14. Commitments and Contingencies

Leases

The Company determines if an arrangement is a lease on the commencement date of the contract. The right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. The right-of-use assets and lease liabilities are measured by the present value of the future minimum lease payments over the lease term. The Company uses the rate implicit in the lease whenever that rate is readily determinable. If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate. The right-of-use asset is then adjusted to exclude lease incentives. Certain leases may contain rental escalation, renewal options and/or termination options that are factored into our determination of lease payments when appropriate. Variable lease payment amounts that cannot be determined at the commencement of the lease are not included in the right-to-use assets or lease liabilities. Leases covering a period of fewer than 12 months are not recorded on the Company’s consolidated balance sheets. Rent expense is calculated using the straight-line method.

The Company leases certain facilities and equipment under non-cancelable lease agreements that expire at various dates through 2025, which are generally renewed or replaced by similar leases. The lease agreements do not contain any material restrictive covenants, do not contain any conditions of residual value guarantees and are substantially all considered to be operating leases. The Company’s leases relate to office facilities in New Jersey, New York, California, Florida, Georgia and the U.K. The weighted average lease term was 2.9 years and the weighted average discount rate was 2.0%.

Rent expense for the three months ended March 31, 2020 was $0.8 million. The following table presents the Company’s lease liabilities and right-of-use assets related to operating leases as of March 31, 2020:


($ in thousands)	March 31, 2020
One year or less	$	3,188
More than one year to two years		2,449
More than two years to three years		—
More than three years to four years		—
More than four years to five years		—
More than five years		—
Total undiscounted future minimum lease payments		5,637
Less: difference between lease payments and discounted lease liabilities		104
Lease liabilities	$	5,533

Right-of-use assets	$	4,810
Prepaid lease assets, net of lease allowances and incentives		723
Total	$	5,533

The right-of-use assets are reported as a component of other assets and the lease liabilities are reported as a component of other liabilities on the Company’s consolidated balance sheets.

Coronavirus Disease 2019 Impact

The World Health Organization declared the coronavirus disease 2019 (“COVID-19”) outbreak a pandemic on March 11, 2020. The COVID-19 outbreak has caused an economic downturn on a global scale, including temporary closures of many businesses and reduced consumer spending due to aggressive shelter-in-place measures implemented by state governments, as well as significant market disruption and volatility. The magnitude and duration of the COVID-19 pandemic and the impact of actions taken by governmental authorities, businesses and consumers to mitigate its effects create significant uncertainty. The Company continues to actively monitor the impact of COVID-19 as it continues to unfold and cannot, at this time, predict the impact the pandemic will have on its future consolidated financial position, cash flows or results of operations, however the impact could be material. See Item 1A. Risk Factors for additional information.