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Leases | 9 Months Ended
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Sep. 30, 2020
Leases [Abstract] |
Leases | Leases As a lessee, the Company’s current leases include its master facility lease and immaterial equipment leases, all of which are considered operating leases. The Company (as a sublessor) also subleases portions of its facility to third parties under three separate subleases. All of these subleases have been determined to be operating leases and are accounted for separately from the head lease. Master Facility Lease The Company leases a building in San Diego under an operating lease that expires on December 31, 2021. The lease currently requires fixed monthly rent payments of approximately $78,000, with 3% annual escalation. The lease also contains one five-year renewal option with minimum monthly rent equal to the then-current fair market value, subject to a 3% annual increase. As the Company is not reasonably certain to exercise this option, it has not been included in the calculation of the lease liability or right-of-use asset related to this lease. Facility Subleases As a result of corporate restructurings in previous years, the Company vacated a portion of its facility and has subleased the space to third parties under three separate sublease agreements, which all expire December 31, 2021. The Company recorded a cease-use loss liability and expense in 2018 pursuant to ASC 420, Exit or Disposal Cost Obligations, representing the total expected shortfall in sublease income for two of the subleases as compared to its required payments for those spaces under the remainder of the master lease term. This liability was being amortized over the remaining lease term until the adoption of ASC 842, whereupon the remaining cease-use loss liability of approximately $487,000 was eliminated and treated as a reduction to the beginning ROU asset value for the master lease as of January 1, 2019. Income will continue to be recognized on a straight-line basis over the term of the sublease. Impairment of Right-of-Use Assets The Company recorded an impairment loss of $0 and $34,169 for the three and nine months ended September 30, 2020, respectively. The loss related to a vacated portion of the facility that was no longer being subleased. The Company determined that the prolonged loss of sublease income and an adverse commercial real estate market caused by COVID-19 were indicators of impairment. A fair value approach using quoted prices for similar assets was used to determine the impairment loss. The loss was recorded within operating expenses in the condensed statement of operations. The components of lease expense were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Operating lease cost | $ | 98,808 |  |  | $ | 191,472 |  |  | $ | 344,836 |  |  | $ | 578,919 |
Operating sublease income | (72,793) |  |  | (99,937) |  |  | (218,380) |  |  | (299,812) |
Net operating lease cost | $ | 26,015 |  |  | $ | 91,535 |  |  | $ | 126,456 |  |  | $ | 279,107 |
Supplemental balance sheet information related to leases was as follows:
| As of September 30, 2020 |  | As of December 31, 2019
Operating lease ROU assets | $ | 423,163 |  |  | $ | 697,418 |
Current operating lease liabilities | $ | 883,534 |  |  | $ | 865,379 |
Non-current operating lease liabilities | 207,178 |  |  | 860,963 |
Total operating lease liabilities | $ | 1,090,712 |  |  | $ | 1,726,342 |
Weighted-average remaining lease term–operating leases | 1.3 years |  | 2.0 years
Weighted-average discount rate–operating leases | 6.5 | % |  | 6.5 | %
Supplemental cash flow and other information related to leases was as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |
Operating cash flows from operating leases | $ | 236,748 |  |  | $ | 229,927 |  |  | $ | 706,211 |  |  | $ | 685,865 |
Total remaining annual commitments under non-cancelable lease agreements for each of the years ended December 31 are as follows:
Year Ending December 31, | Operating Leases |  | Sublease Income |  | Net Operating Leases
2020 (excluding the nine months ended September 30, 2020) | $ | 159,167 |  |  | $ | (72,793) |  |  | $ | 86,374 |
2021 | 968,165 |  |  | (403,345) |  |  | 564,820 |
2022 | 5,868 |  |  | — |  |  | 5,868 |
2023 | 3,423 |  |  | — |  |  | 3,423 |
Total future minimum lease payments | 1,136,623 |  |  | $ | (476,138) |  |  | $ | 660,485 |
Less imputed interest | (45,911) |  |  |  |  |
