Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.22.2
Leases
6 Months Ended
Jun. 30, 2022
Leases [Abstract]  
Leases

Note 12. Leases

 

The Company leases fulfillment centers and other facilities under operating lease arrangements from third parties. The lease terms are generally specified in the respective lease agreement, however certain agreements provide for lease term extensions or early termination options. To determine the period for the estimated future lease payments, the Company evaluates whether it is reasonably certain that it will exercise an extension or termination option at the commencement date. The Company makes payments on a monthly basis for each of its five non-cancelable operating leases, which expire at various times between July 2022 and September 2024. The Company has one lease with a term less than one year for which it is not likely to exercise a renewal option, with future lease commitments totaling less than $0.1 million.

 

To determine the estimated future lease payments, the Company reviews each of its lease agreements to identify the various payment components. For real estate leases, the Company includes only the actual lease components in its determination of future lease payments. Once the estimated future lease payments are determined, the Company uses a discount rate to calculate the present value of the future lease payments. For identified leases, the Company used its incremental borrowing rate to discount the related future payment obligations, which represents the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

 

In determining operating ROU assets and lease liabilities for the Company's existing operating leases upon adoption of the new lease guidance in January 2022 (see Note 2), the Company was required to estimate an appropriate incremental borrowing rate on a fully collateralized basis for the term of the leases. The estimate of this rate requires judgment and considers factors such as interest rates available to the Company on a fully collateralized basis and other corporate index yields for terms similar to its leases.

 

The table below presents the Company's weighted average lease term and discount rate of its operating leases as of the date presented:

 

 

 

June 30,

 

 

2022

Weighted average remaining lease term

 

9 years

Weighted average discount rate

 

7.4%

 

The table below presents total lease cost for the periods presented (in thousands):

 

Lease cost

 

Statement of Operations Location

 

For the Three Months Ended
 June 30, 2022

 

 

For the Six Months Ended
 June 30, 2022

 

Operating lease cost

 

 General and administrative expense

 

$

463

 

 

$

928

 

 

The table below presents the effect of lease payments on the Company's unaudited condensed consolidated statement of cash flows for the periods presented (in thousands):

 

 

 

Six Months Ended June 30,

 

Supplemental cash flow information

 

2022

 

 

2021

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

Operating cash flow for operating leases

 

$

1,305

 

 

$

1,090

 

 

Future lease payments as of June 30, 2022 were as follows (in thousands):

 

Year Ending December 31,

 

Operating Leases

 

2022 (six months)

 

$

941

 

2023

 

 

1,219

 

2024

 

 

533

 

2025

 

 

362

 

2026

 

 

374

 

Thereafter

 

 

2,525

 

Total lease payments

 

 

5,954

 

Less: Amounts representing interest

 

 

(1,376

)

Lease liability

 

$

4,578

 

Future minimum rental payments on operating leases as of December 31, 2021 were as follows (in thousands):

 

 

December 31,

 

Year Ending December 31,

 

2021

 

2022

 

$

2,007

 

2023

 

 

918

 

2024

 

 

181

 

Total

 

$

3,106

 

 

The Company is a sublessor under two non-cancelable sublease agreements. Both subleases are set to expire in January 2023, at which time the respective head leases also expire. Minimum future sublease rental income under the non-cancelable operating subleases as of the date presented are as follows (in thousands):

 

 

 

June 30,

 

 

 

2022

 

2022 (six months)

 

$

357

 

2023

 

 

67

 

Total

 

$

424

 

Sublease rental income totaled $0.3 million and $0.4 million during the three months ended June 30, 2022 and 2021, respectively, and $0.6 million and $0.7 million for the six months ended June 30, 2022 and 2021, respectively.