Note 13 - Leases

6 Months Ended

Jun. 30, 2020

13. Leases

We lease datacenters, corporate offices and fiber-optic cables under operating leases. The Company does not have any leases classified as finance leases.

Our leases have remaining lease terms of 1 year to 20 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year.

The components of lease expense were as follows (Dollar amounts in thousands of U.S. dollars):

	*For the three months ended*		*For the three months ended*		*For the six months ended*		*For the six months ended*
	*June 30, 2020*		*June 30, 2019*		*June 30, 2020*		*June 30, 2019*
Operating Lease Cost (leases with a total term greater than 12 months)	$	527	$	826	$	1,074	$	1,897
Short-term Lease Cost (leases with a total term of 12 months or less)		130		279		374		403
Variable Lease Cost		145		193		273		364
Total Lease Cost	$	802	$	1,298	$	1,721	$	2,664

Lease Cost is presented in general and administrative expenses and network expenses within our consolidated statements of operations and comprehensive income.

Information related to leases was as follows (Dollar amounts in thousands of U.S. dollars):

	*For the three months ended*		*For the three months ended*		*For the six months ended*		*For the six months ended*
Supplemental cashflow information:	*June 30, 2020*		*June 30, 2019*		*June 30, 2020*		*June 30, 2019*
Operating Lease - Operating Cash Flows (Fixed Payments)	$	429	$	834	$	987	$	1,885
Operating Lease - Operating Cash Flows (Liability Reduction)	$	359	$	703	$	797	$	1,651
New ROU Assets - Operating Leases	$	36	$	41	$	911	$	4,468

Supplemental balance sheet information related to leases:	*June 30, 2020*			*December 31, 2019*
Weighted Average Discount Rate		3.95	%		5.20	%
Weighted Average Remaining Lease Term	8.51 yrs			8.62 yrs

Maturity of lease liability as of June 30, 2020 (Dollar amounts in thousands of U.S. dollars):

	*June 30, 2020*
Remaining of 2020	$	973
2021		1,774
2022		1,695
2023		1,657
2024		1,379
Thereafter		5,068
Total future lease payments		12,546
Less imputed interest		1,871
Total	$	10,675

Operating lease payments include payments under the non-cancellable term and approximately $0.6 million related to options to extend lease terms that are reasonably certain of being exercised.

As of June 30, 2020, we have entered into lease agreements for total payments of$1.1 million that have not yet commenced, and therefore are not included in the lease liability.

In March 2020, the Company modified a corporate office lease to defer its April 2020 rent payment to be paid later in four equal installments from September to December 2020. The modification resulted in an increase to the right of use operating lease asset and right of use operating lease liability of $0.3 million and $0.6 million, respectively, which also included the foreign exchange re-measurement of the right of use asset at the date of modification. Foreign exchange revaluation on both the right of use asset and liability is presented in general and administrative expenses within our consolidated statements of operations and comprehensive income.

The Company has elected to use the single exchange rate approach when accounting for lease modifications. Under the single exchange rate approach, the entire right of use asset is revalued at the date of modification in the Company’s functional currency provided the re-measurement is not considered a separate contract or if the re-measurement is related to change the lease term or assessment of a lessee option to purchase the underlying asset being exercised.