NOTE 9 – LEASES

The Company has operating leases for administrative offices and research and development facilities, and certain finance leases for equipment. The operating leases have remaining terms of less than one year to less than seven years. Leases with an initial term of 12 months or less will not be recorded on the consolidated balance sheets as operating leases or finance leases, and the Company will recognize lease expense for these leases on a straight-line basis over the lease term. Certain leases include options to renew, with renewal terms that can extend the lease term for five years. The exercise of lease renewal options for the Company’s existing leases is at the Company’s sole discretion and not included in the measurement of lease liability and ROU asset as they are not reasonably certain to be exercised. Certain finance leases also include options to purchase the leased equipment. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The leases do not contain any residual value guarantees or material restrictive covenants.

In June 2020, the Company entered into a lease agreement for office space in New York, New York. The space consists of an initial 9,289 square feet and an additional 3,000 square feet of expansion space. The lease for the initial space commenced on August 1, 2020 and the possession of the expansion space commenced in December 2020. The term for both spaces will expire on October 30, 2025 and does not contain an option to renew. In connection with entering into the lease and in lieu of a cash deposit, the Company obtained a letter of credit in the amount of $0.2 million.

In September 2021, the Company permanently vacated its office space of approximately 10,000 square feet in Jersey City, New Jersey. The space was vacated because employees have transitioned to long-term remote working arrangements or the Company’s office space in New York, New York. The abandonment of leased space is an indicator of impairment and the Company assessed the lease ROU asset for impairment.

During the year ended December 31, 2021, the Company recorded non-cash impairment charges related to the impairment of the lease ROU assets of $0.6 million, which is recorded in general and administrative expenses.

Changes in the carrying amounts of the Company’s AROs for the years ended December 31, 2021 and 2020 are shown below (in thousands):

At December 31, 2021, the Company did not have any operating and finance leases that have not yet commenced.

The components of lease expense for the years ended December 31, 2021 and December 31, 2020 were as follows (in thousands):

The following table summarizes the balance sheet classification of leases at December 31, 2021 (in thousands):

The following table presents other information on leases as of December 31, 2021 and December 31, 2020 (in thousands):

Future minimum payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2021 (in thousands):

Supplemental cash flow information related to the Company’s leases were as follows for the years ended December 31, 2021 and December 31, 2020 (in thousands):