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LEASES

12 Months Ended

Dec. 31, 2023

9. LEASES

Lessee:

The Company has operating leases for its corporate headquarters, a training facility and office equipment, including copiers. The Company leases an approximately 32,000 square foot facility in Malvern, Pennsylvania for its corporate headquarters, which includes office and warehouse space. In the first quarter of 2019, the Company signed a lease modification for its Malvern facility that extended the lease through February 2028 and included approximately 10,000 square foot of additional premises. The Company has an option to extend the lease on its combined 42,000 square foot facility for an additional five-year term; however, the Company has determined it is not reasonably certain to exercise the option at this time after assessing contract, asset, entity and market conditions present upon lease commencement.

The Company leases an approximately 9,600 square foot facility in Charlotte, North Carolina as a training facility for its NeuroStar Advanced Therapy Systems. The lease ends in September 2027. The Company has an option to extend the lease on its training facility for an additional one-year term; however, the Company has determined it is not reasonably certain to exercise the option at this time after assessing contract, asset, entity and market conditions present upon lease commencement.

Operating lease rent expense was $0.8 million, $0.8 million, and $0.7 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, the weighted-average remaining lease term of operating leases was 4.1 years and the weighted-average discount rate was 7.2%.

The following table presents the supplemental cash flow information as a lessee related to leases for the years ended December 31, 2023 and 2022 (in thousands):


	Year ended		Year ended
	December 31, 2023		December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,077	$	892
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—	$	—

The following table sets forth by year the required future payments of operating lease liabilities as of December 31, 2023 (in thousands):


	Year ended
	December 31, 2023
2024	$	876
2025		898
2026		921
2027		882
2028		116
Total lease payments		3,693
Less imputed interest		(503)
Present value of operating lease liabilities	$	3,190

Lessor sales-type leases:

Certain costumers have purchased NeuroStar Advanced Therapy Systems on a rent-to-own basis. The lease term is three or four years with a customer option to purchase the NeuroStar Advanced Therapy System at the end of the lease or automatic transfer of ownership of the NeuroStar Advanced Therapy System at the end of the lease.

The following table sets forth the profit recognized on sales-type leases (in thousands):


	Year ended December 31,
	2023		2022
Profit recognized at commencement, net	$	129	$	478
Interest income		—		—
Total sales-type lease income	$	129	$	478

The following table sets forth a maturity analysis of the undiscounted lease receivables related to sales-type leases as of December 31, 2023 (in thousands):


	December 31,
	2023
2024	$	915
2025		442
2026		118
2027		91
Total sales-type lease receivables	$	1,566

As of December 31, 2023 and 2022, the carrying amount of the lease receivables is $1.6 million and $2.8 million, respectively. The Company does not have any unguaranteed residual assets.

Lessor operating leases:

NeuroStar Advanced Therapy Systems sold on a rent-to-own basis prior to January 1, 2019 are accounted for as operating leases. NeuroStar Advanced Therapy Systems sold subsequent to January 1, 2019 for which collection is not probable are also accounted for as operating leases. For the years ended December 31, 2023, 2022 and 2021, the Company recognized operating lease income of $0.2 million, $0.2 million and $0.3 million, respectively.

The Company maintained rental equipment, net of $0.3 million and $0.5 million, as of December 31, 2023 and 2022, respectively, which are included in Property and equipment, net on the Balance Sheets. Rental

equipment depreciation expense was $0.09 million, $0.10 million and $0.05 million for the years ended December 31, 2023, 2022 and 2021, respectively.