Leases

3 Months Ended

Mar. 31, 2020

10. Leases

On January 1, 2019, the Company adopted Leases (Topic 842) using the modified retrospective method applied to all leases existing at the date of initial application. The Company elected the practical expedients to not reassess whether any existing contracts are or contain leases, not reassess the lease classification for any existing leases, and not reassess initial direct costs for any existing leases, upon the adoption of Leases (Topic 842).

The Company leases its corporate headquarters of 21,020 rentable square feet in accordance with a non-cancelable 89-month operating lease agreement as amended and effective in January 2017. The Company also leases an additional office space of 6,003 rentable square feet in accordance with a non-cancellable 90-month operating lease agreement entered into in April 2017, with an option to extend for additional 60 months. The extension option is not included in the determination of the lease term as it is not reasonably certain to be exercised.

For the three months ended March 31, 2020 and 2019, a summary of the Company’s lease information is shown below:

	Three Months Ended March 31,
(In thousands)	2020		2019
Lease cost:
Operating lease costs	$	168	$	168
Other information:
Cash paid for operating leases	$	174	$	170
Right-of-use assets obtained in exchange for operating lease liabilities	$	-	$	3,042
Weighted average discount rate for operating leases ⁽¹⁾		-		8.0	%

(1)

The Company used 8.0%, its estimated incremental borrowing rate for similar secured assets, as the discount rate for the leases to determine the present value of the lease payments because the implicit rate in each lease is not readily determinable. The discount rate was calculated on the basis of information available as of January 1, 2019, the application date.

As of March 31, 2020, the weighted average remaining operating lease term was 4.6 years.

As of March 31, 2020, scheduled future maturities and present value of the operating lease liabilities are as follows:

(In thousands)
Year	March 31, 2020
Remainder of 2020	$	530
2021		724
2022		743
2023		765
2024		542
2025 and thereafter		77
Total maturities	$	3,381
Present value included in consolidated balance sheet:
Current portion of operating lease liabilities	$	506
Noncurrent operating lease liabilities		2,327
Total operating lease liabilities	$	2,833
Difference between the maturities and the present value of operating lease liabilities	$	548