LEASES

Adoption of ASC 842, "Leases"

On January 1, 2019, we adopted ASC 842 using the modified retrospective method outlined in ASU 2018-11 "Leases (Topic 842) Targeted Improvements." Results for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts are not adjusted and continue to be reported in accordance with our legacy accounting under Accounting Standards Codification Topic 840: Leases (ASC 840). The Company recorded the transition to ASC 842 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented.

We have elected the package of practical expedients permitted under the transition guidance, which among other things, allow us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption. We have also elected the practical expedient to not separate lease and non-lease components for the majority of our leases and the election to keep leases with an initial term of 12 months or less off of the consolidated balance sheet.

The cumulative effect of the changes made to our January 1, 2019 consolidated balance sheet for the adoption of ASC 842 were as follows:



	Balance at December 31, 2018			Adjustments Upon Adoption of ASC 842			Balance at January 1, 2019
Assets
Right-of-use operating lease assets	$	—		$	1,592		$	1,592
Liabilities
Other accrued liabilities	6,099			(22		)	6,077
Operating lease liabilities - current	—			650			650
Operating lease liabilities - non-current	—			942			942
Equity
Accumulated deficit	(102,495		)	22			(102,473		)

The adjustment made to the January 1, 2019 consolidated balance sheet related to an accrued liability for lease escalation clauses in certain of our leases under ASC 840 which is a cumulative-effect adjustment to the opening balance of accumulated deficit upon the adoption of ASC 842.

Leases

The terms of the Company’s four primary office space lease arrangements are as follows:


•	The Gallarate, Italy building lease, for approximately 1,636 square feet, runs from May 1, 2019 to April 30, 2025. This facility serves as the operating headquarters for our European operations.


•	The Westlake, Ohio building lease, for approximately 3,000 square feet, runs from May 1, 2017 to April 30, 2020. This facility houses engineering operations.


•	The Aurora, IL warehouse lease, for approximately 11,000 square feet, runs from September 1, 2013 to December 31, 2020. This facility serves as an outside warehouse facility. On January 30, 2020, the Company extended the lease for three years to expire on December 31, 2023.


•	The Overland Park, KS lease, for approximately 600 square feet, runs from October 16, 2018 to October 15, 2021. This facility serves primarily as a sales office.

The Company also has four additional operating leases related to certain office equipment and company leased vehicles. Our leases have remaining lease terms of 1 year to 6 years. Our leases do not contain any material residual value guarantees or material restricted covenants and we currently have no material sublease arrangements. We have no financing leases as defined under ASC 842.

We were party to a sublease agreement with American Bailey Corporation (ABC) that obligated ABC to reimburse us for its share of lease and lease-related expenses under our February 1, 2010 lease of executive offices in Stamford, Connecticut. The Company did not renew the lease following its expiration on December 31, 2019. Please refer to Note 12 to the consolidated financial statements for a discussion of our relationship with ABC.

Total operating lease expense for the year ended December 31, 2019 is as follows:



Operating lease cost	$	661
Short-term lease cost	136
Total lease cost	$	797

Prior to the adoption of ASC 842, rent expense, net of related party sub-lease income, was approximately $745 and $902 for the years ended December 31, 2018 and 2017.

The weighted average remaining lease term was 4.5 years as of December 31, 2019. The weighted average discount rate was 3.37% as of December 31, 2019.

Remaining maturities of our existing lease liabilities as of December 31, 2019 were as follows:



Year Ending December 31,	Operating Leases
2020	318
2021	227
2022	170
2023	161
Thereafter	207
Total lease payments	$	1,083
Less imputed interest	(103		)
Total	$	980

The following is the balance sheet classification of our existing lease liabilities as of December 31, 2019:



Operating lease liabilities - current	$	300
Operating lease liabilities - non-current	680
Total operating lease liabilities	$	980

Supplemental cash flow information related to leases was as follows:



	For the Twelve Months ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	645
Leased assets obtained in exchange for operating lease liabilities	609