Quarterly report pursuant to Section 13 or 15(d)

Operating Leases

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Operating Leases
3 Months Ended
Mar. 31, 2020
Leases [Abstract]  
Operating Leases

NOTE 5 - OPERATING LEASES

 

At December 31, 2019, the Company had one operating lease for its headquarters office space in Burbank, California that expires on July 31, 2023.

 

In February 2020, the Company took possession of a second leased facility consisting of office, research, and production space also located in Burbank, California. The lease commenced on January 1, 2020, and has a term for 5 years, with annual fixed rental payments ranging from $90 to $101. The aggregate total fixed rent is approximately $478 and resulted in the recognition of an operating lease right-of-use (“ROU”) asset and of corresponding lease liability of approximately $430 each. The Company also paid a security deposit of $16. At March 31, 2020, the Company did not have any other leases.

 

ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Generally the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

 

The components of lease expense and supplemental cash flow information related to leases for the period are as follows:

 

   

Three months ended

March 31, 2020

 
      (in thousands)  
Lease Cost        
Operating lease cost (included in selling, general, and administrative expense in the Company’s statement of operations)   $ 50  
         
Other Information        
Cash paid for amounts included in the measurement of lease liabilities for 2020   $ 38  
Weighted average remaining lease term – operating leases (in years)     3.5  
Average discount rate – operating leases     4 %

 

The supplemental balance sheet information related to leases for the period is as follows:

 

    At March 31, 2020  
Operating leases        
Long-term right-of-use assets   $ 723  
         
Short-term operating lease liabilities   $ 163  
Long-term operating lease liabilities     567  
Total operating lease liabilities   $ 730  

 

Maturities of the Company’s lease liabilities are as follows:

 

Year Ending   Operating Leases  
2020   $ 150  
2021     186  
2022     202  
2023     172  
2024     101  
Total lease payments     811  
Less: Imputed interest/present value discount     (81 )
Present value of lease liabilities     730  
Less current portion     (163 )
Operating lease liabilities, long-term   $ 567  

 

Lease expenses were $50 and $3 during the three months ended March 31, 2020 and 2019, respectively.