Item 2.05 Costs Associated with Exit or Disposal Activities.

On December 9, 2022 the Company signed agreements for early exit of its three leaseholds in Sisters, Oregon and the sale of operations equipment and personal property in such facilities. The Company will gain no operational benefit from the leaseholds beginning late December 2022, and will terminate the lease agreements on January 31, 2023. As such, the Company anticipates that it will incur non-cash charges related to the impairment of its right of use assets and factory equipment of up to $5.3 million in the fourth quarter of 2022, as well as related net cash payments of $0.7 million expected to be made over the next 14 months. The amounts of the expected impairment and net cash payments are estimates, and the amounts and timing of actual charges and payments may vary due to a variety of factors.

We expect to incur other costs associated with additional impairments of assets and other related restructuring and exit costs, including cash payments of up to $1.0 million and non-cash charges of up to $2.2 million. These are estimates and are still being evaluated.

Item 2.06 Material Impairments.

The information set forth in Item 2.05 above is hereby incorporated by reference into this Item 2.06.

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