Total | $ | 1,090,712 |  |  |  |  |
Leases | Leases As a lessee, the Company’s current leases include its master facility lease and immaterial equipment leases, all of which are considered operating leases. The Company (as a sublessor) also subleases portions of its facility to third parties under three separate subleases. All of these subleases have been determined to be operating leases and are accounted for separately from the head lease. Master Facility Lease The Company leases a building in San Diego under an operating lease that expires on December 31, 2021. The lease currently requires fixed monthly rent payments of approximately $78,000, with 3% annual escalation. The lease also contains one five-year renewal option with minimum monthly rent equal to the then-current fair market value, subject to a 3% annual increase. As the Company is not reasonably certain to exercise this option, it has not been included in the calculation of the lease liability or right-of-use asset related to this lease. Facility Subleases As a result of corporate restructurings in previous years, the Company vacated a portion of its facility and has subleased the space to third parties under three separate sublease agreements, which all expire December 31, 2021. The Company recorded a cease-use loss liability and expense in 2018 pursuant to ASC 420, Exit or Disposal Cost Obligations, representing the total expected shortfall in sublease income for two of the subleases as compared to its required payments for those spaces under the remainder of the master lease term. This liability was being amortized over the remaining lease term until the adoption of ASC 842, whereupon the remaining cease-use loss liability of approximately $487,000 was eliminated and treated as a reduction to the beginning ROU asset value for the master lease as of January 1, 2019. Income will continue to be recognized on a straight-line basis over the term of the sublease. Impairment of Right-of-Use Assets The Company recorded an impairment loss of $0 and $34,169 for the three and nine months ended September 30, 2020, respectively. The loss related to a vacated portion of the facility that was no longer being subleased. The Company determined that the prolonged loss of sublease income and an adverse commercial real estate market caused by COVID-19 were indicators of impairment. A fair value approach using quoted prices for similar assets was used to determine the impairment loss. The loss was recorded within operating expenses in the condensed statement of operations. The components of lease expense were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Operating lease cost | $ | 98,808 |  |  | $ | 191,472 |  |  | $ | 344,836 |  |  | $ | 578,919 |
Operating sublease income | (72,793) |  |  | (99,937) |  |  | (218,380) |  |  | (299,812) |
Net operating lease cost | $ | 26,015 |  |  | $ | 91,535 |  |  | $ | 126,456 |  |  | $ | 279,107 |
Supplemental balance sheet information related to leases was as follows:
| As of September 30, 2020 |  | As of December 31, 2019
Operating lease ROU assets | $ | 423,163 |  |  | $ | 697,418 |
Current operating lease liabilities | $ | 883,534 |  |  | $ | 865,379 |
Non-current operating lease liabilities | 207,178 |  |  | 860,963 |
Total operating lease liabilities | $ | 1,090,712 |  |  | $ | 1,726,342 |
Weighted-average remaining lease term–operating leases | 1.3 years |  | 2.0 years
Weighted-average discount rate–operating leases | 6.5 | % |  | 6.5 | %
Supplemental cash flow and other information related to leases was as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |
Operating cash flows from operating leases | $ | 236,748 |  |  | $ | 229,927 |  |  | $ | 706,211 |  |  | $ | 685,865 |
Total remaining annual commitments under non-cancelable lease agreements for each of the years ended December 31 are as follows:
Year Ending December 31, | Operating Leases |  | Sublease Income |  | Net Operating Leases
2020 (excluding the nine months ended September 30, 2020) | $ | 159,167 |  |  | $ | (72,793) |  |  | $ | 86,374 |
2021 | 968,165 |  |  | (403,345) |  |  | 564,820 |
2022 | 5,868 |  |  | — |  |  | 5,868 |
2023 | 3,423 |  |  | — |  |  | 3,423 |
Total future minimum lease payments | 1,136,623 |  |  | $ | (476,138) |  |  | $ | 660,485 |
Less imputed interest | (45,911) |  |  |  |  |
Total | $ | 1,090,712 |  |  |  |  |

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