February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize assets and liabilities
for leases with lease terms greater than twelve months in the statement of financial position. Leases will be classified as either
financing or operating, with classification affecting the pattern of expense recognition in the statements of operations. ASU
2016-02 also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty
of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim
reporting periods within that reporting period. Early adoption is permitted. Although Asterias has not completed its evaluation
of the impact of the adoption of ASU 2016-02, Asterias currently holds operating leases (see Note 8). As a result, the adoption
of ASU 2016-02 could have a material impact to Asterias’ financial statements.
June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based
Payment Accounting. ASU No. 2018-07 supersedes the guidance for equity-based payments to non-employees (Topic ASC 505-50). Under
the new standard, an entity should treat equity-based payments to nonemployees the same as stock-based compensation to employees
in most cases. The new guidance is effective for interim and annual periods beginning after December 15, 2018, with early adoption
permitted. The Company is assessing ASU 2018-07 and does not expect it to have a material impact on its financial statements.
August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure
Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements. The new guidance
is effective for interim and annual periods beginning after December 15, 2019. The Company is assessing ASU 2018-13 and does not
expect it to have a material impact on its consolidated financial statements.
Balance Sheet Components
plant and equipment, net
of September 30, 2018 and December 31, 2017, property, plant and equipment consisted of the following (in thousands):
|| || ||
|| || |
|Furniture, fixtures and
|| ||1,753|| ||
|| ||2,112|| |
|| ||1,793|| ||
|| ||7,387|| |
|Less - accumulated
depreciation and amortization||
and equipment, net||
and amortization expense for the three and nine months ended September 30, 2018 was $248,000 and $761,000, respectively. Depreciation
and amortization expense for the three and nine months ended September 30, 2017 was $285,000 and $840,000, respectively.
September 28, 2018, the Company’s office and research facility lease in Fremont, California (Fremont Lease) was terminated
(see Note 8). Upon of the termination of the Fremont Lease, Novo Nordisk Research Center Seattle Inc. (“NNRCSI”) entered
into a new lease of the facilities with the landlord and a sublease agreement with the Company for part of the facility. As a
result, the Company derecognized its leasehold improvements at the office and research facility with a net book value of $3.0
million and the related lease liability to the landlord of $3.1 million. This resulted in a net gain of $76,000 which is included
in the deferred rent and lease incentives on the balance sheet at September 30, 2018 and will be amortized over the term of the
on September 28, 2018, the Company sold certain laboratory equipment to NNRCSI which it is leasing back under the sublease agreement
(see Note 8). The gain on the asset sale and lease back totaling $116,000 is included in the deferred rent and lease incentives
on the balance sheet at September 30, 2018 and will be amortized over the term of the sublease for the research facility space.