The Company leases facilities and certain car leases (the "leases") under agreements accounted for as operating leases. The leases have initial lease terms ranging from 1 years to 12 years. Payments due under the lease contracts include primarily fixed payments. The lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Currently, there are no operating leases where we believe it is reasonably certain that the Company will exercise any option to extend the initial term.

The Company has evaluated its facility leases and determined which leases met the definition of the new standard in accordance with Topic 842. The Company also performed an evaluation of their other contracts with suppliers in accordance with Topic 842 and have determined that, except for the facilities and car leases described above, none of its supply contracts contain a lease. Further, the Company has made an accounting policy election to keep leases with a term of twelve months or less off the balance sheet. This policy applies to all classes of the underlying assets. The Company will recognize those lease payments and associated interest expense in the consolidated statement of operations evenly over the lease term.

The Company elected the “package of practical expedients,” which permits the Company not to reassess under ASC 842 its prior conclusions about lease identification, lease classification and initial direct costs. The Company also made a policy election not to separate non-lease components from lease components. Furthermore, the Company elected to not capitalize leases with a term of 12 months or less and recognize the lease expense for such leases generally on a straight-line basis over the lease term.

In connection with the leases, the Company recognized operating lease right-of-use assets of $13.2 million and $15.7 million and an aggregate lease liability of $16.9 million and $19.5 million in its condensed consolidated balance sheet as of June 30, 2020 and December 31, 2019, respectively.

The determination of the discount rate used to calculate the present value of the right-of-use assets and lease liabilities depends on whether an interest rate is specified in the lease or not. If the lease specifies a rate, that rate is used when calculating the present value of lease payments. If the rate is not readily determinable, which is generally the case for the Company, the Company’s incremental borrowing rate (“IBR”) as of the date of inception of the lease is used (for initial measurement, the IBR was determined as of the adoption date of the standard). The IBR is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. The Company used a ratings benchmark report against its peers in the technology sector.

The Company has operating leases for its corporate offices and other service agreements. The Company's leases have remaining lease terms of 1 to 12 years, some of which include options to extend. The Company's lease expense for the three months ended June 30, 2020 and 2019, consisting entirely of operating leases, was approximately $3.3 million and $3.2 million, respectively. The Company's lease expense for the six months ended June 30, 2020 and 2019 was approximately $6.8 million and $6.1 million, respectively. Operating lease payments, which reduced operating cash flows, amounted to $4.2 million and $3.2 million for the six months ended June 30, 2020 and 2019, respectively.

During the six months ended June 30, 2020, the Company decided to abandon the Berlin office. The cease use date was March 31, 2020. According to ASC 842, the Company elected to apply the "loss of straight-line lease cost", amortizing the

remaining right-of-use asset of approximately $0.4 million from the decision date to the cease use date. This expense is included in restructuring costs in the condensed consolidated statements of operations for the six months ended June 30, 2020.

Supplemental balance sheet information related to leases was as follows:



	As of June 30, 2020			As of December 31, 2019
Operating Leases	(in thousands, except lease term and discount rate)
Right-of-use asset	$	13,156		$	15,680

Current operating lease liability	6,196			6,602
Long term operating lease liability	10,725			12,865
Total operating lease liability	$	16,921		$	19,467

Weighted Average Remaining Lease Term
Operating leases	3.4 years			3.5 years

Weighted Average Discount Rate
Operating leases	7		%	7		%

Future minimum lease payments under non-cancellable operating leases (with an initial or remaining lease terms in excess of one year) are as follows (amounts in thousands):



Year ending December 31:	As of June 30, 2020			As of December 31, 2019
2020 (remaining six months for June 30, 2020)	$	3,593		$	7,787
2021	6,707			6,530
2022	3,959			3,746
2023	2,110			1,925
2024	1,336			1,148
Thereafter	1,196			864
Total undiscounted lease payments	18,901			22,000
Less: present value adjustment	(1,980		)	(2,533		)
Total operating lease liability	$	16,921		$	19,467

In 2019, the Company's 401(k) policy was changed to a Safe Harbor Plan, whereby the Company matches 100% of the first 3% of eligible compensation and 50% of the next 2% of eligible compensation. Furthermore, the match is immediately vested. Salaries and related expenses include $0.8 million of employer matching contributions for the three months ended June 30, 2020 and 2019, and $1.7 million and $1.8 million for the six months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020, the Company has a $1.8 million letter of credit outstanding substantially in favor of a certain landlord for office space. In addition, the Company has a letter of credit totaling $0.1 million as a security deposit for the due performance by the Company of the terms and conditions of a supply contract. There were no draws against these letters of credit during the six months ended June 30, 2020.

The Company is in the process of finalizing its sales tax liability analysis for states in which it has economic nexus. It is probable that the Company will be subject to sales tax liabilities plus interest in these states and therefore the estimated tax liability ranges between $2.5 million to $6.3 million with no amount within that range a better estimate than any other amount; accordingly, $2.5 million was accrued as of June 30, 2020.

In December 2019, a novel coronavirus disease (“COVID-19”) was first reported. On March 11, 2020, due to worldwide spread of the virus, the World Health Organization characterized COVID-19 as a pandemic. The COVID-19 global pandemic has resulted in a widespread health crisis, and the resulting impact on governments, businesses and individuals and actions taken by them in response to the situation have resulted in widespread economic disruptions, significantly affecting broader economies, financial markets, and overall demand for the Company’s products. The COVID-19 outbreak also has caused increased uncertainty in estimates and assumptions affecting the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities in the Company’s Condensed Consolidated Financial Statements as the extent and period of recovery from the COVID-19 outbreak and related economic disruption is difficult to forecast.

The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors including, but not limited to, the magnitude and duration of COVID-19, the extent to which it will impact worldwide macroeconomic conditions, the speed of the anticipated recovery, and governmental and business reactions to the pandemic. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19. The accounting matters assessed included, but were not limited to, the Company’s allowance for credit losses and the carrying value of the goodwill and other long-lived assets. While there was not any significant impact to the Company’s consolidated financial statements as of and

for the six months ended June 30, 2020, the Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods.