Effective January 1, 2019, the Company adopted Accounting Standards Update (ASU) No. 2016-02, as amended, using the alternative transition method, which allowed the Company to initially apply the new lease standard at the adoption date (the “effective date method”). Under the effective date method, comparative periods are presented under previous GAAP, Accounting Standards Codification 840, and do not include any retrospective adjustments to reflect the adoption of ASU No. 2016-02. As an accounting policy, the Company has elected not to apply the recognition requirements to short-term leases and not to separate non-lease components from lease components. The Company also has elected the package of transition provisions available for existing contracts, which allowed the Company to carryforward its historical assessments of (i) whether contracts are or contain leases, (ii) lease classification and (iii) initial direct costs. The adoption did not result in a cumulative-effect adjustment to the opening balance of accumulated deficit. As a result of the adoption, the Company recorded an operating lease right-of-use asset of $0.4 million and corresponding short-term and long-term liabilities of $0.2 million and $0.2 million, respectively, as of January 1, 2019. The adoption of ASU No. 2016-02 did not have a material impact on the Company’s condensed consolidated statement of operations and comprehensive income or cash flows as of the adoption date.

The Company identified only one lease to be accounted for under ASU No. 2016-02, which was the lease for its corporate facility that had an initial expiration date of October 31, 2020. The right-of-use asset and corresponding liability for the facility lease have been measured at the present value of the future minimum lease payments. The discount rate used to measure the lease asset and liability represents the interest rate on the Notes (8%). Lease expense is recognized on a straight-line basis over the lease term, and operating lease expense was $0.2 million for the nine months ended September 30, 2020. On September 30, 2020, the Company and the lessor extended the lease for an additional 20.5 month term commencing November 1, 2020. The Company does not have an option to extend the lease term beyond the current extension.

The extension was accounted for as a lease modification at September 30, 2020. The Company assessed the lease classification of the facility lease at the modification date and determined that the facility lease should be accounted for as an operating lease. The right-of-use asset and corresponding operating lease liability have been remeasured based on the present value of remaining lease payments over the remaining extended lease term. Non-lease components are not included in the right-of-use asset and liability and are reflected as expense in the period incurred.

Future minimum payments under the facility operating lease at September 30, 2020 are as follows (in thousands):

	Operating
Year ending December 31,	lease
2020	$	52
2021		206
2022		112
Total future lease payments		370
Less: imputed interest		(17	)
Present value of lease liabilities	$	353

Supplemental cash flow information related to the operating lease was as follows (in thousands):

		Nine Months Ended
		September 30,
		2020		2019

Cash paid for amounts included in the measurement of lease liabilities:
	Operating cash flows for lease	$	168	$	163
Non-cash activity:
	Recognition of additional right-of-use asset and liability upon lease modification	$	352	$	—