Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

v3.19.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2019
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

10. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases office space pursuant to operating leases that are subject to specific escalation clauses. Rent expense charged to operations for the three months ended June 30, 2019 and 2018 amounted to $1,529 and $1,386, respectively. The Company received sub-lease income from sub-tenants during the three months ended June 30, 2019 and 2018 of $38 and $83, respectively. Therefore, for the three months ended June 30, 2019 and 2018, net rent expense amounted to $1,491 and $1,303, respectively, and is included in general and administrative expenses in the Condensed Consolidated Statements of Operations.

The Company leases office space pursuant to operating leases that are subject to specific escalation clauses. Rent expense charged to operations for the six months ended June 30, 2019 and 2018 amounted to $3,058 and $2,898, respectively. The Company received sub-lease income from sub-tenants during the six months ended June 30, 2019 and 2018 of $70 and $158, respectively. Therefore, for the six months ended June 30, 2019 and 2018, net rent expense amounted to $2,988 and $2,740, respectively, and is included in general and administrative expenses in the Condensed Consolidated Statements of Operations.

As security for performance under the leases, the Company is required to maintain letters of credit in favor of the landlord totaling $506 as of June 30, 2019 and December 31, 2018.  Furthermore, the Company maintains an $80 letter of credit in favor of its Boston landlord. Both are collateralized by the Company’s revolving credit facility with City National Bank.

In March 2014, the Company entered into a lease agreement for additional office space in Richmond, VA.  The lease commenced on May 1, 2014 and expires July 31, 2019. The lease is subject to escalation clauses and provides for a rent-free period of three months.  Monthly rent expense is $5.  The Company paid a refundable security deposit of $3.  In September 2016, the Company entered into Lease Amendment Number One (“Amendment Number One”) to expand its space and extend its lease.  This expansion was to occur on or about October 1, 2017, and the lease was extended to November 30, 2024.  The lease was further amended on January 16, 2018 (“Amendment Number Two”) to update the expansion date to January 12, 2018 and to extend the term of the lease to November 30, 2028.  The amended lease provides for a rent credit of $40.  Monthly rent expense under the amended lease is $10.

In June 2015, the Company entered into a lease agreement for office space in Charlottesville, VA.  The lease commenced on June 30, 2015 and expired on June 30, 2018.  On June 6, 2019, the Company extended this lease for three years, with the new term beginning on July 1, 2019 and expiring on June 30, 2022.  Monthly rent expense is $2.  The Company paid a refundable security deposit of $2.

In connection with the Jamison Acquisition, the Company assumed lease agreements for office space in Bedminster and Princeton, NJ.  The Bedminster lease, as extended, expires on March 31, 2022.  Monthly rent expense on this lease is $11.  The Princeton lease, as extended, expired on April 30, 2016.  Monthly rent expense on this lease was $5.  Both leases are subject to escalation clauses, and the Bedminster lease provided for a rent-free period of four months.

In December 2015, the Company extended its lease related to its New York City office space.  The amended lease commenced on October 1, 2017 and expires on September 30, 2028.  The lease is subject to escalation clauses, and provided for a rent-free period of twelve months and for tenant improvements of up to $2,080.  Monthly rent under this extension is $446.

In January 2016, the Company entered into a lease agreement for office space in Princeton, NJ.  The lease commenced April 23, 2016 and expires on August 31, 2022.  This lease replaces the Princeton lease discussed above that expired on April 30, 2016.  Monthly rent expense on this lease is $6.  The lease is subject to escalation clauses, and provides for a rent-free period of five months.

With the Cappiccille Acquisition, the Company assumed a lease agreement for office space in Livingston, NJ.  The lease was month-to-month.  Monthly rent expense was $2.  This lease was terminated in January 2019.

In January 2018, the Company extended its lease related to its Boston, MA office space.  The amended lease commenced on January 1, 2018 and expires on April 30, 2023.  The lease provides for a rent-free period of one month.  Monthly rent under this extension is $33.

With the Neosho Acquisition, the Company assumed a lease agreement for office space in La Jolla, CA.  The lease expires January 31, 2020.  Monthly rent expense is $3.

