Note 6 - Lease Obligations and Other Contingencies

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Leases of Lessor Disclosure [Text Block]

Note 6 — Lease Obligations and Other Contingencies

In February 2016, the FASB issued ASU 2016-02: Leases (Topic 842). This ASU requires a lessee to recognize a right-of-use asset and a lease liability on its balance sheet for most operating leases. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides companies with an additional optional transition method to apply the new standard to leases in effect at the adoption date through a cumulative effect adjustment. The Company adopted the new lease standard as of January 1, 2019 using this optional transition method.

The Company elected the package of practical expedients referenced in ASU 2016-02, which permits companies to retain original lease identification and classification without reassessing initial direct costs for existing leases. The Company also elected the practical expedient that exempts leases with an initial lease term of twelve months or less, as well as the practical expedient that allows companies to select, by class of underlying asset, not to separate lease and non-lease components. Adoption of this standard resulted in the recognition of a right-of-use asset and a lease liability on the Company’s January 1, 2019 Consolidated Balance Sheet of $3,621 and $4,822, respectively. There was no material impact on the Company’s Consolidated Statement of Comprehensive Loss, and the cumulative transition adjustment recorded to retained earnings upon adoption was $238.

The Company leases certain assets under operating leases, which primarily consisted of real estate leases, laboratory equipment leases and office equipment leases as of December 31, 2020. Certain operating leases provide for renewal options, which can vary by lease. The right-of-use asset and lease liabilities on the Company’s Consolidated Balance Sheet represent payments over the lease term, which includes renewal options for certain real estate leases that we are likely to exercise. As part of the Company’s assessment of the lease term, the Company elected the hindsight practical expedient, which allows companies to use current knowledge and expectations when determining the likelihood to extend lease options. Renewal options for our leases range from 1 to 5 years in length and begin from 2023 through 2026. The weighted average lease term for the Company’s operating leases was 13.1 years. The discount rate used in the calculation of the Company’s right-of-use asset and lease liability was determined based on the stated rate within each contract when available, or the Company’s collateralized borrowing rate from lending institutions. The weighted average discount rate for the Company’s operating leases was 12.7%.

The Company has not made any residual value guarantees related to its operating leases; therefore, the Company has no corresponding liability recorded on its Consolidated Balance Sheets.

Aggregate lease expense under operating leases was $1,754 and $1,464 for the twelve-month periods ended December 31, 2020 and 2019, respectively. Certain operating leases include rent escalation provisions, which the Company recognizes as expense on a straight-line basis. Lease expense for leases with an initial term of twelve months or less was not material.

Future lease payments for assets under operating leases as of December 31, 2020, are as follows:

Remaining Maturities of Lease Liabilities
Year Ending December 31,	Operating Leases
2021	$	1,302
2022		758
2023		619
2024		577
2025		582
Thereafter		7,327
Total lease payments		11,165
Less imputed interest		6,115
Total	$	5,050

The Company’s current lease liability at December 31, 2020 and 2019 was $1,179 and $1,377, respectively. The Company’s long-term lease liability as of December 31, 2020 and 2019 was $3,871 and $3,406, respectively. The current and long-term portions of the Company’s lease liability are presented within “Lease financing obligations” on the Consolidated Balance Sheets. Cash paid for amounts included in the measurement of lease liabilities was $1,696 and $1,457 for the years ended December 31, 2020 and 2019, respectively. The Company’s right-of use asset balance associated with operating leases totaled $3,802 and $3,590 at December 31, 2020 and 2019, respectively. These amounts are presented within “Other assets” on the Consolidated Balance Sheets. Operating right-of-use assets are recorded net of accumulated amortization of $2,641 and $1,386 as of December 31, 2020 and 2019, respectively.