Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

The Company leases space under a non-cancelable operating lease for our corporate headquarters. This lease has escalating lease terms and also includes a tenant incentive that was recorded at the time the lease was originally entered into. The lease does not contain contingent rent provisions. The Company also has a lease for additional office space under an operating lease. The lease for our corporate headquarters includes both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease components (e.g., common-area or other maintenance costs) which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases. The lease for our additional office space is non-cancelable with a lease term of less than one year and therefore, we have elected the practical expedient to exclude this short-term lease from our right-of-use assets and lease liabilities.

Our leases include options to renew. The exercise of lease renewal options is at our sole discretion. Therefore, the renewals to extend the lease terms are not included in our right of use assets and lease liabilities as they are not reasonably certain of exercise. We regularly evaluate the renewal options and when they are reasonably certain of exercise, we include the renewal period in our lease term.

We used our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

The cost components of our operating leases were as follows for the periods ended June 30, 2019:

	Three months ended June 30, 2019						Six months ended June 30, 2019
	Corporate		Additional		Operating		Corporate		Additional		Operating
	Headquarters		Office Space		Leases		Headquarters		Office Space		Leases
Operating lease cost	$	38,000	$	-	$	38,000	$	75,000	$	-	$	75,000
Variable lease cost		26,000		-		26,000		54,000		-		54,000
Short-term lease cost		-		9,000		9,000		-		19,000		19,000
Total	$	64,000	$	9,000	$	73,000	$	129,000	$	19,000	$	148,000

Variable lease costs consist primarily of taxes, insurance, and common area or other maintenance costs for our leased corporate headquarters which are paid based on actual costs incurred by the lessor.

Maturities of our lease liabilities for our corporate headquarters operating lease were as follows as of June 30, 2019:

Maturity of Lease Liabilities	Operating Leases
2019	$	108,000
2020		222,000
2021		57,000
Total lease payments	$	387,000
Less: Interest		20,000
Present value of lease liabilities	$	367,000

The remaining lease term as of June 30, 2019 was 1.75 years and the discount rate was 6%. The cash outflow for operating leases for the three and six months ended June 30, 2019 was $54,000 and $108,000, respectively.

The following table presents future minimum lease payments for our operating leases at December 31, 2018 under ASC 840 and is being presented for comparative purposes:

2019	$	217,000
2020	$	222,000
2021	$	57,000

Rent expense under these leases was approximately $75,000 and $135,000 for the three and six months ended June 30, 2018, respectively.