Note 7 - Leases

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

7. Leases

On January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), using the modified retrospective method through a cumulative adjustment to the beginning accumulated deficit balance. Prior comparative periods have not been restated under this method. The adoption of this guidance resulted in no cumulative effect adjustment as of January 1, 2019.  However, total assets and liabilities increased by $10,670 as a result of the adoption. Based on the new guidance, for leases less than twelve months, an entity is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The Company made this election, along with other available practical expedients. This guidance had a material impact on the consolidated balance sheets as of January 1, 2019, but did not have an impact on the consolidated statements of income (loss) and cash flows. The most significant impact was the recognition of right of use (“ROU”) asset and lease liabilities for operating leases related to facility leases.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets, other current liabilities and other long-term liabilities on the consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities on the consolidated balance sheets. As of the adoption date and December 31, 2019, the Company does not have material finance leases.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments and initial direct costs incurred, net of lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.

The Company has operating leases for office facilities. The leases have remaining lease terms of one year to ten years and some may include options to extend the lease for up to five years.

Information related to operating leases for the year ended December 31, 2019 are as follows:

Operating lease expense	$	5,094
Cash paid for leases	$	4,585
Right of use assets obtained in exchange for lease obligations	$	27,639

Weighted average remaining lease term and weighted average discount as of December 31, 2019 are as follows:

Weighted average remaining lease term (years)	8.52
Weighted average discount rate	3.9	%

Future minimum lease payments under non-cancellable leases as of December 31, 2019 are as follows:

2020	$	4,455
2021		6,174
2022		6,351
2023		6,266
2024		6,073
Thereafter		23,630
Total future minimum lease payments		52,949
Less: Imputed interest		8,006
Lease incentive recognized as offset to asset liability		1,324
Present value of lease obligations	$	43,619

As of December 31, 2019, the Company has additional operating leases for office facilities that have not yet commenced of $1,098. These operating leases will commence in the second quarter of 2020 with lease terms between three to five years.

As previously reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and under legacy lease accounting (ASC 840), future minimum lease payments under non-cancelable leases and service agreements as of December 31, 2018 are as follows:

2019	$	4,588
2020		2,252
2021		1,883
2022		1,722
2023		1,615
2024 and thereafter		1,698
Total	$	13,758

For the years ended December 31, 2018 and 2017, operating lease expense was $5,742 and $6,865, respectively.