| Leases | 6. LEASES The Company leases
corporate office space in Los Gatos, California. This lease has a remaining term of 22 months as of March 31, 2019. This lease
is accounted for under ASC Topic 842 and as a result, the most significant impact was the recognition of the operating lease right-of-use
assets and the liability for operating leases. Upon adoption the Company recorded an operating lease right-of-use asset and the
related lease liability. The lease liability is based on the present value of the remaining minimum lease payments, discounted
using the Company’s estimated incremental borrowing rate of 10% at the effective date of January 1, 2019. As permitted under
ASC Topic 842, the Company elected several practical expedients that permit it to not reassess (1) whether a contract is or contains
a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial
indirect costs. The impact of the adoption
of ASC Topic 842 on the balance sheet at January 31, 2019 was (in thousands):
As reported December 31, 2018 Adoption of ASC Topic 842 Balance January 1, 2019
Prepaid expenses and other current assets $ 170 $ (13 ) $ 157
Operating lease of right-of-use assets – 295 295
Total assets 19,357 282 19,639
Other current liabilities 1,611 129 1,740
Long-term liabilities operating leases – 152 152
Total liabilities 1,611 281 1,892 The current lease accounted
for under ASC Topic 842 contains escalating payments on the anniversary of the commencement. These additional lease components
are included in the measurement of the initial lease liability. Additional payments based on a change in the Company’s share
of the operating expenses, including real estate taxes and insurance, are recorded as a period expense when incurred. Lease modifications
result in remeasurement of the lease liability. Lease expense for operating leases consists of the lease payments plus any initial
direct costs, primarily brokerage commissions, and is recognized on a straight-line basis over the lease term. Future minimum payments
under non-cancellable leases as of March 31, 2019 were as follows (in thousands):
For the Year Ended December 31, Amount
Remaining 2019 $ 107
2020 165
2021 14
Total future minimum lease payments 286
Less imputed interest (32 )
Total lease liability 254 The below table provides
supplemental information and non-cash activity related to our operating leases are as follows (in thousands):
Three Month Ended March 31, 2019
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities $ 40
Non-cash activity:
Right-of-use assets obtained in exchange for the lease obligations (1) $ 295
(1) Represents the initial right-of-use asset valuation of the Los Gatos lease on January 1, 2019 In October 2016, the
Company entered into lease agreement for approximately 200 square feet of office space in Cambridge, Massachusetts. The lease with
monthly payments of $2,074 per month commenced on October 24, 2016. The lease rate increased to $2,619 on January 1, 2019. Because
the lease is month to month and can be cancelled with a 30-day notice, the future lease payments are not included in the Company’s
lease accounting under ASC Topic 842. |
