• Filing Date: 2020-11-03
  • Form Type: 10-Q
  • Description: Quarterly report
v3.20.2
Leases
9 Months Ended
Sep. 30, 2020
Leases [Abstract]  
Leases 5. LEASES

The Company evaluates all of its contracts to determine whether it is or contains a lease at inception. The Company reviews its contracts for options to extend, terminate or purchase any right of use assets and accounts for these, as applicable, at inception of the contract. Lease renewal options are not recognized as part of the lease liability until the Company determines it is reasonably certain it will exercise any applicable renewal options. The Company has not recorded any liability for renewal options in these Interim Financial Statements. The useful lives of leased assets as well as leasehold improvements, if any, are limited by the expected lease term.

Operating Leases

The Company’s operating lease activities primarily consist of leases for office space in the U.S., the United Kingdom and Germany. Most of these leases include options to renew, with renewal terms generally ranging from one to seven years. The exercise of lease renewal options is at the Company’s sole discretion. Certain of the Company’s operating lease agreements include variable lease costs that are based on common area maintenance and property taxes. The Company expenses these payments as incurred. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental balance sheet information as of September 30, 2020 for the Company’s operating leases is as follows:

(In thousands)

NON-CURRENT ASSETS:

Right of use assets, net

$

791

Total lease assets

$

791

CURRENT LIABILITIES:

Accrued expenses

$

489

NON-CURRENT LIABILITIES:

Other non-current liabilities

442

Total lease liabilities

$

931

The Company’s operating lease cost for the three and nine months ended September 30, 2020 was $113,000 and $338,000, respectively, and is included in general and administrative expenses in its condensed consolidated statement of operations. The Company’s operating lease cost for the three and nine months ended September 30, 2019 was $117,000 and $359,000, respectively, and is included in general and administrative expenses in its condensed consolidated statement of operations.

As of September 30, 2020, a schedule of maturity of lease liabilities under all of the Company’s operating leases is as follows:

Years Ending December 31

(In thousands)

2020 (remaining)

$

145

2021

459

2022

159

2023

159

2024

159

Thereafter

Total

1,081

Less amount representing interest

(150)

Present value of minimum lease payments

931

Less current portion

(489)

Non-current portion

$

442

Cash paid for operating leases was $464,000 during the nine months ended September 30, 2020. No right of use assets were obtained in exchange for operating leases for the nine months ended September 30, 2020.

As of September 30, 2020, the weighted average remaining lease terms of the Company’s operating leases was 3.0 years. The weighted average discount rate used to determine the lease liabilities was 10.1%.

Finance Leases

The Company’s finance lease activities primarily consist of leases for office equipment and automobiles. Property and equipment leases are capitalized at the lesser of fair market value or the present value of the minimum lease payments at the inception of the leases using the Company’s incremental borrowing rate. The Company’s finance lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental balance sheet information as of September 30, 2020 and December 31, 2019 for the Company’s finance leases is as follows:

September 30,

December 31,

2020

2019

(In thousands)

NON-CURRENT ASSETS:

Property and equipment, net

$

783

$

414

Total lease assets

$

783

$

414

CURRENT LIABILITIES:

Finance lease obligations

$

219

$

255

NON-CURRENT LIABILITIES:

Finance lease obligations — less current portion

452

94

Total lease liabilities

$

671

$

349

Depreciation expense associated with property and equipment under finance leases was approximately $101,000 and $83,000 for the three months ended September 30, 2020 and 2019, respectively. Depreciation expense associated with property and equipment under finance leases was approximately $294,000 and $236,000 for the nine months ended September 30, 2020 and 2019, respectively. Interest expense associated with finance leases was $14,000 and $9,000 for the three months ended September 30, 2020 and 2019, respectively. Interest expense associated with finance leases was $33,000 and $26,000 for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, a schedule of maturity of lease liabilities under finance leases, together with the present value of minimum lease payments, is as follows:

Years Ending December 31

(In thousands)

2020 (remaining)

$

103

2021

335

2022

208

2023

80

Total

726

Less amount representing interest

(55)

Present value of minimum lease payments

671

Less current portion

(219)

Non-current portion

$

452

Cash paid for finance leases was $486,000 during the nine months ended September 30, 2020. The Company acquired $776,000 of property and equipment in exchange for finance leases during the nine months ended September 30, 2020.

As of September 30, 2020, the weighted average remaining lease terms of the Company’s financing leases was 1.6 years. The weighted average discount rate used to determine the financing lease liabilities was 8.7%.