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Leases

12 Months Ended

Dec. 31, 2019

7. Leases

The Company adopted a comprehensive new lease accounting standard effective January 1, 2019 using the modified retrospective transition method; accordingly, the comparative information for the year ended December 31, 2018 has not been adjusted and continues to be reported under the previous lease standard. The Company elected the package of practical expedients under the new lease standards, which includes (i) not reassessing whether any expired or existing contracts are or contain a lease, (ii) not reassessing lease classification for any expired or existing leases, (iii) not reassessing initial direct costs for any existing leases, and (iv) account for a lease and non-lease component as a single component for certain classes of assets. The Company will not adopt the practical expedient to use hindsight in determining the lease term. Adoption of the new standard resulted in recording operating lease right-of-use assets and operating lease liabilities of $3,980,649 and $4,819,606, respectively, on the consolidated balance sheets as of December 31, 2019. The adoption of the standard was immaterial and did not result in an impact as of January 1, 2019. The standard did not have a material impact on the consolidated statements of operations or consolidated statements of cash flows.

The Company’s lease arrangements for its offices expire at various dates through 2027. Security deposits under letters of credit or cash deposited with banks were $160,910 as of December 31, 2019.

Substantially all of the leases are long-term operating leases for facilities with fixed payment terms between 1.4 and 7.9 years. The current portion of operating lease liabilities are presented within accrued and other current liabilities, and the non-current portion of operating lease liabilities are presented under operating lease liabilities on the consolidated balance sheets.

Lease Cost

The operating lease costs were $1,112,362 for the year ended December 31, 2019. For the year ended December 31, 2018, total operating lease expense under the previous lease standard was $253,651.

Lease Term and Discount Rate

The weighted-average remaining lease term (in years) and discount rate related to the operating leases consisted of the following as of December 31, 2019:

Weighted-average remaining lease term			5.03 years
Weighted-average discount rate			9.85	%

As most of the Company’s leases do not provide an implicit rate, the Company is required to use its incremental borrowing rate. The Company uses an incremental borrowing rate based on the information available at the lease commencement date to determine present value of lease payments. The incremental borrowing rate used is the rate the Company would have to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Maturity of Lease Liabilities

The present value of the Company’s operating leases consisted of the following as of December 31, 2019:

Year Ending December 31,
2020	$	2,579,924
2021		685,111
2022		472,084
2023		486,247
2024		500,834
Thereafter		1,408,052
Minimum lease payments		6,132,252
Less imputed interest		(1,312,646	)
Present value of operating lease liabilities	$	4,819,606
Current portion included in accrued expenses and other (lease liabilities)	$	2,203,474
Long-term portion of operating lease liabilities		2,616,132
Total operating lease liabilities	$	4,819,606

Other Information

Cash payments included in the measurement of the Company operating lease liabilities were approximately $1,212,800 for the year ended December 31, 2019. Lease liabilities arising from obtaining lease right-of-use assets were approximately $3,853,500 for the year ended December 31, 2019.

Prior to January 1, 2019, the Company accounted for its operating leases under the provisions of ASC 840, Accounting for Leases (“ASC 840”). The following table summarizes future minimum operating lease payments as of December 31, 2018 (prior to the adoption of ASC 842):

Year ending December 31,
2019	$	505,621
2020		347,845
2021		226,817
	$	1,080,283