LEASES

3 Months Ended

Mar. 31, 2020

We lease all of our office space pursuant to lease arrangements, each of which have expiration dates on or before February 29, 2024. We recognize lease expense 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. We combine lease and non-lease components for new and reassessed leases. We apply discount rates to operating leases using a portfolio approach.

On January 31, 2020, we 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 commenced in the first quarter of 2020 and expires in 2022. During the three months ended March 31, 2020, we recorded a lease liability of $0.6 million, which represents the present value of the lease payments using an estimated incremental borrowing rate of 3.50%. We also recognized lease right-of-use assets ("ROU") of $0.6 million which represents our right to use an underlying asset for the lease term.

Below is a summary of our ROU assets and lease liabilities as of March 31, 2020 and December 31, 2019, respectively (in thousands):



	Balance Sheets Classification	March 31, 2020		December 31, 2019
Assets
Right-of-use assets	Other assets	$	2,571	$	2,202
Liabilities
Operating lease liabilities - current	Other current liabilities	1,423		1,150
Operating lease liabilities - long-term	Other long-term liabilities	2,652		2,664
Total lease liabilities		$	4,075	$	3,814

The table below provides supplemental information related to operating leases during the three months ended as of March 31, 2020 (in thousands except for lease term):



Cash paid within operating cash flow	$	349
Weighted average lease terms (in years)	2.94

In the fourth quarter 2019, we announced our decision to exit the San Jose California facility (“SJ Facility”) by March 31, 2020. We accelerated the amortization of our SJ Facility leasehold improvements over their remaining estimated life. As of March 31, 2020, the SJ Facility leasehold improvements were fully amortized.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease expenses are recognized on a straight-line basis over the lease term. During the three months ended March 31, 2020, and 2019, our operating lease expenses are as follows:



	Three Months Ended March 31,
	2020		2019
Operating lease costs	$	273	$	265

Minimum future lease payment obligations as of March 31, 2020 are as follows (in thousands):



For the Years Ending December 31,
Remainder of 2020	1,186
2021	1,499
2022	1,197
2023	457
2024	24
Total	$	4,363

On March 12, 2020, we entered into a sublease agreement with Neato Robotics, Inc. ("Neato") for the San Jose California Facility ("SJ Facility"). The term of the sublease agreement commences upon the later of (i) May 1, 2020 and (ii) fifteen (15) days following our landlord’s consent to the sublease (the "Commencement Date"). Effective May 1, 2020, we entered into an amendment to the sublease agreement with Neato, pursuant to which the Commencement Date occurs upon the earlier of (i) the date Neato commences conduct of business operations from the SJ Facility or (ii) the date that is fifteen (15) days after delivery of the SJ Facility to Neato and the lifting of the Order of the Health Officer of the County of Santa Clara, dated March 16, 2020, and Executive Order N-33-20 issued by the Executive Department, State of California, dated March 19, 2020, and any extensions thereof, or similar directives requiring residents to shelter in place or businesses that include businesses of ours or Neato, to shut down or work remotely, issued by applicable municipal, state, and federal authorities having jurisdiction over the SJ Facility in connection with the management of the COVID-19 pandemic. However, if we do not deliver the premises to Neato by the Commencement Date, then the sublease would commence 15 days after we deliver the premises to Neato.

Subject to any delays related to the COVID-19 pandemic, this sublease is expected to commence in the second quarter of 2020 and ends on April 30, 2023 which is the lease termination date of the original SJ Facility lease.

This lease will be accounted for as an operating lease as we are not relieved of the primary obligation under the original lease. Sublease income we expect to receive under the term of the sublease agreement are as follows (in thousands):



For the Years Ending December 31,
Remainder of 2020	$	599
2021	1,046
2022	1,077
2023	363
Total	$	3,085