At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company calculates the associated lease liability and corresponding right-of-use asset upon lease commencement using a discount rate based on the rate implicit in the lease or an incremental borrowing rate commensurate with the term of the lease.

The Company records lease liabilities within current liabilities or long-term liabilities based upon the length of time associated with the lease payments. The Company records its operating lease right-of-use assets as long-term assets. Right-of-use assets for financing leases are recorded within property and equipment, net in the balance sheet. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Instead, the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The Company leases laboratory, office and storage facilities in San Antonio, Texas, under operating lease agreements that expire in 2028. The Company also leases certain office space in Austin, Texas under a month-to-month operating lease agreement. In addition, the Company leases certain equipment under various operating and finance leases. The lease agreements generally provide for periodic rent increases, and renewal and termination options. The Company’s lease agreements do not contain any material variable lease payments, residual value guarantees or material restrictive covenants.

Certain leases require the Company to pay taxes, insurance, and maintenance. Payments for the transfer of goods or services such as common area maintenance and utilities represent non-lease components. The Company elected the package of practical expedients and therefore does not separate non-lease components from lease components.

The table below summarizes the Company’s lease liabilities and corresponding right-of-use assets (in thousands):

	As of March 31, 2020
Assets
Operating	$	744
Financing	102
Total leased assets	$	846

Liabilities
Current:
Operating	$	136
Financing	108
Noncurrent:
Operating	624
Financing	4
Total lease liabilities	$	872

Weighted-average remaining lease term (years) - operating leases	6.74
Weighted-average remaining lease term (years) - finance leases	0.82
Weighted-average discount rate - operating leases		7.91	%
Weighted-average discount rate - finance leases		5	%

The table below summarizes the Company’s lease costs from its unaudited consolidated condensed statement of operations, and cash payments from its unaudited consolidated condensed statement of cash flows during the three months ended March 31, 2020 (in thousands, except years and rates):

	Three Months Ended March 31, 2020
Lease expense:
Operating lease expense	$	55
Finance lease expense:
Depreciation of right-of-use assets	32
Interest expense on lease liabilities	2
Total lease expense	$	89

Cash payment information:
Operating cash used for operating leases	$	51
Financing cash used for financing leases	18
Total cash paid for amounts included in the measurement of lease liabilities	$	69

Total rent expenses for the three months ended March 31, 2020 was $95,000, which includes leases in the table above, month-to-month operating leases, and common area maintenance charges.

The Company’s future minimum annual lease payments under operating and financing leases at March 31, 2020 are as follows in (thousands):

	Financing			Operating
	Leases			Leases

Remaining 2020	$	105		$	159
2021	7			183
2022	—			123
2023	—			100
Thereafter	—			447
Total minimum lease payments	$	112		$	1,012
Less: amount representing interest	0				(252	)
Present value of obligations under leases	112				760
Less: current portion		(108	)		(136	)
Noncurrent lease obligations	$	4		$	624

The Company has entered into agreements with various research organizations for pre-clinical and clinical development studies, which have provisions for cancellation. Under the terms of these agreements, the vendors provide a variety of services including conducting research, recruiting and enrolling patients, monitoring studies and data analysis. Payments under these agreements typically include fees for services and reimbursement of expenses. The timing of payments due under these agreements is estimated based on current study progress. As of March 31, 2020, the Company had clinical research study obligations of $0.9 million, all of which is expected to be paid within a year. Should the timing of the clinical trials change, the timing of the payment of these obligations would also change.

The Company is subject to various claims and contingencies related to legal proceedings. Due to their nature, such legal proceedings involve inherent uncertainties including, but not limited to, court rulings, negotiations between affected parties and governmental actions. Management assesses the probability of loss for such contingencies and accrues a liability and/or discloses the relevant circumstances, as appropriate. Management believes that any liability to the Company that may arise as a result of currently pending legal proceedings will not have a material adverse effect on the Company’s financial condition, liquidity, or results of operations as a whole.