Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.19.1
Leases
3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
Leases

5. Leases

 

The Company has one operating lease pertaining to 17,698 square feet of corporate office space in Newark, California pursuant to a lease agreement which commenced January 16, 2014 and was amended on April 16, 2018. At March 31, 2019 the Company’s lease portfolio had a weighted average remaining term of 4.8 years, with an option to extend for an additional 5 years. The lease requires monthly lease payments that are subject to annual increases throughout the lease term. The optional period has not been considered in the determination of the right-of-use assets or lease liabilities associated with this lease as the Company did not consider it reasonably certain it would exercise the option.

 

The Company cannot determine the implicit rate in its lease, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. The Company used an incremental borrowing rate as of the date of adoption for leases that commenced prior to January 1, 2019. The weighted average discount rate for the Company’s lease portfolio is 12.6%.

 

For the three months ended March 31, 2019, the Company incurred $0.1 million of lease costs included in operating expenses in the condensed consolidated statements of income and comprehensive income in relation to its operating lease, a portion of which was variable rent expense and not included within the measurement of the Company’s operating ROU assets and lease liabilities. The variable rent expense consists primarily of the Company’s proportionate share of operating expenses, property taxes, and insurance and is classified as lease expense due to the Company’s election to not separate lease and non-lease components. Short-term lease costs were not material.

 

Rent expense for the three months ended March 31, 2018 was $0.1 million, a portion of which represents immaterial variable rent expense.

 

Supplemental information on the Company’s condensed consolidated balance sheets and statements of cash flow related to leases was as follows (in thousands):

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

2019

 

Balance sheet

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

 

 

$

177

 

 

 

 

 

 

 

 

 

Operating lease liability (Other accrued liabilities)

 

 

 

 

$

357

 

Long-term portion of operating lease liability

 

 

 

 

 

2,053

 

Total operating lease liability

 

 

 

 

$

2,410

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

2019

 

Cash flows

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of

   lease liabilities

 

 

 

 

$

157

 

 

As of March 31, 2019, the maturities of the Company’s operating lease liabilities were as follows (in thousands):

 

 

 

 

 

 

Operating

 

 

 

 

 

 

Leases

 

Year ending December 31,

 

 

 

 

 

 

 

2019 (from April to December)

 

 

 

 

$

471

 

2020

 

 

 

 

 

647

 

2021

 

 

 

 

 

667

 

2022

 

 

 

 

 

686

 

2023

 

 

 

 

 

707

 

Thereafter

 

 

 

 

 

30

 

Total undiscounted future minimum lease payments

 

 

 

 

$

3,208

 

Less: Imputed interest

 

 

 

 

 

798

 

Total operating lease liability

 

 

 

 

$

2,410

 

Less: Current portion of operating lease liability

 

 

 

 

 

357

 

Long-term portion of operating lease liability

 

 

 

 

$

2,053