Quarterly report pursuant to Section 13 or 15(d)


9 Months Ended
Sep. 30, 2021
Leases [Abstract]  

Note 3 - Leases


The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of a fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable.


Right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments.


The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met.


At September 30, 2021, the Company has an operating lease for corporate office space and two finance leases for office equipment and furniture located in the corporate office space. In addition, the Company has auxiliary corporate office space that it rents on a month-to-month basis; this rental is accounted for as an operating lease with the same term as the Company’s main office in the same building.


The components of lease expense are as follows:


    Three months ended     Nine months ended  
(in thousands)   September 30,
    September 30,
    September 30,
    September 30,
Operating lease expense   $ 93     $ 93     $ 279     $ 279  
Finance lease cost                                
Amortization of right-to-use assets   $ 20     $ 20     $ 61     $ 61  
Interest on lease liabilities   $ 2     $ 4     $ 7     $ 12  
Total finance lease cost   $ 22     $ 24     $ 68     $ 73  


Supplemental cash flow information related to leases are as follows:


Cash flow information:

    Nine months ended  
(in thousands)   September 30,
    September 30,
Cash paid for amounts included in the measurement of lease liabilities:            
Operating cash flow use from operating leases   $ 282     $ 281  
Operating cash flow use from finance leases   $ 7     $ 12  
Financing cash flow use from finance leases   $ 63     $ 58  
Non-cash activity:                
Right-of-use assets obtained in exchange for lease obligations:                
Operating leases   $
    $ 83  
Finance Leases   $


Weighted average remaining lease terms are as follows at September 30, 2021:


Weighted average remaining lease term:        
Operating leases     1.0 year  
Finance Leases     0.9 year  


As the rate implicit in the leases was not readily determinable, the Company used its incremental borrowing rate based on the information available in determining the present value of lease payments. The Company’s incremental borrowing rate was based on the term of the lease, the economic environment of the lease and reflect the rate the Company would have had to pay to borrow on a secured basis. Below is information on the weighted average discount rates used at the time that the leases were evaluated:


Weighted average discount rates:      
Operating leases     8 %
Finance Leases     8 %


Maturities of lease liabilities are as follows:


(in thousands)            
Year ending December 31,   Operating
2021 (excluding nine months ended September 30, 2021)   $ 94     $ 24  
2022     252       64  
Total lease payments   $ 346     $ 92  
Less imputed interest     (13 )     (4 )
Present value of lease liabilities   $ 333     $ 88