The components of lease expense for the three and six months ended June 30, 2019 were as follows:

 

 

  

Three Months

Ended June 30,

2019

 

 

Six Months

Ended June 30,

2019

 

Operating Lease Cost

  

$

1,469

  

 

$

2,936

  

Finance Lease Cost:

  

 

 

  

 

 

 

  

     Amortization of ROU assets

  

 

17

  

 

 

48

  

     Interest on lease liabilities

  

 

1

  

 

 

3

 

     Total

 

$

18

 

 

$

51

 

 

The following table summarizes the maturities of lease liabilities at June 30, 2019:

 

 

  

Operating Leases

 

  

Non-cancellable
Subleases

 

 

Operating Lease
Liabilities

 

Remainder of 2019

  

$

2,975

  

  

$

(17

)

 

$

2,958

  

2020

  

 

5,754

  

  

 

(34

)

 

 

5,720

  

2021

  

 

5,746

  

  

 

(35

)

 

 

5,711

  

2022

  

 

5,726

  

  

 

(35

)

 

 

5,691

  

2023

 

 

5,331

 

 

 

(6

)

 

 

5,325

 

Thereafter

 

 

24,656

 

 

 

 

 

 

24,656

 

Total

  

$

50,188

  

  

$

(127

)

 

 

50,061

  

Less imputed interest

 

 

 

 

 

 

 

 

 

 

(8,293

)

Total remaining liabilities

 

 

 

 

 

 

 

 

 

$

41,768

 

Weighted-average remaining lease term – operating leases (months)

 

 

 

 

 

 

 

 

 

 

108.3

 

Weighted-average discount rate

 

 

 

 

 

 

 

 

 

 

4.3

%

 

The Company has finance leases for certain office equipment. The Company entered into a finance lease agreement for a telephone system during 2014.  The amount financed was $321 and the lease has a term of five years, which began on March 1, 2014.   Monthly minimum lease payments were $5, and continued through November 30, 2018.   On June 30, 2015, the Company assumed certain finance leases for equipment totaling $253 as part of the Jamison Acquisition.  In July 2015, the Company entered into a finance lease for a copier.  The amount financed was $21 and the lease has a term of three years, which began on July 1, 2015.  Monthly minimum lease payments were $1, and continued through June 30, 2018.  In October 2015, the Company entered in a finance lease for a copier.  The amount financed was $18 and the lease has a term of three years, which began on November 1, 2015.  Monthly minimum lease payments were $1, and continued through October 31, 2018.  In January 2017, the Company entered into a finance lease agreement for a copier.  The amount financed was $11 and the lease has a term of two years, which began on January 1, 2017.  Monthly minimum lease payments were $1, and continued through December 31, 2018.  In January 2017, the Company entered into a finance lease agreement for two copiers.  The amount financed was $152 and the lease has a term of five years, which began on February 1, 2017.  Monthly minimum lease payments are $3, and continue through January 31, 2022.  In July 2017, the Company entered into a lease agreement for four copiers.  The amount financed was $72 and the lease has a term of three years, which began on July 1, 2017.  Monthly minimum lease payments are $2, and continue through June 30, 2020.  In March 2018, the Company entered into a lease agreement for a copier.  The amount financed was $11 and the lease has a term of three years, which began on March 1, 2018.  Monthly minimum lease payments are $0.3, and continue through February 28, 2021.  In March 2019, the Company entered into a lease agreement for a copier.  The amount financed was $13 and the lease has a term of three years, which began on March 1, 2019.  Monthly minimum lease payments are $0.4, and continue through February 28, 2022.  In March 2019, the Company entered into an additional lease agreement for a copier.  The amount financed was $12 and the lease has a term of 39 months, which began on March 1, 2019.  Monthly minimum lease payments are $0.4, and continue through May 31, 2022. The aggregate principal balance of finance leases was $160 and $188 as of June 30, 2019 and December 31, 2018, respectively.

The assets relating to finance leases that are included in equipment as of June 30, 2019 and December 31, 2018 are as follows:

 

 

  

June 30,

2019

 

 

December 31,

2018

 

Finance lease assets included in furniture and equipment

  

$

588

  

 

$

605

  

Finance lease assets included in software

  

 

  

 

 

58

  

Less: Accumulated depreciation and amortization

  

 

(431

)

 

 

(462

)

 

  

$

157

  

 

$

201

  

 

Depreciation expense relating to finance lease assets was $22 and $40 for the three months ended June 30, 2019 and 2018, respectively.   Depreciation expense relating to finance lease assets was $53 and $61 for the six months ended June 30, 2019 and 2018, respectively.  

Future minimum lease payments under finance leases are as follows:

 

 

  

Future Minimum Lease
Commitments

 

Remainder of 2019

  

$

45

  

2020

  

 

75

  

2021

  

 

37

  

2022

 

 

3

 

2023

 

 

 

Total

  

$

160

  

Weighted-average remaining lease term – finance leases (months)

 

 

23.9

 

Weighted-average discount rate

 

 

3.9

%