XML 39 R22.htm IDEA: XBRL DOCUMENT

Leases

6 Months Ended

Jun. 30, 2020

Note 15. Leases

The Company maintains a lease, as amended, for its 10,870 square foot premises located in Lawrenceville, New Jersey which is currently set to expire September 1, 2023. Also, the Company maintains a lease for an 11,500 square foot premises located in Huntsville Alabama, which is currently set to expire in January 2023.

We adopted ASC Topic 842 on January 1, 2019 using the modified retrospective transition method for all lease arrangements at the beginning of the period of adoption. Results for reporting periods beginning January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting under Topic 840, Leases. The standard had a material impact on our Condensed Consolidated Balance Sheet but had no impact on our condensed consolidated net earnings and cash flows. The most significant impact of adopting ASC Topic 842 was the recognition of the right-of-use (ROU) asset and lease liabilities for operating leases, which are presented in the following three-line items on the Consolidated Condensed Balance Sheet: (i) operating lease right-of-use asset; (ii) current operating lease liabilities; and (iii) operating lease liabilities. Therefore, on date of adoption of ASC Topic 842, the Company recognized a ROU asset of $1.4 million, operating lease liabilities, current and non-current collectively, of $1.5 million and reduced other liabilities by approximately $0.1 million. We elected the package of practical expedients for leases that commenced before the effective date of ASC Topic 842 whereby we elected to not reassess the following: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. In addition, we have lease agreements with lease and non-lease components, and we have elected the practical expedient for all underlying asset classes and account for them as a single lease component. We have no finance leases. We determine if an arrangement is a lease at inception. We have operating leases for office space and research and development facilities. Neither of our leases include options to renew; however, one contains an option for early termination. We considered the option of early termination in measurement of right-of-use assets and lease liabilities, and we determined it is not reasonably certain to be terminated. In connection with the 2^nd Lease Amendment for the New Jersey office lease in January 2019, the Company considered this as one modified lease and not as two separate leases. Therefore, in January 2019, the Company determined this lease was an operating lease and remeasured the ROU asset and lease liability. Therefore, the Company increased the ROU asset and operating lease liabilities by $0.4 million to $1.8 million and $1.9 million, respectively.

Following is a table of the lease payments and maturity of our operating lease liabilities as of June 30, 2020:

	For the year ending December 31,
Remainder of 2020	$	263,726
2021		530,734
2022		535,579
2023		233,116
2024 and thereafter		-
Subtotal future lease payments		1,563,155
Less imputed interest		(219,931	)
Total lease liabilities	$	1,343,224

Weighted average remaining life		3.2 years

Weighted average discount rate		9.98	%

For the three-month and six-month periods ending June 30, 2020, operating lease expense was $130,595 and $261,190, respectively and cash paid for operating leases included in operating cash flows was $131,452 and $262,084, respectively. For the three-month and six-month periods ending June 30, 2019, operating lease expense was $130,595 and $261,190, respectively and cash paid for operating leases included in operating cash flows was $118,415 and 224,585, respectively.