Leases and Contingencies

3 Months Ended

Mar. 31, 2020

Leases and Contingencies [Abstract]

Leases and Contingencies

5. LEASES AND CONTINGENCIES

Operating Leases

The Company has operating leases for office and warehouse space and certain equipment. In certain of the Company’s lease agreements, the rental payments are adjusted periodically based on defined terms within the lease. The Company

did not have any finance leases as of March 31, 2020 and 2019, respectively, or for the three-month periods then ended, respectively.

Our leases relating to office and warehouse space have terms of 36 months to 122 months. Our leases relating to equipment have lease terms of 60 to 203 months, with some of them having clauses relating to automatic renewal.

The Company’s warehouse agreement also contains non-lease components, in the form of payments towards variable logistics services and labor charges, which the Company is obligated to pay based on the services consumed by it. Such amounts are not included in the measurement of the lease liability but will be recognized as expense when they are incurred.

For the three months ended March 31, 2020 and 2019, respectively, the operating lease expense was $0.8 million and $0.7 million, respectively.

Supplemental cash flow information related to the Company’s operating leases were as follows (in thousands):

	Three months ended March 31,
	2020		2019
Cash paid for amounts included in the measurements of lease liabilities
Operating cash flow from operating leases	$	906	$	663
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	-	$	1,490

As of March 31, 2020, the weighted average remaining lease term was 4.3 years and the weighted average discount rate was 3.7%.

The following table presents the maturity of the Company’s operating lease liabilities as of March 31, 2020 (in thousands):

2020 (excluding the three months ended March 31, 2020)	$	2,730
2021		3,670
2022		3,154
2023		1,665
2024		1,234
Thereafter		1,452
Total lease payments	$	13,905
Less: imputed interest		(1,097)
Total	$	12,808

Other Contingencies

On or about April 30, 2020 the Company became aware that one of its products may contain undeclared traces of milk. The sale of this product occurred during the first quarter of 2020 and the first part of the second quarter of 2020. The Company has initiated a recall of the specific lots of this product that were impacted and notified the U.S. Food and Drug Administration, as required. The Company has considered the impact of the recall to our first quarter results and has concluded that the effects are immaterial to the financial statements. The Company will continue to monitor the effects of the recall and are prepared to record any necessary adjustments during the second quarter of 2020 as facts and circumstances become more concrete.