7. Commitments and Contingencies

Commitments

In the ordinary course of business, the Company enters into non-cancellable leases to purchase equipment and for its facilities, including related party leases (see Note 8 – Transactions with Related Parties). Leases are accounted for as operating leases or finance leases, in accordance with ASC 842, Leases.

Operating Leases

The Company leases office space in Miami, Florida and research and development laboratory space in Bothell, Washington under operating leases that expire on September 30, 2027 and January 31, 2031, respectively. For operating leases, the weighted average discount rate is 6.4% and the weighted average remaining lease term is 5.0 years.

The following table summarizes the Company’s maturities of operating lease liabilities, by year and in aggregate, as of March 31, 2026 (table in thousands):

 Schedule of Maturities of Operating Lease Liabilities 

As of March 31, 2026, the total operating lease liability of $343 is classified as a current operating lease liability.

In April 2023, the Company renewed its lease for the unit 100 at the Bothell, Washington facility (“Bothell 100”) for an 84-month (7 years) term, starting February 1, 2024, and ending on January 31, 2031. The Company classified the amended lease as an operating lease pursuant to the provisions of ASC 842 and calculated the discounted value of the total lease payments to be approximately $1,224,000 using a discount rate of 6%. This amount was recognized as the lease liability and right-of use asset at the renewal date of the lease.

In September 2023, following the renewal of the Bothell 100 facility lease, the Company amended the agreement to expand the premises to include Suite 200 (“Bothell 200 facility”). The lease for the Bothell 200 facility has a 60-month (5-year) term, running from February 1, 2024, through January 31, 2029. The Company classified the lease as an operating lease and calculated the discounted value of the total lease payments to be approximately $571,000, using a 6% discount rate. This amount was recognized as the lease liability and right-of-use asset at the lease commencement date.

In August 2024, the Company renewed its lease for the Miami, Florida location for a 36-month term, starting from October 1, 2024, and ending on September 30, 2027, with an optional two-year extension. At the time of renewal, the Company classified the lease as an operating lease pursuant to the provisions of ASC 842 and calculated the discounted value of the total lease payments to be approximately $163,000, using a discount rate of 10.75%, and recognized this amount as the lease liability and right-of-use asset at renewal date.

The operating lease liabilities summarized above do not include variable common area maintenance (the “CAM”) charges, which are contractual liabilities under the Company’s Bothell, Washington lease. CAM charges for the Bothell, Washington facility are calculated annually based on actual common expenses for the building incurred by the lessor and proportionately billed to tenants based on leased square footage. For the three months ended March 31, 2026 and 2025, approximately $44,000 and $39,000 of CAM was included in general and administrative operating expenses on the condensed consolidated statements of operations, respectively.

The lessor of the Miami, Florida lease is a limited liability company controlled by Dr. Phillip Frost, a director and a principal stockholder of the Company.

For the three months ended March 31, 2026 and 2025, operating lease expense, including short-term leases, finance leases and CAM charges, totaled approximately $102,000 and $ 103,000, respectively, of which $16,000 and $16,000 for each period was to a related party.

Contingencies

From time to time, the Company is a party to, or otherwise involved in, legal proceedings arising in the normal course of business. As of the date of this report, except as described below, the Company is not aware of any proceedings, threatened or pending, against it which, if determined adversely, would have a material effect on its business, results of operations, cash flows or financial position.