Annual report pursuant to Section 13 and 15(d)

Lease Commitments

v3.21.1
Lease Commitments
12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Lease Commitments Lease Commitments
Operating Leases

The Company leases its laboratory, research facility and administrative office space under various operating leases. Following the Business Disposals, the Company assigned its office leases in North Carolina and New Jersey to the Buyer. At
December 31, 2020, the Company has approximately 5,800 square feet in Hershey, Pennsylvania and 1,959 square feet in Bundoora, Australia. The Company has escalating lease agreements for its Pennsylvania and Australia spaces, which expire in January 2022 and June 2021, respectively. These leases require monthly rent with periodic rent increases. The terms of the Company's former New Jersey lease required that a $350 thousand security deposit for the facility be held in a stand by letter of credit in favor of the landlord (see Note 7). In addition, under the assignment of leases related to the Company's New Jersey headquarters, the Buyer became obligated to replace the $350 thousand letter of credit held by the New Jersey landlord and secured by the Company's cash collateral in August 2019; however, the letter of credit was not replaced until April 2020. The cash collateral was released on May 20, 2020.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, obligations under operating leases, current portion, and obligations under operating leases, less current portion on its Consolidated Balance Sheets.

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 Company did not enter into any significant operating leases during the year ended December 31, 2020 and 2019. The Company remeasured the remaining life of its Pennsylvania lease during 2020, resulting in an increase in its ROU asset and related lease liability of $264 thousand.

Finance Leases

The Company also leases scientific equipment under various finance leases, which have been capitalized at the present value of the minimum lease payments. Finance leases are included in fixed assets, net of accumulated depreciation and obligations under finance leases. The equipment under these finance leases had a cost of $272 thousand and accumulated depreciation of $161 thousand, as of December 31, 2020 and 2019. The amortization of equipment under finance leases is recorded in depreciation expense.

The components of operating and finance lease expense were as follows for the years ended December 31, 2020 and 2019 for continuing operations (in thousands):
2020 2019
Finance lease cost:
Amortization of right-of use assets
$ 56  $ 35 
Interest on lease liabilities
10  13 
Operating lease cost 318  220 
Short-term lease cost 129  109 
Variable lease cost 60  55 
$ 573  $ 432 
Supplemental cash flow related to operating and finance leases of the Company's continuing operations was as follows for the year ended December 31, 2020 and 2019 (in thousands):

2020 2019
Cash paid amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases $ 318  $ 220 
 Financing cash flows used for finance leases $ 94  $ 72 

Minimum future lease payments under all finance and operating leases as of December 31, 2020 are as follows (in thousands):
 
Finance
Leases
Operating
Leases
Total
December 31,
2021 $ 41  $ 234  $ 275 
2022 35  31  66 
2023 36  39 
2024 — 
Total minimum lease payments 121  268  389 
Less amount representing interest 14  13  27 
Present value of net minimum obligations 107  255  362 
Less current obligation under finance and operating leases 35  223  258 
Long-term obligation under finance and operating leases $ 72  $ 32  $ 104 

Other supplemental information related to operating and finance leases of the Company's continuing operations was as follows at December 31, 2020 and 2019:
2020 2019
Weighted average remaining lease term (in years):
Operating leases 1.15 0.99
Finance leases 3.13 3.35
Weighted average discount rate:
Operating leases 7.25  % 7.98  %
Finance leases 8.18  % 8.21  %
Lease Commitments Lease Commitments
Operating Leases

The Company leases its laboratory, research facility and administrative office space under various operating leases. Following the Business Disposals, the Company assigned its office leases in North Carolina and New Jersey to the Buyer. At
December 31, 2020, the Company has approximately 5,800 square feet in Hershey, Pennsylvania and 1,959 square feet in Bundoora, Australia. The Company has escalating lease agreements for its Pennsylvania and Australia spaces, which expire in January 2022 and June 2021, respectively. These leases require monthly rent with periodic rent increases. The terms of the Company's former New Jersey lease required that a $350 thousand security deposit for the facility be held in a stand by letter of credit in favor of the landlord (see Note 7). In addition, under the assignment of leases related to the Company's New Jersey headquarters, the Buyer became obligated to replace the $350 thousand letter of credit held by the New Jersey landlord and secured by the Company's cash collateral in August 2019; however, the letter of credit was not replaced until April 2020. The cash collateral was released on May 20, 2020.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, obligations under operating leases, current portion, and obligations under operating leases, less current portion on its Consolidated Balance Sheets.

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 Company did not enter into any significant operating leases during the year ended December 31, 2020 and 2019. The Company remeasured the remaining life of its Pennsylvania lease during 2020, resulting in an increase in its ROU asset and related lease liability of $264 thousand.

Finance Leases

The Company also leases scientific equipment under various finance leases, which have been capitalized at the present value of the minimum lease payments. Finance leases are included in fixed assets, net of accumulated depreciation and obligations under finance leases. The equipment under these finance leases had a cost of $272 thousand and accumulated depreciation of $161 thousand, as of December 31, 2020 and 2019. The amortization of equipment under finance leases is recorded in depreciation expense.

The components of operating and finance lease expense were as follows for the years ended December 31, 2020 and 2019 for continuing operations (in thousands):
2020 2019
Finance lease cost:
Amortization of right-of use assets
$ 56  $ 35 
Interest on lease liabilities
10  13 
Operating lease cost 318  220 
Short-term lease cost 129  109 
Variable lease cost 60  55 
$ 573  $ 432 
Supplemental cash flow related to operating and finance leases of the Company's continuing operations was as follows for the year ended December 31, 2020 and 2019 (in thousands):

2020 2019
Cash paid amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases $ 318  $ 220 
 Financing cash flows used for finance leases $ 94  $ 72 

Minimum future lease payments under all finance and operating leases as of December 31, 2020 are as follows (in thousands):
 
Finance
Leases
Operating
Leases
Total
December 31,
2021 $ 41  $ 234  $ 275 
2022 35  31  66 
2023 36  39 
2024 — 
Total minimum lease payments 121  268  389 
Less amount representing interest 14  13  27 
Present value of net minimum obligations 107  255  362 
Less current obligation under finance and operating leases 35  223  258 
Long-term obligation under finance and operating leases $ 72  $ 32  $ 104 

Other supplemental information related to operating and finance leases of the Company's continuing operations was as follows at December 31, 2020 and 2019:
2020 2019
Weighted average remaining lease term (in years):
Operating leases 1.15 0.99
Finance leases 3.13 3.35
Weighted average discount rate:
Operating leases 7.25  % 7.98  %
Finance leases 8.18  % 8.21  %