In November 2016, the Company signed an office lease agreement to lease approximately 20,000 square feet of office space in Alpharetta, Georgia for its corporate headquarters. The lease agreement is for a 6.5 year term with a renewal option for one additional five-year term. Rental payments are $35,145 per month subject to an increase of 3% per year. Rent expense under this lease is recognized on a straight-line basis over the term of the lease. In addition, the lease agreement requires payment of the pro-rata share of the annual operating expenses associated with the premises.

The Company’s operating leases included on the balance sheet are as follows (in thousands):


	March 31, 2021
Operating lease right-of-use asset	$	491

Liabilities
Current portion of operating lease liabilities	$	377
Operating lease liabilities		539
Total operating lease liabilities	$	916

The Company recognizes a right-of-use asset for the right to use the underlying asset for the lease term, and a lease liability, which represents the present value of the Company’s obligation to make payments over the lease term. The renewal option is not included in the calculation of the right-of-use asset and the lease liabilities as the Company has not yet determined if the Alpharetta, Georgia lease will be renewed. The present value of the lease payments is calculated using an incremental borrowing rate as the Company’s leases do not provide an implicit interest rate. At March 31, 2021, the Company’s weighted average discount rate was 11.0% and the weighted average lease term was 2.50 years.

Minimum lease payments were as follows at March 31, 2021 (in thousands):


Year Ending December 31,
2021		297
2022		407
2023		316
Total minimum lease payments		1,020
Less imputed interest		(104	)
Total operating lease liabilities	$	916

Equipment leases with an initial term of 12 months or less are not recorded with operating lease liabilities. The Company recognizes expense for these leases on a straight-line basis over the lease term. The equipment leases were deemed to be immaterial.

Operating lease cost was $62,000 for each the three months ended March 31, 2021 and 2020. Variable lease cost was $24,000 for each of the three months ended March 31, 2021 and 2020. Short-term lease cost was $2,000 and $4,000 for the three months ended March 31, 2021 and 2020, respectively. Cash payments included in operating activities on the statement of cash flows for operating lease liabilities were $95,000 and $92,000 for the three months ended March 31, 2021 and 2020, respectively.

In the course of the Company’s normal business operations, it has agreements with contract service providers to assist in the performance of its research and development, clinical research and manufacturing. Substantially all of these contracts are on an as needed basis.