Quarterly report pursuant to Section 13 or 15(d)

Leasing Arrangements

v3.20.1
Leasing Arrangements
3 Months Ended
Mar. 31, 2020
Leases [Abstract]  
Leasing Arrangements
Leasing Arrangements

Operating Leases

The Company leases its laboratory, research facility and administrative office space under various operating leases. The Company also leases scientific equipment under various finance leases. Following the Business Disposals, the Company has assigned its office leases in North Carolina and New Jersey to Buyer.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, and operating lease liabilities, non-current on its unaudited condensed consolidated balance sheets. Finance leases are included in fixed assets, net of accumulated depreciation and obligations under finance leases.

ROU assets represent the Company's right to use an underlying asset for the lease term and lease obligations represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease obligations are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company's incremental borrowing rate was determined by adjusting its secured borrowing interest rate for the longer-term nature of its leases. The Company's variable lease payments primarily consist of maintenance and other operating expenses from its real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. The operating lease ROU asset also includes any lease payments made and excludes lease incentives incurred. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components. The Company has elected to account for these lease and non-lease components as a single lease component. The Company is also electing not to apply the recognition requirements to short-term leases of twelve months or less and instead will recognize lease payments as expense on a straight-line basis over the lease term.

The components of operating and finance lease expense were as follows for the three months ended March 31, 2020 and 2019, respectively, for continuing operations (in thousands):

 
Three months ended March 31, 2020
 
Three months ended March 31, 2019
Finance lease cost:
 
 
 
Amortization of right-of use assets
$
21

 
$
10

Interest on lease liabilities
3

 
1

Operating lease cost
56

 
44

Short-term lease cost
28

 
30

Variable lease cost
15

 
24

 
$
123

 
$
109


Supplemental cash flow related to leases of the Company's continuing operations was as follows for the three months ended March 31, 2020 and March 31, 2019 (in thousands):

 
Three months ended March 31, 2020
 
Three months ended March 31, 2019
Cash paid amounts included in the measurement of lease liabilities:
 
 
 
Operating cash flows used for operating leases
$
56

 
$
44


Other supplemental information related to leases of the Company's continuing operations was as follows at March 31, 2020 and 2019, respectively:

 
Three months ended March 31, 2020
 
Three months ended March 31, 2019
Weighted average remaining lease term (in years)
 
 
 
Operating leases
0.63

 
1.73

Finance leases
3.13

 
1.89

 
 
 
 
Weighted average discount rate
 
 
 
Operating leases
7.99
%
 
7.96
%
Finance leases
8.24
%
 
10.28
%


At March 31, 2020, future estimated minimum lease payments under non-cancelable operating leases were as follows (in thousands):

 
 
Finance
Leases
 
Operating
Leases
 
Total
2020 (remaining 9 months)
 
$
60

 
$
158

 
$
218

2021
 
39

 
20

 
59

2022
 
31

 
11

 
42

2023
 
31

 
2

 
33

2024
 
7

 

 
7

Total minimum lease payments
 
$
168

 
191

 
359

Less amount representing interest
 
21

 
17

 
38

Present value of net minimum obligations
 
147

 
174

 
321

Less current obligation under finance and operating leases
 
66

 
153

 
219

Long-term obligation under finance and operating leases
 
$
81

 
$
21

 
$
102

Leasing Arrangements
Leasing Arrangements

Operating Leases

The Company leases its laboratory, research facility and administrative office space under various operating leases. The Company also leases scientific equipment under various finance leases. Following the Business Disposals, the Company has assigned its office leases in North Carolina and New Jersey to Buyer.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, and operating lease liabilities, non-current on its unaudited condensed consolidated balance sheets. Finance leases are included in fixed assets, net of accumulated depreciation and obligations under finance leases.

ROU assets represent the Company's right to use an underlying asset for the lease term and lease obligations represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease obligations are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company's incremental borrowing rate was determined by adjusting its secured borrowing interest rate for the longer-term nature of its leases. The Company's variable lease payments primarily consist of maintenance and other operating expenses from its real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. The operating lease ROU asset also includes any lease payments made and excludes lease incentives incurred. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components. The Company has elected to account for these lease and non-lease components as a single lease component. The Company is also electing not to apply the recognition requirements to short-term leases of twelve months or less and instead will recognize lease payments as expense on a straight-line basis over the lease term.

The components of operating and finance lease expense were as follows for the three months ended March 31, 2020 and 2019, respectively, for continuing operations (in thousands):

 
Three months ended March 31, 2020
 
Three months ended March 31, 2019
Finance lease cost:
 
 
 
Amortization of right-of use assets
$
21

 
$
10

Interest on lease liabilities
3

 
1

Operating lease cost
56

 
44

Short-term lease cost
28

 
30

Variable lease cost
15

 
24

 
$
123

 
$
109


Supplemental cash flow related to leases of the Company's continuing operations was as follows for the three months ended March 31, 2020 and March 31, 2019 (in thousands):

 
Three months ended March 31, 2020
 
Three months ended March 31, 2019
Cash paid amounts included in the measurement of lease liabilities:
 
 
 
Operating cash flows used for operating leases
$
56

 
$
44


Other supplemental information related to leases of the Company's continuing operations was as follows at March 31, 2020 and 2019, respectively:

 
Three months ended March 31, 2020
 
Three months ended March 31, 2019
Weighted average remaining lease term (in years)
 
 
 
Operating leases
0.63

 
1.73

Finance leases
3.13

 
1.89

 
 
 
 
Weighted average discount rate
 
 
 
Operating leases
7.99
%
 
7.96
%
Finance leases
8.24
%
 
10.28
%


At March 31, 2020, future estimated minimum lease payments under non-cancelable operating leases were as follows (in thousands):

 
 
Finance
Leases
 
Operating
Leases
 
Total
2020 (remaining 9 months)
 
$
60

 
$
158

 
$
218

2021
 
39

 
20

 
59

2022
 
31

 
11

 
42

2023
 
31

 
2

 
33

2024
 
7

 

 
7

Total minimum lease payments
 
$
168

 
191

 
359

Less amount representing interest
 
21

 
17

 
38

Present value of net minimum obligations
 
147

 
174

 
321

Less current obligation under finance and operating leases
 
66

 
153

 
219

Long-term obligation under finance and operating leases
 
$
81

 
$
21

 
$
102