Note 9. Leases

On January 1, 2019, the Company adopted ASC 842, which requires entities to recognize assets and liabilities for leases with lease terms of more than 12 months on the balance sheet. Adoption of ASC 842 resulted in the recording of operating lease assets of $7.5 million and operating lease liabilities of $8.3 million. The impact of the changes made to the consolidated balance sheet as of January 1, 2019 as a result of adopting the new guidance was as follows (in thousands):


	Balance at		Adjustments		Balance at
	December 31,		Due to		January 1,
	2018		ASC 842		2019
Balance Sheet:
Operating lease right-of-use asset - noncurrent	$	—		7,499	$	7,499
Operating lease liability - current	$	—		1,080	$	1,080
Operating lease liability - noncurrent	$	—		7,219	$	7,219
Deferred rent - noncurrent	$	799		(799)	$	—

The Company has one operating lease agreement entered into in March 2017 for laboratory and office space located in Newark, California. The Company provided the landlord with a $450,000 letter of credit collateralized by restricted cash as security deposit for the lease, which expires in May 2024. During 2019, the Company received $469,000 from the landlord for eligible leasehold improvements made to the leased property. Leases with terms of 12 months or less are not recorded on the balance sheet, and the related lease expenses are recognized on a straight-line basis over the lease term. During the year ended December 31, 2019, the Company recognized $64,000 of sublease income. The Company did not recognize any sublease income for the years ended December 31, 2018 and 2017. Under the terms of the lease, we are responsible for certain taxes, insurance and maintenance expenses.

The weighted average lease term and discount rate are as follows:


	December 31,
	2019
Operating Lease Term and Discount Rate:
Weighted-average remaining lease term		4.4 years
Weighted-average discount rate		11.0%

The following table summarizes the Company’s minimum lease payments and lease liability as of December 31, 2019 (in thousands):


Year Ending December 31:	Amount
2020	$	1,941
2021		2,000
2022		2,059
2023		2,121
2024		895
Thereafter		—
Total future minimum lease payments		9,016
Less: imputed interest		(1,799)
Present value of future minimum lease payments		7,217
Less: current portion of operating lease liability		(1,256)
Operating lease liability - noncurrent	$	5,961

As previously disclosed in the Company’s 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum operating leases having initial or remaining noncancelable lease terms in excess of one year would have been as follows (in thousands):


Year Ending December 31:	Amount
2019	$	1,941
2020		2,000
2021		2,059
2022		2,121
2023		2,185
Thereafter		922
Total	$	11,228

Supplemental lease cost information is as follows (in thousands):


		Year Ended
		December 31, 2019
Operating lease cost	$	1,792

Supplemental balance sheet information is as follows (in thousands):


	December 31, 2019
Operating Leases:
Operating lease right-of-use asset, non-current	$	6,042

Operating lease liability - current	$	1,256
Operating lease liability - noncurrent		5,961
Total operating lease liabilities	$	7,217

Supplemental cash flow information is as follows (in thousands):


	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow used by operating leases	$	1,885

Prior to the adoption of ASC 842, the Company’s rent expense was $1.9 million and $1.4 million for the years ended December 31, 2018 and 2017, respectively. Rent expense was recognized on a straight-line basis over the term of the lease and accordingly, the Company recorded the difference between cash rent payments and the recognition of rent expense as a deferred rent liability.