Leased Properties

6 Months Ended

Jun. 30, 2023

The Company's lease for its corporate headquarters (3,169 square feet of office space) commenced on July 1, 2018. In February 2022, the Company entered into an amendment to extend the term of the lease for two years such that the term now expires on August 31, 2024.

MBI, a wholly owned subsidiary the Company acquired in November 2019, leases general office space in Lexington, Massachusetts. The lease for that space commenced on July 1, 2013. In February 2022, the Company entered into an amendment to extend the term of the lease for three years to December 31, 2025, subject to the landlord's right to terminate the lease on December 31, 2023. The extension of the lease in February 2022 resulted in an increase in operating lease liabilities and ROU assets of approximately $1.0 million. In September 2022, the landlord exercised its option to terminate the lease, resulting in the new lease term ending on December 31, 2023. The termination of the lease resulted in a reduction of operating lease liabilities and ROU assets of approximately $504,000 and $458,000, respectively, and a $46,000 gain on the modification of the lease which was included as a reduction to research and development expense for the year ended December 31, 2022. MBI entered into a new lease for general office space in June 2023 that will commence on December 1, 2023 and will create an obligation to pay approximately $1.4 million over the lease period of three years.

MBI previously leased warehouse space in Billerica, Massachusetts, under a lease that commenced on October 1, 2016 and terminated on March 31, 2022.

Under the terms of each lease, the lessee pays base annual rent (subject to an annual fixed percentage increase), plus property taxes, and other normal and necessary expenses, such as utilities, repairs, and maintenance. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. The leases do not require material variable lease payments, residual value guarantees or restrictive covenants.

The leases do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease within a particular currency environment. The Company uses an incremental borrowing rate consisting of the current prime rate plus 200 basis points for operating leases that commenced prior to January 2019 (and all of the Company's operating leases commenced prior to such date). The depreciable lives of operating leases and leasehold improvements are limited by the expected lease term.

At June 30, 2023, the Company reported operating lease ROU assets of approximately $276,000 in other non-current assets, approximately $272,000 in current portion of lease liabilities, and approximately $23,000 in lease liabilities long-term in the condensed consolidated balance sheets.

Total operating lease costs were approximately $145,000 and $284,000 for the three and six months ended June 30, 2023, respectively, and $150,000 and $340,000 for the three and six months ended June 30, 2022, respectively. Operating lease costs consist of monthly lease payments expense, common area maintenance and other repair and maintenance costs and are included in general and administrative expenses in the condensed consolidated statements of operations.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately $105,000 and $209,000 for the three and six months ended June 30, 2023, respectively, and $80,000 and $203,000 for the three and six months ended June 30, 2022, respectively. These amounts are included in operating activities in the condensed consolidated statements of cash flows. At June 30, 2023, operating leases had a weighted average remaining lease term of 0.83 years.

As of June 30, 2023, future minimum lease payments under the Company's operating leases are as follows (does not include any minimum lease payments under the lease MBI entered in June 2023 because the lease does not commence until December 1, 2023):



Remainder of 2023	$	213,000
2024	93,000


Total future minimum lease payments	306,000
Less: accreted interest	10,000
Total operating lease liabilities	$	296,000