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LEASES

3 Months Ended

Mar. 31, 2020

14. LEASES

The Company recognizes leases with duration greater than 12 months on the balance sheet by recording the related Right-Of-Use (ROU) asset and liability at the present value of lease payments over the term. Leases that include rental escalation clauses or renewal options have been factored into the determination of lease payments when appropriate. There are no residual value guarantees on the existing leases. The Company estimates its incremental borrowing rate, at lease commencement, to determine the present value of lease payments, since most of the Company’s leases do not provide an implicit rate of return.

The Company’s lease population consists primarily of office equipment. The Company does not have any finance leases. The Company determines at contract inception, if an arrangement is a lease or contains a lease based on whether the Company obtains the right to control the use of specifically identifiable property, plant and equipment for a period of time in exchange for consideration. The Company has elected not to separate non-lease components from lease components for its leases. Variable lease payments are recognized as expense when incurred.

As of March 31, 2020, the Company had no operating leases that had not yet commenced.

Lease position:

The table below presents the assets and liabilities related to operating leases recorded on the balance sheet:


	Classification on the Consolidated
(in thousands)	Balance Sheet		March 31, 2020
Assets:
Operating lease right-of-use assets		Other assets	$	147

Liabilities:
Current maturities of operating leases		Accrued expenses and other liabilities	$	48
Long-term operating lease liabilities		Other long-term liabilities		97
Total lease liabilities			$	145

Lease Costs:

Operating and short-term lease costs totaling $14 thousand for the three months ended March 31, 2020 and 2019 are included in selling, general and administrative expenses in the consolidated statements of operations.

Other information:


Cash paid for amounts included in the measurement of lease liabilities –operating leases (in thousands)	$	12
Weighted average remaining lease term –operating leases		3.0	years
Weighted average discount rate – operating leases		3.68	%

Lease Commitments:

Future minimum lease payments at March 31, 2020 were as follows:


Maturity of lease liabilities
(in thousands)	Operating Leases
2020 (excluding the three months ended March 31)	$	39
2021		52
2022		52
2023		10
Total lease payments		153
Less: Amounts representing interest		(8)
Present value of lease liabilities	$	145

The company currently has an operating lease as the lessor for certain real estate leased to a third party under an operating lease with an initial term of 36 months. The lease requires fixed monthly payments and does not contain clauses for future rent escalations or renewal options. There are no terms and conditions under which the lessee has the option to purchase this asset. As of March 31, 2020, projected future lease income on this lease totaled $471,000 scheduled to be received as follows: 2020 – $176,625, 2021 - $235,500 and 2022 - $58,875. During the quarter ended March 31, 2020, the company recorded rental income of $59 thousand that is classified as part of selling, general and administrative expenses on the consolidated statements of operations.