Note 8 - Operating Leases

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

8. Operating Leases

The Company has

seven

operating leases for office and laboratory space used to conduct business (

one

of which is for a data center). The exercise of lease renewal options is at our discretion and the majority of renewals to extend the lease terms are

not

included in our Right-Of-Use (“ROU”) assets and lease liabilities as they are

not

reasonably certain of exercise. The Company regularly evaluates the renewal options and when they are reasonably certain of exercise. The Company includes the renewal period in our lease term. As most of the Company’s leases do

not

provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at the lease commencement date in determining the net present value (NPV) of the lease payments.

In

July 2019,

the Company signed a

5

-year lease for a laboratory facility in Culver, City California. The total payments for this lease is

$2.8

million with a NPV of

$2.5

million. This lease replaces a building in Culver City whose lease expires in

January 2020.

As of

September 30, 2019,

the Company recognized a Right-Of-Use (“ROU”) asset of

$3.2

million and an operating lease liability of

$3.5

million based on the present value of the minimum rental payments as a result of adoption of ASC Topic

842.

The weighted average discount rate used for leases as of

September 30, 2019

is

4.0%.

The weighted average lease term as of

September 30, 2019

is

4.2

years. The operating lease expense for the

three

and

nine

months ended

September 30, 2019

was

$0.3

million and

$0.8

million, respectively.

Maturities and balance sheet presentation of the Company’s lease liabilities for all operating leases as of

September 30, 2019

is as follows (in thousands):

2019	$	273
2020		1,078
2021		644
2022		619
2023		584
2024		582
2025		145
Total Lease Payments		3,925
Less Interest:		(393	)
Present value of lease liabilities	$	3,532
Current operating lease liabilities	$	1,171
Long-term operating lease liabilities		2,361
Total	$	3,532