LEASES

9 Months Ended

Sep. 30, 2020

NOTE 9. LEASES

We lease office space and a vehicle under contracts we classify as operating leases. None of our leases are financing leases.

The following table presents the detail of our lease expense, net of sublease income, which is reported in General and administrative expense (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating lease expense	$	72	$	492	$	544	$	1,195
Short-term lease expense	54		67		159		231
Less: Sublease income	—		(94)		—		(172)
Lease expense	$	126	$	465	$	703	$	1,254

We reported within continuing operating cash flows for the nine months ended September 30, 2020 and 2019, $0.2 million and $1.5 million, respectively, of cash paid for amounts included in the measurement of operating lease liabilities.

As of September 30, 2020, our operating leases had a weighted-average remaining lease term of approximately 22 months, and we used a weighted-average discount rate of approximately 13% to measure our operating lease liabilities.

As of December 31, 2019 we reported right of use assets of $4.4 million and lease liabilities of $7.5 million. During August 2020, we entered into a settlement agreement relating to the lease for our former office space in Las Vegas which we vacated during March 2020. During the nine months ended September 30, 2020, we reduced right of use assets and operating lease liabilities relating to this lease by $3.8 million and $5.3 million, respectively, which resulted in a gain on lease termination of $1.5 million. In addition, we recognized a further gain of $2.0 million during August 2020, when we entered into a settlement with our former landlord, which is described in more detail in Note 9. As of September 30, 2020, our right of use assets were $0.4 million and our remaining lease obligations were $0.5 million.

Maturity of Lease Liabilities

The following table presents information regarding the maturities of our undiscounted remaining operating lease payments, with a reconciliation to the amount of the liabilities representing such payments as presented in our September 30, 2020 unaudited Condensed Consolidated Balance Sheet (in thousands):


Operating lease liabilities maturing during the next:
One year	$	343
Two years	122
Three years	50



Total undiscounted cash flows	$	515
Present value of cash flows	$	466

Lease liabilities on balance sheet:
Short-term	$	308
Long-term	158
Total lease liabilities	$	466

Termination of Lease and Related Landlord Actions

Beginning approximately July 2019, we were not able to pay our obligations under the office lease for our former office located at 3960 Howard Hughes Parkway in Las Vegas, Nevada. On March 5, 2020, our former landlord, BRE/HC Las Vegas Property Holdings, L.L.C (the “Hughes Center Landlord”), exercised its right to terminate the lease as of such date as a result of the ongoing payment default.

On April 9, 2020, the Hughes Center Landlord filed suit against us in Nevada to recover the approximately $1.1 million of rent owed through March 5, 2020, plus damages resulting from the early termination of the lease.

On August 3, 2020, we entered into a settlement agreement with the Hughes Center Landlord (the “Hughes Center Lease Settlement”), pursuant to which we immediately paid $0.45 million to the Hughes Center Landlord and agreed to pay another $0.15 million in three equal installments on each of September 1, 2020, October 1, 2020 and November 1, 2020 (an aggregate payment of $0.6 million), in full settlement of our obligations with respect to such office lease.

As of December 31, 2019, we had accrued approximately $2.3 million for settlement of this matter. During the period ended September 30, 2020, we accrued an additional $0.3 million related to this matter. See Note 1 8 for additional information regarding the Hughes Center Lease Settlement and the Hughes Center Landlord’s legal actions against us.

Other

In September 2020, we prepaid the lease expense for a short-term lease on a property in the Los Angeles, California area. The $0.3 million we paid remained in the balance of Prepaid expense and other current assets as of September 30, 2020.

Significant Judgments

When accounting for our leases, we make certain judgments, such as whether a contract contains a lease or what discount rate to use, that affect the determination of the amount of our lease assets and liabilities. Based on the current facts and circumstances related to our contracts, none of the judgments we make involve an elevated degree of qualitative significance or complexity such that further disclosure is warranted.