Leases

9 Months Ended

Sep. 30, 2022

Note 11 — Leases

The Company adopted the new leases guidance contained in

Topic 842

effective January 1, 2022 using the modified retrospective method. Therefore, the reported results for the three and nine months ended September 30, 2022 and the financial position as of September 30, 2022 reflect the application of this new guidance, while the reported results for the three and nine months ended September 30, 2021 and the financial position as of December 31, 2021 were not adjusted and continue to be reported under the prior lease accounting guidance in effect for the prior periods.

Company as a Lessee

The Company is party to a non-cancellable operating lease agreement for office space, which expires in 2033.

The Company’s operating lease for this office space includes fixed rent payments and variable lease payments, which are primarily related to common area maintenance and utility charges. The Company elected not to separate lease and

non-lease

components, and as such, all amounts paid under the lease are classified as either fixed or variable lease payments. Fixed leases payments were included in the calculation of the ROU asset and leases liabilities, with variable lease payments being recognized as lease expense. The Company has determined that no renewal clauses are reasonably certain of being exercised and have not included any renewal periods within the lease term for this lease.

As of September 30, 2022, the Company had operating lease ROU assets of $3.8 million, current lease liabilities of $0.3 million, and

non-current

lease liabilities of $4.7 million. In measuring operating lease liabilities, the Company used a weighted average discount rate of 4.4% in existence as of the January 1, 2022 adoption date. The weighted average remaining lease term as of September 30, 2022 was 10.4 years.

Components of Lease Cost

The Company’s total operating lease cost for the three and nine months ended September 30, 2022 was comprised of the following (in thousands):


	Three months ended September 30, 2022		Nine months ended September 30, 2022

Operating lease cost	$	121	$	363
Short-term lease cost		6		42
Variable lease cost		12		36

Total lease cost	$	139	$	441

Maturity of Lease Liabilities

As of September 30, 2022, maturities of our operating lease liabilities, which do not include short-term leases and variable lease payments, are as follows (in thousands):


Remaining three months of 2022	$	134
2023		543
2024		557
2025		571
2026		585
Thereafter		3,946

Total Lease Payments		6,336
Less: imputed interest		(1,271	)

Present value of total lease liabilities	$	5,065

Company as Lessor

The Company sublets a portion of its office space to a related party and accounts for the arrangement as an operating lease. Related party sublease rental income is recognized on a straight-line basis and is included in Interest and other (expense) income in the accompanying unaudited consolidated statements of operations. For the three and nine months ended September 30, 2022, operating lease income from the Company’s sublet was immaterial. As of September 30, 2022, total remaining future minimum lease payments receivable on the Company’s operating lease was

$0.6 million.