Quarterly report pursuant to Section 13 or 15(d)

LEASES

v3.21.2
LEASES
9 Months Ended
Sep. 30, 2021
Leases [Abstract]  
LEASES LEASES
We lease facilities under two non-cancelable operating leases. The leases expire between January 2022 and November 2024 and include renewal provisions for two to five years, provisions which require us to pay taxes, insurance, maintenance costs or provisions for minimum rent increases. We also lease facilities and equipment under short-term agreements for a period of 12 months or less and recognize the payments straight-line over the lease term. All of the information presented below, with the exception of total lease costs, relates to our two non-cancelable operating leases and a finance lease.
    On May 1, 2020 we entered into an amendment for one of our non-cancelable facilities operating leases, under which certain rent payments were deferred and the term of the lease was extended by three months to November 30, 2024. The base rent was deferred for three months and the deferred amount will be repaid over the remaining balance of the modified lease term. In addition, operating expenses were deferred for three months with the deferred amount due upon the annual true-up of operating expenses, which occurred in April 2021. As a result of the lease amendment, we recorded additional ROU assets, and related lease liabilities, of $115,000.
    One facility lease requires us to maintain a cash security deposit of $50,000 and also a $55,000 letter of credit in favor of the lessor. The letter of credit was originally for $200,000 at lease inception and steps down $50,000 at each anniversary date if there have been no monetary defaults. The letter of credit is secured by a pledge in favor of the issuing bank of a mutual fund account which is classified as restricted cash in our balance sheet.
Lease renewal options are at our discretion. No renewal options have been recognized in our right-of-use assets and lease liabilities as of September 30, 2021. Our lease agreements do not require material variable minimum lease payments, residual value guarantees or restrictive covenants.
In December 2020, we entered into a lease for lab equipment. The lease is for 60 months and bears an interest rate of 5.99%. After evaluation of the lease under ASU No. 2016-02, Leases (Topic 842), we determined the lease to be a finance lease. We recorded a right-of-use asset and lease liability of $204,000 upon inception of the lease.
    The Company's weighted average remaining lease term and weighted average discount rate as of September 30, 2021 is shown below:
Weighted average remaining term (years)
     Operating leases 3.05
     Finance lease 4.17
Weighted average discount rate (%)
     Operating leases 4.75  %
     Finance lease 5.99  %
    Minimum future maturities of lease liabilities recognized on the condensed consolidated balances sheets as of September 30, 2021 (in thousands):
Operating Leases Finance Lease
October 1, 2021 - December 31, 2021 $ 197  $ 13 
2022 586  50 
2023 584  50 
2024 544  50 
2025 —  46 
Total minimum lease payments $ 1,911  $ 209 
Less: imputed interest (131) (24)
Total lease liabilities $ 1,780  $ 185 
    
Operating lease costs were $308,000 for the three months ended September 30, 2021, of which $203,000 and $105,000 are included in research and development expenses and sales, marketing and administration expenses, respectively. Operating lease costs were $278,000 for the three months ended September 30, 2020, of which $196,000 and $82,000 are included in research and development expenses and sales, marketing and administration expenses, respectively.
Operating lease costs were $909,000 for the nine months ended September 30, 2021, of which $600,000 and $309,000 are included in research and development expenses and sales, marketing and administrative expenses, respectively. Operating lease costs were $840,000 for the nine months ended September 30, 2020, of which $608,000 and $232,000 are included in research and development expenses and sales, marketing and administrative expenses, respectively.
    Cash paid for amounts included in the measurement of operating lease liabilities were $580,000 and $422,000 for the nine months ended September 30, 2021 and 2020, respectively, which is included in operating activities in the condensed consolidated statements of cash flows.
Finance lease amortization for the three and nine months ended September 30, 2021 was $10,000 and $30,000, respectively, and is included in research and development expenses. There was no finance lease amortization for the three and nine months ended September 30, 2020 as the lease was not in effect during that period.
LEASES LEASES
We lease facilities under two non-cancelable operating leases. The leases expire between January 2022 and November 2024 and include renewal provisions for two to five years, provisions which require us to pay taxes, insurance, maintenance costs or provisions for minimum rent increases. We also lease facilities and equipment under short-term agreements for a period of 12 months or less and recognize the payments straight-line over the lease term. All of the information presented below, with the exception of total lease costs, relates to our two non-cancelable operating leases and a finance lease.
    On May 1, 2020 we entered into an amendment for one of our non-cancelable facilities operating leases, under which certain rent payments were deferred and the term of the lease was extended by three months to November 30, 2024. The base rent was deferred for three months and the deferred amount will be repaid over the remaining balance of the modified lease term. In addition, operating expenses were deferred for three months with the deferred amount due upon the annual true-up of operating expenses, which occurred in April 2021. As a result of the lease amendment, we recorded additional ROU assets, and related lease liabilities, of $115,000.
    One facility lease requires us to maintain a cash security deposit of $50,000 and also a $55,000 letter of credit in favor of the lessor. The letter of credit was originally for $200,000 at lease inception and steps down $50,000 at each anniversary date if there have been no monetary defaults. The letter of credit is secured by a pledge in favor of the issuing bank of a mutual fund account which is classified as restricted cash in our balance sheet.
Lease renewal options are at our discretion. No renewal options have been recognized in our right-of-use assets and lease liabilities as of September 30, 2021. Our lease agreements do not require material variable minimum lease payments, residual value guarantees or restrictive covenants.
In December 2020, we entered into a lease for lab equipment. The lease is for 60 months and bears an interest rate of 5.99%. After evaluation of the lease under ASU No. 2016-02, Leases (Topic 842), we determined the lease to be a finance lease. We recorded a right-of-use asset and lease liability of $204,000 upon inception of the lease.
    The Company's weighted average remaining lease term and weighted average discount rate as of September 30, 2021 is shown below:
Weighted average remaining term (years)
     Operating leases 3.05
     Finance lease 4.17
Weighted average discount rate (%)
     Operating leases 4.75  %
     Finance lease 5.99  %
    Minimum future maturities of lease liabilities recognized on the condensed consolidated balances sheets as of September 30, 2021 (in thousands):
Operating Leases Finance Lease
October 1, 2021 - December 31, 2021 $ 197  $ 13 
2022 586  50 
2023 584  50 
2024 544  50 
2025 —  46 
Total minimum lease payments $ 1,911  $ 209 
Less: imputed interest (131) (24)
Total lease liabilities $ 1,780  $ 185 
    
Operating lease costs were $308,000 for the three months ended September 30, 2021, of which $203,000 and $105,000 are included in research and development expenses and sales, marketing and administration expenses, respectively. Operating lease costs were $278,000 for the three months ended September 30, 2020, of which $196,000 and $82,000 are included in research and development expenses and sales, marketing and administration expenses, respectively.
Operating lease costs were $909,000 for the nine months ended September 30, 2021, of which $600,000 and $309,000 are included in research and development expenses and sales, marketing and administrative expenses, respectively. Operating lease costs were $840,000 for the nine months ended September 30, 2020, of which $608,000 and $232,000 are included in research and development expenses and sales, marketing and administrative expenses, respectively.
    Cash paid for amounts included in the measurement of operating lease liabilities were $580,000 and $422,000 for the nine months ended September 30, 2021 and 2020, respectively, which is included in operating activities in the condensed consolidated statements of cash flows.
Finance lease amortization for the three and nine months ended September 30, 2021 was $10,000 and $30,000, respectively, and is included in research and development expenses. There was no finance lease amortization for the three and nine months ended September 30, 2020 as the lease was not in effect during that period.