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LEASES

12 Months Ended

Dec. 31, 2020

NOTE 13: LEASES

The Company adopted ASU No. 2016-02, Leases (Topic 842) on January 1, 2019 and recognized leases with duration greater than 12 months on the balance sheet using the modified retrospective approach. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed for a carry-forward of the historical lease classification. For leases with terms greater than 12 months, the Company has recorded the related Right-Of-Use asset and liability at the present value of lease payments over the term. 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 December 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:


		December 31,
	Classification on Consolidated Balance Sheet	2020		2019
(in thousands)
Assets:
Operating lease right-of-use assets	Other assets	$	124	$	159

Liabilities:
Current portion of operating lease liabilities	Accrued expenses and other liabilities	$	52	$	47
Long-term operating lease liabilities	Other long-term liabilities		70		110
Total lease liabilities		$	122	$	157

Lease Costs:

The components of lease expense are included in selling, general and administrative expenses in the consolidated statements of operations as disclosed below:

Total rental expense, charged to operations related to operating leases under the previous lease standard, was $191,000 in 2018.

Other information:


As of December 31,	2020			2019
Cash paid for amounts included in the measurement of lease liabilities – operating leases (in thousands)	$	49		$	46
ROU assets obtained in exchange for operating lease liabilities (in thousands)	$	14		$	—
Weighted average remaining lease term – operating leases (years)		2.5			3.3
Weighted average discount rate – operating leases		3.48	%		3.68	%

Lease Commitments:

Maturity of lease liabilities - Operating Leases:


As of December 31,	2020		2019
(in thousands)
2020	$	—	$	52
2021		55		52
2022		55		52
2023		13		10
2024		3		—
2025		1		—
Total lease payments		127		166
Less: Amounts representing interest		(5)		(9)
Present value of lease liabilities	$	122	$	157

In the second quarter of 2019, the company entered into 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 December 31, 2020, projected future lease income on this lease totaled $294,375 scheduled to be received as follows: 2021 - $235,500 and 2022 - $58,875. During the year ended December 31, 2020, the company recorded rental income of $236,000 that is classified as part of selling, general and administrative expenses on the consolidated statements of operations.

Year ended December 31,

(in thousands)

Operating lease cost

Short-term lease cost

Total lease cost