LEASES

The Company leases all of its office space pursuant to lease arrangements, each of which have expiration dates on or before February 29, 2024. On January 1, 2019 (the “Adoption Date”), the Company adopted ASC 842 Leases, using the alternative modified transition method to apply the standard and measure leases existed at, or entered into after the Adoption Date. Upon adoption of ASC 842, the Company recognized operating lease liabilities of $4.9 million, which represents the present value of the remaining lease payments of existing leases as of the Adoption Date using an estimated incremental borrowing rate of 3.25%. The Company also recognized lease ROU assets of $4.0 million which represent the Company's right to use an underlying asset for the lease term. In conjunction with the adoption of ASC 842, the Company elected the following practical expedients: (i) combining lease and non-lease components, (ii) leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheets, and the associated lease payments are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) on a straight-line basis over the lease term, and (iii) applying discount rates to operating leases using a portfolio approach.

There was no cumulative-effect adjustment recognized on the beginning accumulated deficit as a result of the adoption. The comparative periods presented reflect the former lease accounting guidance.

Below is a summary of our lease ROU assets and lease liabilities as of the Adoption Date and December 31, 2019, respectively (in thousands):



	Balance Sheets Classification	December 31, 2019		January 1, 2019
Assets
Operating lease assets	Other assets	$	2,202	$	4,048
Liabilities
Operating lease liabilities - current	Other current liabilities	1,150		1,157
Operating lease liabilities - long-term	Other long-term liabilities	2,664		3,693
Total lease liabilities		$	3,814	$	4,850

The table below provides supplemental information related to operating leases during the year ended December 31, 2019 (in thousands except for lease term):



Cash paid within operating cash flow	$	1,178
Weighted average lease terms (in years)	3.35

Operating lease ROU assets and liabilities commencing after the Adoption Date are recognized at commencement date based on the present value of lease payments over the lease term. Under ASC 842, all operating lease expenses are recognized on a straight-line basis over the lease term. During the years ended December 31, 2019, 2018 and 2017, the Company's operating lease expenses are as follows (in thousands):



	Year ended December 31,
	2019		2018		2017
Operating lease costs	$	1,120	$	1,181	$	1,307

As of December 31, 2018, the Company had $0.8 million in deferred rent which represented unamortized lease incentives on its outstanding leases and was recorded as a reduction to the ROU assets recognized at the Adoption Date.

The Company leases several of its facilities under non-cancelable operating lease arrangements that expire at various dates through 2024. On November 12, 2014, the Company entered into an amendment to the lease of its primary facilities. The amendment terminated the prior lease of a San Jose, California facility of approximately 33,000 square feet as of May 2015, which had been scheduled to expire in December 2016. It also began the current lease of a San Jose, California facility of approximately 42,000 square feet as of February 2015. The lease contains provisions for leasehold improvement incentives and expires as of April 2023 and can be extended to April 2028.

During 2019, the Company began to shift general and administrative, research and development and executive functions and employees from the SJ Facility to temporary office space maintained in San Francisco, California and the Company's Montreal, Canada office. In the fourth quarter 2019, the Company announced the decision to exit the SJ Facility. The lease for the SJ Facility expires in April 2023. The Company's exit of the SJ Facility is expected to be completed by March 31, 2020. The Company is currently marketing the SJ Facility for a sublessor. In the fourth quarter of 2019, the Company recorded a $0.9 million impairment charge to the SJ Facility ROU asset.

Minimum future lease payments obligations as of December 31, 2019 are as follows (in thousands):



For the Years Ending December 31,
2020	$	1,230
2021	1,197
2022	1,171
2023	457
2024	24
Total	$	4,079

Effective January 31, 2020, the Company entered into an agreement to lease approximately 5,000 square feet of office space in San Francisco, California. This facility will be used for administrative and headquarter functions. The lease expires in 2022. The lease commenced in the first quarter of 2020. The Company expects to increase its ROU assets by of $0.6 million in first quarter of 2020 related to this operating lease.