SeaChange International, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Operating Leases

Operating Leases

9 Months Ended

Oct. 31, 2022

The Company has operating leases for facilities expiring at various dates through 2025.

The components of lease expense included in the condensed consolidated statements of operations and comprehensive loss are as follows:


	For the Three Months Ended October 31,		For the Nine Months Ended October 31,
	2022		2022
	(Amounts in thousands)
Operating lease cost	$	111	$	381
Short term lease cost, net		3		11
Total lease cost	$	114	$	392

Supplemental balance sheet information related to the Company’s operating leases was as follows:


	As of October 31, 2022			As of January 31, 2022
	(Amounts in thousands)
Operating lease right-of-use assets	$	1,392		$	2,031

Current portion, operating lease liabilities		652			762
Operating lease liabilities, long term		787			1,361
Total operating lease liabilities	$	1,439		$	2,123

Weighted average remaining lease term (years)		2.3			3.0
Weighted average incremental borrowing rate		5.0	%		5.0	%

Supplemental cash flow information related to the Company’s leases was as follows:


	For the Three Months Ended October 31,				For the Nine Months Ended October 31,
	2022		2021		2022		2021
	(Amounts in thousands)				(Amounts in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	123	$	218	$	430	$	951

The current portion, operating lease liabilities is included as a component of accrued expenses in the condensed consolidated balance sheets.

Future minimum lease payments for operating leases, with initial or remaining terms in excess of one year as of October 31, 2022 are as follows:


	Payments for Operating Leases
For the Fiscal Years Ended January 31,	(Amounts in thousands)
2023	$	165
2024		670
2025		691
Total lease payments		1,526
Less interest		87
Total operating lease liabilities	$	1,439

In the first nine months of fiscal 2022, the Company entered into a sublease termination agreement (the “Lease Termination Agreement”) with respect to its former headquarters in Waltham, Massachusetts. In connection to the Lease Termination Agreement, the Company agreed to pay the sublandlord a total of $0.4 million in termination payments for the nine months ended October 31, 2021. The Company also wrote off all related operating lease right-of-use assets and liabilities as of the termination date, resulting in a $0.3 million non-cash gain, which partially offset the loss on termination payments. The net $0.1 million loss on lease termination is reported as a component of severance and restructuring expense on the condensed consolidated statements of operations and comprehensive loss for the nine months ended October 31, 2021. Prior to the execution of the Lease Termination Agreement, the sublease had been scheduled to expire in February 2025.

The Company has entered into four operating sublease agreements (collectively, the “Subleases”) with respect to part of its existing Poland facility lease (the “Head Lease”), two in fiscal 2022 and two in fiscal 2023. The Company accounted for the Head Lease and the Subleases as separate contracts and there was no effect on the right-of-use asset or lease liability associated with the Head Lease. One of the Subleases entered into fiscal 2022 ended during the three months ended October 31, 2022. The remaining Subleases entered into fiscal 2022 and 2023 have effective dates ranging from less than one year to more than two years from October 31, 2022, respectively. The Head Lease rent expense is presented net of income related to the Subleases and reported as a component of operating expenses on the condensed consolidated statements of operations and comprehensive loss. The Company recorded $66 thousand and $170 thousand of income related to the Subleases for the three and nine months ended October 31, 2022, respectively, and $32 thousand of sublease income for the three and nine months ended October 31, 2021.