LEASES

The Company leases the Rancho Cordova, California and Gurgaon, India facilities pursuant to operating leases. The Rancho Cordova lease expires in

May 2024.

The Gurgaon lease expires in

September 2023;

however, either party can terminate after

September 2019

with

three

months' notice. As such, it was accounted for as a short-term lease.

Operating Leases

Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments

not

yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments

not

yet paid, we use the Company's cost of capital based on existing debt instruments. Our material leases typically contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term.

The following summarizes the Company's operating leases:

	June 30, 2020
Right-of-use operating lease assets, net	$	797,000
Current lease liability		137,000
Non-current lease liability		689,000

Weighted average remaining lease term		3.9
Discount rate		22	%

Maturities of lease liabilities by year for our operating leases are as follows:

2020 (remaining)	$	152,000
2021		310,000
2022		319,000
2023		328,000
2024		139,000
Thereafter		--
Total lease payments	$	1,248,000
Less: imputed interest		(422,000	)
Present value of operating lease liabilities	$	826,000

Statement of Cash Flows

January 2019,

the Company signed a new amendment to its lease for office space at its corporate headquarters in Rancho Cordova, CA. The amendment was accounted for as a modification and resulted in a right-of-use asset of

$966,000

being recognized as a non-cash addition on the date of the amendment. Cash paid for amounts included in the measurement of operating lease liabilities was

$149,000

for the

six

months ended

June 30, 2020

and is included in cash flows from operating activities.

Operating Lease Costs

Operating lease costs were

$105,000

and

$208,000

for the

three

and

six

months ended

June 30, 2020,

respectively. These costs are primarily related to long-term operating leases, but also include immaterial amounts for variable lease costs and short-term leases with terms greater than

days.

Finance Leases

Finance leases are included in equipment and other current and non-current liabilities on the condensed consolidated balance sheet. The amortization and interest expense are included in general and administrative expense and interest expense, respectively on the statement of operations. These leases are

not

and were

not

material for the

three

and

six

months ended of

June 30, 2020.