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LEASES | 9 Months Ended
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Sep. 30, 2019
LEASES |
LEASES | (8) LEASES The Company’s primary leases are as follows:
| · |  | The Company entered into a sublease agreement on October 20, 2017 with CSG Systems Inc. for approximately 41,715 square feet at 9555 Maroon Circle, Englewood CO 80112. The term of the sublease runs through June 30, 2023, with an option to extend for an additional two years through June 30, 2025. During the first year of the sublease, the rent per square foot is $7.50, increasing to $19.75 during the second year of the sublease and each year thereafter for the initial term increasing by an additional $1 per square foot. The Company has not yet determined whether it is reasonably certain to exercise its renewal option and has therefore only considered the initial term when determining the lease liability and lease asset. The Company is also obligated to pay its proportionate share of building operating expenses. The sub-landlord agreed to contribute approximately $0.2 million toward tenant improvements which is accounted for as a reduction of the operating lease asset and subsequently treated as a reduction of rent expense over the term of the lease.
| · |  | The Company entered into an amendment to its sublease agreement on March 11, 2019 with CSG Systems, Inc. for an additional 21,420 square feet of office space at its current headquarters location at Two Maroon Circle, located at 9555 Maroon Circle, Englewood, CO 80112. The term of sublease for the additional space began on June 1, 2019 and runs through June 30, 2023, with an option to extend the term for an additional two years through June 30, 2025. During the first seven months of the Amendment to the Sublease, the rent per square foot is $10.00, increasing to $20.75 from January 1, 2020 through October 31, 2020. For annual periods beginning November 1, 2020, the price per square foot increases by an additional $1 per square foot. The expansion work was completed, and the lease commenced, on June 1, 2019. Upon lease commencement, the Company recorded an operating lease liability and a corresponding right of use asset for $1.6 million each.
| · |  | The Company entered into an equipment lease on September 20, 2019 with Konica Minolta Premier Finance for a copier/printer and related software located at its corporate offices. The term of the equipment lease agreement is 5 years with the option to purchase the equipment at the end of the lease. The Company does not expect to exercise the option to purchase the equipment and, accordingly, has not considered the effect of the purchase in the evaluation of the lease asset and liability. Rent is to be paid monthly at a fixed rate for the term of the equipment lease agreement. Upon lease commencement, the Company recorded a financing lease liability and a corresponding right of use asset for $0.2 million each.
The Company’s operating leases do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring the lease liability. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The Company’s incremental borrowing rate was determined to be 4.8% for its operating lease liabilities. The Company’s equipment lease agreement has an implicit rate of 8.3%, which was used to measure its financing lease liability. The remaining lease term was 4.0 years for the Company’s operating leases and 5.0 years for its financing leases. The table below reconciles the undiscounted future minimum lease payments under the Company’s operating and capital leases to the total operating and capital lease liabilities recognized on the consolidated balance sheets as of September 30, 2019 (in thousands):
|  | Operating lease liabilities |  | Financing lease liabilities
October 1, 2019 through December 31, 2019 |  | $ | 272 |  | $ | 25
2020 |  |  | 1,344 |  |  | 45
2021 |  |  | 1,408 |  |  | 45
2022 |  |  | 1,473 |  |  | 45
2023 |  |  | 763 |  |  | 45
2024 |  |  | — |  |  | 34
Total undiscounted future minimum lease payments |  |  | 5,260 |  |  | 241
Less: Difference between undiscounted lease payments and discounted lease liabilities: |  |  | (556) |  |  | (42)
Total lease liabilities |  | $ | 4,704 |  | $ | 199
Operating and financing lease costs were $0.4 and $0.8 million for the three and nine months ended September 30, 2019, respectively and $0.2 million and $0.7 million for the same periods in 2018, which were included in general and administrative expenses on the consolidated statement of operations.

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- Definition The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 + Details
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