Leases

3 Months Ended

Mar. 31, 2020

LEASES

The Company leases certain equipment, manufacturing, warehouse and office space under non-cancellable operating leases expiring through 2024 under which it is responsible for related maintenance, taxes and insurance. The Company has one finance lease containing a bargain purchase option upon expiration of the lease in 2022. The lease term consists of the non-cancellable period of the lease, periods covered by options to extend the lease if the Company is reasonably certain to exercise the option, and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise the option. The present value of the remaining lease obligation for these leases was calculated using an incremental borrowing rate (“IBR”) of 7.25%, which was the Company’s borrowing rate on its revolving credit agreement signed on December 11, 2018. The weighted average remaining lease term for operating, restructuring and finance leases is 2.3 years, 1.3 years, and 2.0 years, respectively.

The Company had one restructured lease with sub-lease component for the New York, New York office that was closed in 2017. The lease expires in 2021. As part of the lease agreement there was $0.3 million in restricted cash in other long-term assets on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 which represents collateral against the related letter of credit issued as part of this agreement.

The restructured lease and sub-lease were not scoped out of the requirements of Topic 842 and were evaluated for impairment in accordance with the asset impairment provisions of ASC 360, Property, Plant and Equipment (“Topic 360”). The Company concluded its net right-of-use assets were not impaired and the carrying amount approximates expected sublease income in future years as of March 31, 2020. The Company continues to carry certain immaterial operating expenses associated with this lease as restructuring liabilities and will continue to accrete those liabilities in accordance with Topic 420, as has been done since the cease use date in 2017. For additional information regarding treatment of leases please refer to Note 6 “Leases.” included under Item 8 of our 2019 Annual Report.

Components of the operating, restructured and finance lease costs recognized in net loss for the three months ended March 31, 2020 and 2019, were as follows (in thousands):


	Three months ended March 31,
	2020		2019
Operating lease cost (income):
Sublease income	$	(25)	$	(25)
Lease cost	152		147
Operating lease cost, net	127		122

Restructured lease cost (income):
Sublease income	(68)		(112)
Lease cost	61		109
Restructured lease cost, net	(7)		(3)

Finance lease cost
Interest of lease liabilities	—		1
Finance lease cost, net	—		1

Total lease cost, net	$	120	$	120

Supplemental balance sheet information related to the Company’s operating and finance leases as of March 31, 2020 and December 31, 2019 are as follows (in thousands):


	March 31, 2020		December 31, 2019
Operating Leases
Operating lease right-of-use assets	$	1,179	$	1,289
Restructured lease right-of-use assets	268		322
Operating lease right-of-use assets, total	1,447		1,611

Operating lease liabilities	1,337		1,480
Restructured lease liabilities	410		488
Operating lease liabilities, total	1,747		1,968

Finance Leases
Property and equipment	13		13
Allowances for depreciation	(7)		(5)
Finance lease assets, net	6		8

Finance lease liabilities	6		6
Total finance lease liabilities	$	6	$	6

Future minimum lease payments required under operating, restructured and finance leases for each of the 12-month rolling periods below in effect at March 31, 2020 are as follows (in thousands):


	Operating Leases		Restructured Leases		Restructured Leases Sublease Payments		Finance Lease
April 2020 to March 2021	$	621	$	342	$	(273)	$	3
April 2021 to March 2022	644		86		(68)		3
April 2022 to March 2023	172		—		—		—
April 2023 to March 2024	13		—		—		—

Total future undiscounted lease payments	1,450		428		(341)		6
Less imputed interest	(113)		(18)		14		—
Total lease obligations	$	1,337	$	410	$	(327)	$	6

Supplemental cash flow information related to leases for the three months ended March 31, 2020 and 2019, was as follows (in thousands):


	Three months ended March 31,
	2020		2019
Supplemental cash flow information
Cash paid, net, for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	135	$	122
Operating cash flows from restructured leases	$	17	$	(3)
Financing cash flows from finance leases	$	1	$	1