The Company acts as a lessee under all its lease agreements. The Company leases its headquarters and laboratory facilities in Boulder, Colorado, under a non-cancelable lease agreement for approximately 29,722 square feet that was set to expire in January 2023. In January 2022, the Company amended the agreement to extend the lease agreement through January 2024, resulting in an additional $1.2 million in ROU assets and lease liabilities recorded during the three months ended March 31, 2022. The Company also leases laboratory and office space in De Soto, Kansas, under a non-cancelable lease agreement for approximately 9,066 square feet that expires in October 2023. The Company also holds various copier and storage facility leases under non-cancelable lease agreements that expire in the next one to four years.

On March 11, 2022, the Company entered into a Lease Agreement (the Lease) with Centennial Valley Properties I, LLC, a Colorado limited liability company (the Landlord) for office and laboratory space located at 919 West Dillion Road; Louisville, Colorado (the Leased Premises). The purpose of the Lease is to replace the Company’s current leased premises at 2970 Wilderness Place, Suite 100 in Boulder, Colorado and the Company intends to move its corporate headquarters to the Leased Premises by mid-2023.

The initial term of the Lease is twelve years (the Initial Term) from the commencement date, which is the earlier of: (i) the Company conducting revenue generating business (as defined in the Lease), or (ii) April 1, 2023 (the Commencement Date), unless earlier terminated in accordance with the Lease. The Company has two renewal options to extend the term of the Lease for an additional seven or ten year terms for each renewal. During the three months ended June 30, 2022, the lease commenced for accounting purposes resulting in $2.0 million in ROU assets and lease liabilities being recorded.

Under the Lease, the Company will lease approximately 79,980 square feet at the Leased Premises. The Company will pay base rent over the life of the Lease beginning at approximately $227,000 per month and escalating, based on fixed escalation provisions, to approximately $326,000 per month, plus certain operating expenses and taxes. The Company's obligation to pay base rent shall be abated, commencing as of the Commencement Date and ending on and including the date that is 12 months after the Commencement Date (the Abated Rent Period). Further, the Company's obligation to pay base rent with respect to a portion of the area of the Lease Premises equal to 19,980 square feet shall be abated (the Partial Abated Rent), commencing as of the day after the end of the Abated Rent Period and ending on and including the date that is 24 months after the Commencement Date (the Partial Abated Rent Period). Pursuant to a work letter entered by the parties in connection with the Lease, the Landlord will contribute an aggregate of $18.8 million toward the cost of construction and improvements for the Leased Premises and the Company exercised its option for an additional tenant

improvement allowance of $2.0 million (the Extra Allowance Amount). The Company will repay the Extra Allowance Amount actually funded by the Landlord in equal monthly payments with an interest rate of 6% per year over the Initial Term excluding any part of the Abated Rent Period or Partial Abated Rent Period, which shall start to accrue on the date that the Landlord first disburses the Extra Allowance Amount. The Company made an accounting policy election to reduce the right-of-use asset and lease liability because the Lease specifies a maximum level of reimbursement for tenant improvements which are probable of being incurred and within the Company's control. Due to the tenant improvement allowances at the accounting lease commencement date and rent abatement periods described above, the Company expects the lease liability to accrete to approximately $25.7 million by March 2024.

The Lease includes various covenants, indemnities, defaults, termination rights, and other provisions customary for lease transactions of this nature, including maintaining a $5.0 million letter of credit (subject to contingent reduction over the term of the lease) to secure the performance of the Company’s obligations under the Lease. The $5.0 million letter of credit has to be cash collateralized by the Company through a restricted cash account for the benefit of the Landlord, which we recognized contemporaneously with the commencement of the Lease for accounting purposes.

Operating lease expense was $0.5 million and $0.8 million for the three and six months ended June 30, 2022, respectively, compared to $0.3 million and $0.6 million for the three and six months ended June 30, 2021, respectively. As of June 30, 2022, the weighted-average remaining lease term and discount rate associated with our operating leases were 7.0 years and 11.40%, respectively.

Future minimum lease payments associated with our operating leases were as follows (in thousands):


	As of June 30, 2022
Remainder of 2022(1)	$	(9,732	)
2023(1)		(8,121	)
2024		2,619
2025		3,710
2026		3,979
2027 and thereafter		36,327
Total future minimum lease payments		28,782
Less amount representing interest		(24,565	)
Total lease liabilities	$	4,217

(1) Includes $20.8 million of tenant improvement allowances expected to be received during these periods.

Future minimum lease payments, which do not include amounts for common area maintenance, insurance, or taxes, for operating lease obligations in accordance with ASC 840 - Leases were as follows (in thousands):


	As of
	December 31, 2021
2022	$	775
2023		149
2024		9
2025		3
2026		1
2027 and thereafter		—
Total	$	937