease liability is initially measured at the commencement date based upon the present value of the lease payments due under the lease. These payments represent the combination of the fixed lease and fixed non-lease components that are due under the arrangement. The costs associated with the Company's short-term leases, as well as variable costs relating to the Company's lease arrangements, are not material to the Company's financial results.

The implicit interest rates of the Company's lease arrangements are generally not readily determinable and as such, the Company applies an incremental borrowing rate, which is established based upon the information available at the lease commencement date, to determine the present value of lease payments due under an arrangement. Measurement of the operating lease liability reflects a range of an estimated discount rate of 14.8% to 15.6% applied to minimum lease payments, including expected renewals, based on the incremental borrowing rate experienced in the Company’s collateralized debt refinancing.

The Company's lease costs are recorded in manufacture and supply, research and development and selling, general and administrative expenses in its Consolidated Statements of Operations and Comprehensive Income (Loss). For the three-months ended March 31, 2023, total operating lease expenses totaled $418, including variable lease expenses such as common area maintenance and operating costs of $108. For the three-month period ended March 31, 2022, total operating lease expenses totaled $419, including variable lease expenses such as common area maintenance and operating costs of $96, respectively.

Maturities of the Company’s operating lease liabilities are as follows:


Remainder of 2023	$	903
2024	1,230
2025	1,266
2026	1,300
2027 and thereafter	6,319
Total future lease payments	11,018
Less: imputed interest	(4,984)
Total operating lease liabilities	$	6,034