7. LEASES

On January 1, 2019, the Company recorded initial ROU assets and corresponding operating lease liabilities of approximately $750,000 and a reversal of deferred rent and prepaid expenses of approximately $6,000 resulting in no cumulative effect adjustment upon adoption of Topic 842. The Company leases administrative facilities and laboratory equipment through operating lease agreements. In addition we rent various equipment used in our diagnostic lab and in our administrative offices through finance lease arrangements. Our operating leases include both lease (e.g., fixed payments including rent) and non-lease components (e.g., common area or other maintenance costs). The facility leases include one or more options to renew, from 1 to 5 years or more. The exercise of lease renewal options is typically at our sole discretion, therefore, the renewals to extend the lease terms are not included in our ROU 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. As our leases do not provide an implicit rate, we use our collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

Operating leases result in the recognition of ROU assets and lease liabilities on the balance sheet. ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The primary leases we enter into with initial terms of 12 months or less are for equipment.

Upon the adoption of Topic 842, our accounting for finance leases, previously referred to as capital leases, remains substantially unchanged from prior guidance.

The balance sheet presentation of our operating and finance leases is as follows:


(dollars in thousands)	Classification on the Condensed Consolidated Balance Sheet	June 30, 2020		December 31, 2019

Assets:
Operating lease assets	Operating lease right-of-use assets, net	$	409	$	519
Finance lease assets	Property and equipment, net		198		184
Total lease assets		$	607	$	703

Liabilities:
Current:
Operating lease obligations	Current maturities of operating lease liabilities	$	213	$	209
Finance lease obligations	Current maturities of finance lease liabilities		43		52
Noncurrent:
Operating lease obligations	Operating lease liabilities, less current maturities		207		317
Finance lease obligations	Finance lease liabilities, less current maturities		115		119
Total lease liabilities		$	578	$	697

As of June 30, 2020 and December 31, 2019, the estimated future minimum lease payments, excluding non-lease components, are as follows:


(dollars in thousands)	Operating Leases				Finance Leases
		June 30,		December 31,		June 30,		December 31,
		2020		2019		2020		2019
2020	$	118	$	242	$	29	$	62
2021		241		241		50		38
2022		48		48		38		32
2023		35		35		28		28
2024		17		17		27		27
Thereafter		—		—		13		13
Total lease obligations		459		583		185		200
Less: Amount representing interest		(39)		(57)		(27)		(29)
Present value of net minimum lease obligations		420		526		158		171
Less, current portion		(213)		(209)		(43)		(52)
Long term portion	$	207	$	317	$	115	$	119

Other information as of June 30, 2020 and December 31, 2019:


	June 30,	December 31,
	2020	2019
Weighted-average remaining lease term (years):
Operating leases	2.2	2.8
Finance leases	4.1	4.3
Weighted-average discount rate:
Operating leases	8.00%	8.00%
Finance leases	8.22%	7.25%

During the six months ended June 30, 2020 and 2019, operating cash flows from operating leases was $0.1 million, respectively, and ROU assets obtained in exchange for operating lease liabilities was zero and $0.8 million, respectively.

Operating Lease Costs

Operating lease costs were approximately $0.1 million during the three and six months ended June 30, 2020, respectively, and $0.1 million and $0.2 million during the three and six months ended June 30, 2019, respectively. These costs are primarily related to long-term operating leases for the Company’s facilities and laboratory equipment. Short-term and variable lease costs were less than $0.1 million for the three and six months ended June 30, 2020 and 2019, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was approximately $0.1 million in operating cash flows for the six months ended June 30, 2020 and 2019, respectively.

Finance Lease Costs

Finance leases are included in property and equipment, net and finance lease liabilities, less current maturities on the condensed consolidated balance sheets. The associated amortization expense and interest expense are included in the condensed consolidated statements of operations for the six months ended June 30, 2020 and 2019. The balances within these accounts are less than $0.1 million, respectively.