Leases and Contingencies

6 Months Ended

Jun. 30, 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 June 30, 2020 and 2019, respectively, or for the six-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.

The operating lease expense was $0.9 million and $0.7 million for the three months ended June 30, 2020 and 2019, respectively, and was $1.7 million and $1.4 million for the six months ended June 30, 2020 and 2019, respectively.

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

	Six months ended June 30,
	2020		2019
Cash paid for amounts included in the measurements of lease liabilities
Operating cash flow used in operating leases	$	1,814	$	1,392
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	-	$	1,490

As of June 30, 2020, the weighted average remaining lease term was 4.1 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 June 30, 2020 (in thousands):

2020 (excluding the six months ended June 30, 2020)	$	1,822
2021		3,670
2022		3,154
2023		1,665
2024		1,234
Thereafter		1,452
Total lease payments	$	12,997
Less: imputed interest		(983)
Total	$	12,014

Other Contingencies

On or about April 30, 2020, the Company became aware that one of its products contained an undeclared milk allergen in the product. 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 completed a voluntary 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 six-month period ended June 30, 2020 to be immaterial to the financial statements. As of June 30, 2020, the Company has concluded the recall program and responded to all government requests. The Company does not expect any significant future financial impact to result from this matter.