Leases

9 Months Ended

Sep. 30, 2020

Leases

Leases

Note 11.    Leases

On May 1, 2020, the Company took possession of premises in Qingdao, China in furtherance of a larger public/private initiative to promote EV business in the region and reduce the reliance on traditional combustion engines. The premises are indirectly and partially owned by local governmental entities, and were provided to the Company at no charge. The Company, pursuant to the underlying lease, has use of the premises until November 30, 2034.

The Company has determined the fair value of the lease and recorded the lease in accordance with ASC 842, Leases(“ASC 842,”) ASC 845 Nonmonetary Transactions(“ASC 845,”) and ASC 958, Not-for-Profit Entities (“ASC 958.”) In connection with this lease agreement, the Company recorded operating right of use assets of $7.2 million, and an operating lease liability of $7.2 million. The fair value of the annual lease payments is $0.7 million.

As of September 30, 2020, the Company's operating lease right of use assets and operating lease liabilities are $7.4 million and $7.3 million, respectively. The weighted-average remaining lease term is 13.8 years and the weighted-average discount rate is 4.4%.

As of December 31, 2019, the Company's operating right of use assets and operating lease liabilities were $6.9 million and $7.3 million, respectively. As of September 30, 2019, the weighted-average remaining lease term was 6.6 years and the weighted-average discount rate was 7.5%.

The following table summarizes the components of lease expense (in thousands):

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Operating lease cost	$	519	$	391	$	1,488	$	1,264
Short-term lease cost		82		78		279		251
Sublease income		(11)		(11)		(74)		(11)
Total	$	590	$	458	$	1,693	$	1,504

The following table summarizes supplemental information related to leases (in thousands):

	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	115	$	448	$	961	$	968
Right of use assets obtained in exchange for new operating lease liabilities		—		935		—		935

The following table summarizes the maturity of operating lease liabilities (in thousands):

	Leased Property
Years ending December 31	Costs
2020	$	260
2021		721
2022		614
2023		632
2024		645
2025 and thereafter		7,009
Total lease payments		9,881
Less: Interest		(2,541)
Total	$	7,340

In the three months ended March 31, 2020 the Company ceased to use the premises underlying one lease and vacated the real estate. As a result, the Company recorded an impairment loss related to the right of use asset of $0.9 million. In the three months ended June 30, 2020, the Company completed negotiations with the landlord to settle the remaining operating lease liability of $0.9 million by issuing a promissory note for $0.1 million, bearing an annual interest rate of 4.0%, and which is due and payable on December 31, 2021. The Company recorded a gain of $0.8 million in “Other income (expense)” for the settlement of the operating lease liability in the three months ended June 30, 2020.

In the three months ended June 30, 2020 the Company ceased to use its New York City headquarters at 55 Broadway, which are subject to two leases, and vacated the real estate. As a result, the Company recorded an impairment loss related to the right of use asset of $5.3 million. The Company had an operating use liability of $5.8 million with respect to these leases, excluding $0.6 million in accounts payable. In the three months ended September 30, 2020, the Company completed negotiations with the landlord to settle the remaining amounts due of $6.4 million for a cash payment of $1.5 million. The Company recorded a gain of $4.9 million in “Other income (expense)” for the settlement of the operating lease liability in the three months ended September 30, 2020.