Quarterly report pursuant to Section 13 or 15(d)

Right-of-use Assets and Operating Lease Liabilities

Right-of-use Assets and Operating Lease Liabilities
3 Months Ended
Mar. 31, 2020
Leases [Abstract]  
Right-of-use Assets and Operating Lease Liabilities



The Company has entered into several leases that are accounted for as operating leases in accordance with ASC 842. The Company currently has four office and warehouse leases in American Fork, Utah related to the operation of Verb Direct with an aggregate lease payment of $31,000 per month. Each lease expires in December 2023. The lessor of the office and warehouse area is JMCC Properties, which is an entity owned and controlled by the former shareholders and certain current officers of the Company’s subsidiary, Verb Direct.


In addition, the Company leases its corporate headquarters located at 2210 Newport Boulevard, Suite 200, Newport Beach, California 92663 under a lease with a term of 94 months. The average monthly base rent for the first 12 months of the Lease is approximately $7,000 after rent abatement. For the next 82 months of the Lease, the average monthly base rent will be approximately $39,000. As part of the agreement, the landlord provided leasehold incentive of $572,000 for the construction of the leasehold improvements. Pursuant to ASC 842, the lease incentive of $572,000 was recorded as a part of leasehold improvements and a reduction to the right of use assets. The Lease commenced in August 2019.


As March 31, 2020 and December 31, 2019, the Company had recorded right of use assets of $3,140,000 and $3,275,000, respectively, net of amortization.  As March 31, 2020 and December 31, 2019, the Company had recorded lease liabilities of $3,937,000 and $3,982,000, respectively, related to these leases.



Period Ended

March 31, 2020

Lease cost        
Operating lease cost (included in general and administration in the Company’s statement of operations)   $ 175,000  
Other information        
Cash paid for amounts included in the measurement of lease liabilities   $  
Weighted average remaining lease term – operating leases (in years)     5.11  
Average discount rate – operating leases     4.0 %


    March 31, 2020  
Operating leases        
Right-of-use assets, net of amortization of $484,000   $ 3,140,000  
Short-term operating lease liabilities   $ 505,000  
Long-term operating lease liabilities     3,432,000  
Total operating lease liabilities   $ 3,937,000