Leases (Tables)

3 Months Ended

Mar. 31, 2020

Classification of Operating ROU Assets and Lease Liabilities on the Balance Sheet

Lease contracts are evaluated at inception to determine whether they contain a lease and whether we obtain the right to control an identified asset. The following table summarizes the classification of operating ROU assets and lease liabilities on the consolidated balance sheets (in thousands):

Operating Leases	Classification	March 31, 2020		December 31, 2019
Leased Assets
Operating lease - right of use assets	Long term assets	$	2,053	$	2,215

Lease Liabilities
Operating lease liabilities - Current	Other current liabilities		1,159		1,153
Operating lease liabilities	Long term liabilities		2,704		3,000
		$	3,863	$	4,153

Lease Income and Expenses

The table below summarizes the lease income and expenses recorded in the consolidated statements of operations incurred during the three months ended March 31, 2020, (in thousands):

		Three months ended
Lease Cost	Classification	March 31, 2020			March 31, 2019
Operating lease cost ⁽¹⁾	Selling, general and administrative expenses	$	321		$	228
Short-term leases costs ⁽²⁾	Selling, general and administrative expenses		1			38
Sublease income⁽³⁾	Selling, general and administrative expenses		(32	)		(16	)
Net lease cost		$	290		$	250

⁽¹⁾ Includes variable lease costs which are immaterial.

⁽²⁾ Include leases maturing less than twelve months from the report date.

⁽³⁾Sublease portfolio consists of 2 tenants, which sublease parts of our principal executive office located at 1332 Londontown Blvd, Suite 200, Sykesville, MD.

Future Minimum Lease Payments

The future minimum lease payments under non-cancellable operating leases are reflected below. This table also reflects the reconciliation of the undiscounted cash flows to the discounted operating lease liabilities as recognized at March 31, 2020 consolidated balance sheet (in thousands):

	Operating Leases
2020	$	995
2021		1,292
2022		1,184
2023		622
2024		106
After 2024		-
Total lease payments	$	4,199
Less: Interest		336
Present value of lease payments	$	3,863

Operating Lease Weighted Average Remaining Lease Term And Discount Rate

We calculated the weighted-average remaining lease term, presented in years below and the weighted-average discount rate for our operating leases. As noted in our lease accounting policy, we use the incremental borrowing rate as the lease discount rate.

Lease Term and Discount Rate	March 31, 2020	December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	3.28	3.51
Weighted-average discount rate
Operating leases	5.00%	5.00%

Classification of Lease Payments in the Statement of Cash Flows

The table below sets out the classification of lease payments in the consolidated statement of cash flows. The right-of-use assets obtained in exchange for operating lease liabilities represent the new operating leases obtained through our business combinations during the three months ended March 31, 2020.

(in thousands)

	Three months ended
Other Information	March 31, 2020		March 31, 2019
- Operating cash flows used in operating leases	$	339	$	235
Cash paid for amounts included in measurement of liabilities		339		235