Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.20.1
Leases
3 Months Ended
Mar. 31, 2020
Leases [Abstract]  
Leases
Leases

The Company occupies two leased properties as of March 31, 2020. The first leased property serves as the Company's corporate headquarters located in Rockville, Maryland ("Headquarters' Lease"). See below for more information regarding the Headquarters' Lease.

Upon consummation of the Aevi Merger on February 3, 2020, the Company also occupied leased administrative office space in Wayne, Pennsylvania, which expired on April 30, 2020. The monthly rent payment for this lease was $12,050.

Corporate Headquarters' Lease

The annual base rent for the Headquarters' Lease is $161,671, subject to annual 2.5% increases over the term of the lease. The lease provides for a rent abatement for a period of 12 months following the Company's date of occupancy. The lease has an initial term of 10 years from the date the Company makes its first annual fixed rent payment, which occurred in January 2020. The Company has the option to extend the lease two times, each for a period of five years, and may terminate the lease as of the sixth anniversary of the first annual fixed rent payment, upon the payment of a termination fee. As of the lease commencement date, it was not reasonably certain that the Company will exercise the renewal periods or early terminate the lease and therefore the end date of the lease for accounting purposes is January 31, 2030. The remaining term of the lease at March 31, 2020 was 9.8 years.

Supplemental balance sheet information related to the lease is as follows:

 
 
As of
 
 
March 31, 2020
 
December 31, 2019
Property and equipment, net
 
$
710,230

 
$
718,626

Other current liabilities
 
$
166,403

 
$
155,815

Other long-term liabilities
 
$
1,094,307

 
$
1,111,965



The operating lease ROU asset is included in property and equipment and the lease liability is included in accrued expenses and other current liabilities and other long-term liabilities in our condensed consolidated balance sheets. In order to determine the present value of lease payments, the Company utilized a discount rate of 7.7%. This rate was determined based on available information of the rate of interest the Company would pay to borrow on a collateralized basis at an amount equal to the lease payments in a similar economic environment over a similar term on the transition date.

The components of lease expense for the three months ended March 31, 2020 and 2019 were as follows:
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Operating lease cost*
 
$
54,508

 
$
54,506

*Includes short-term leases, which are immaterial.

The following table shows a maturity analysis of the operating lease liability as of March 31, 2020:

 
 
 
 
 
Undiscounted Cash Flows
April 1, 2020 through December 31, 2020
 
$
124,285

2021
 
169,510

2022
 
173,748

2023
 
178,092

2024
 
182,544

2025
 
187,108

Thereafter
 
813,638

Total lease payments
 
$
1,828,925

Less implied interest
 
$
(568,215
)
Total
 
$
1,260,710