Operating lease liability

6 Months Ended

Jun. 30, 2019

5. Operating lease liability

(a) ASU 2016-02 Leases disclosures

The Company has a lease agreement for approximately 10,946 square feet of office space in Canada which commenced on November 1, 2016 and expires October 31, 2021, with the option to extend the lease to October 31, 2026. On December 22, 2016, the Company signed a lease agreement for an additional 2,500 square feet of office space in Canada. The lease for the additional 2,500 square feet expires June 30, 2019. In addition to the basic rent, the Company is obligated to pay for taxes, operating costs, utilities, additional services and other amounts.

The components of the lease expense were as follows:

(in thousands)	THREE MONTHS ENDED JUNE 30, 2019		SIX MONTHS ENDED JUNE 30, 2019
Operating lease cost	$	31	$	62
Variable lease cost		42		90
Total net lease cost	$	73	$	152

Supplemental cash flow information related to leases was as follows:

(in thousands)	THREE MONTHS ENDED JUNE 30, 2019		SIX MONTHS ENDED JUNE 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	55	$	96
Operating lease liabilities arising from obtaining right-of-use assets		—		515

The calculation of the present value of the lease payments utilized a discount rate of 6% and did not include the option to extend the lease to October 31, 2026.

At June 30, 2019, the future payments under the Company’s operating lease liability were as follows:

(in thousands)	AMOUNT
June 30, 2020	$	206
June 30, 2021		209
June 30, 2022		70
Total undiscounted lease payments		485
Less: imputed interest		(31	)
Total operating lease liability		454
Less: current portion		(201	)
Non-current operating lease liability – June 30, 2019	$	253

(b) Disclosures related to periods prior to adoption of ASU 2016-02 Leases

The lease agreements contain scheduled rent increases, rent holidays and tenant improvement allowance. As such, the Company has recorded a deferred rent liability of $0.3 million as at December 31, 2018.

The minimum lease payments under the non-cancelable operating leases as at December 31, 2018 are payable in the following amounts over the following years.

	2019		2020		2021		Total
Operating lease obligations	$	362	$	336	$	280	$	978
	$	362	$	336	$	280	$	978

During the three and six months ended June 30, 2018, the Company incurred operating lease costs of $0.2 million and $0.4 million, respectively.