Annual report pursuant to Section 13 and 15(d)

Lease Commitments

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Lease Commitments
12 Months Ended
Dec. 31, 2023
Leases [Abstract]  
Lease Commitments

12. Lease Commitments

 

Operating Leases

 

The Company leases office space in Miami, Florida and laboratory space in Bothell, Washington under operating leases that expire on August 31, 2024 and January 31, 2031, respectively. The lease for our Miami office is with a related party (see below).

 

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

 

 

The components of rent expense and supplemental cash flow information related to leases for the period are as follows (tables in thousands):

 

    Year Ended
December 31,
2023
 
Lease Cost        
Operating lease cost (included in operating expenses in the Company’s consolidated statement of operations)   $ 233  
         
Other Information        
Cash paid for amounts included in the measurement of lease liabilities   $ 233  
Weighted average remaining lease term – operating leases (in years)     0.8  
Average discount rate – operating leases     6.2 %

 

The supplemental balance sheet information related to leases for the period is as follows (tables in thousands):

 

    At December 31,
2023
    At December 31,
2022
 
Operating leases                
Long-term right-of-use assets of which $42 and $99 relates to related party, net of accumulated amortization of $950 and $592   $ 1,851     $ 274  
                 
Short-term operating lease liabilities, of which $42 and $59 relates to related party     240       233  
Long-term operating lease liabilities, of which $0 and $42 relates to related party     1,613       57  
Total operating lease liabilities   $ 1,853     $ 290  

 

 

Year ending December 31,   (in thousands)  
2024     264  
2025     344  
2026     355  
2027     365  
2028     376  
2029 and thereafter     513  
Total minimum operating lease payments   $ 2,217  
Less: present value discount     (364 )
Total operating lease liabilities   $ 1,853  

 

The minimum lease payments above do not include common area maintenance (CAM) charges, which are contractual obligations under the Company’s Bothell, Washington lease, but are not fixed and can fluctuate from year to year. CAM charges for the Bothell, Washington facility is calculated and billed based on total common expenses for the building incurred by the lessor and apportioned to tenants based on square footage. In 2023 and 2022, approximately $98,000 and $98,000 of CAM charges for the Bothell, Washington lease was included in operating expenses in the consolidated statements of operations, respectively.

 

On September 1, 2018, the Company entered into a lease agreement with a limited liability company controlled by Dr. Phillip Frost, a director, and a principal stockholder of the Company for the lease of its Miami office (see Note 13 – Transactions with Related Parties). On September 1, 2021, the Company extended this lease agreement into an additional three-year with monthly lease payments under this lease total $186,000 through September 2024. The minimum lease payments above include taxes and fees, which are expected to be approximately $9,000 annually. As of December 31, 2023, the remaining right of use asset relating to this lease was $42,000 and the remaining lease obligation was $42,000.

 

On September 21, 2018, the Company amended the lease agreement with a North Creek Tec LLC, to expand its laboratory facility in Bothell – WA, with additional 6,000 sq ft for a period of 5 years that expires on January 31, 2029, with monthly lease payments under this lease total $660,000. In addition, the Company amended the lease agreement to extend the original laboratory facility for an additional 7 years with monthly lease payments under this lease total $1,498,000 Through January 2031. The minimum lease payment combined totals approximately $380,000 annually.

 

Rent expense, excluding capital leases and CAM charges, for 2023 and 2022 totaled $233,000 and $233,000, respectively.

 

 

Finance Leases

 

In April 2020, the Company entered into a lease agreements to acquire equipment with 36 monthly payments of $2,420 payable through March 31, 2023. The lease agreement have an effective interest rate of 8.01%.

 

The leased lab equipment is included under property and equipment and depreciable over five years. Total assets and accumulated depreciation recognized, net, under finance leases was $162,000 and $162,000 as of December 31, 2023, respectively. Total assets and accumulated depreciation recognized, net, under finance leases was $194,000 and $158,000 as of December 31, 2022.