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Note 10 - Leases

12 Months Ended

Dec. 31, 2024

10. Leases

The Company leases laboratory and office space and certain equipment with a remaining term of 1 year.

On August 12, 2024, the Company entered into the HQ Lease, an operating lease agreement for laboratory and office space in Holliston, MA, with an initial three-year term from September 1, 2024 through August 31, 2027. The Company accounts for the HQ Lease under the provisions of ASU No. 2021-09, ASU 2018-10, and ASC 842. We recorded approximately $323,000 as a right-of-use asset and a corresponding operating lease liability on the Company’s condensed consolidated balance sheets upon the accounting commencement date on September 1, 2024. The lease liability was measured at the accounting commencement date utilizing a 13.3% discount rate. The right-of-use asset had a balance of $292,856 at December 31, 2024. The operating lease obligations totaled $294,144 at December 31, 2024 of which $95,345 is included under current liabilities and $198,799 is included under non-current liabilities.

The HQ Lease contains escalating payments during the lease term. Upon execution of the HQ Lease, the Company paid a security deposit, which will be held in escrow and credited at the termination of the lease. As of December 31, 2024, a security deposit of approximately $14,000 was included in long-term prepaid contracts on the Company’s consolidated balance sheet related to the HQ Lease.

On March 25, 2024, the Company entered into an operating lease agreement for office space in Beijing, China with an initial two-year term from April 1, 2024 through April 10, 2026. We recorded approximately $75,000 as a right-of-use asset and a corresponding operating lease liability on the Company’s consolidated balance sheets upon the accounting commencement date on April 1, 2024. The lease liability was measured at the accounting commencement date utilizing a 8% discount rate. The Company terminated its office lease in Beijing, China at the end of October 2024 without a penalty or any further obligation.

All of the Company’s leases qualify as operating leases. The following table summarizes the presentation of the Company’s operating leases in its consolidated balance sheets:

		*December 31,*
	*Balance Sheet Classification*	*2024*		*2023*
		(in thousands)
Assets:
Operating lease assets	Right-of-use asset, net	$	293	$	48
Liabilities:
Current portion of operating lease liabilities	Current portion of operating lease liabilities		95		48
Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion		199		—
Total operating lease liabilities		$	294	$	48

Cash paid for leases during each of the years ended December 31, 2024 and 2023 amounted to approximately $144,000 and $127,000, respectively.

The weighted average remaining lease terms and weighted average discount rates as of December 31, 2024 and 2023 were as follows:

	*Year ended December 31,*
	*2024*			*2023*
Remaining lease term (in years)		2.67			0.48
Discount rate		13.29	%		14.66	%

The following table summarizes the effect of lease costs in the Company’s consolidated statements of operations:

		*For the Year Ended December 31,*
		*2024*		*2023*
		(in thousands)
Operating lease expense	Research and development	$	67	$	68
	Sales and marketing		24		15
	General and administrative		53		44
	Total	$	144	$	127

The minimum lease payments for future years are as follows:

	*As of*
	*December 31, 2024*
	(in thousands)
2025	$	129
2026		133
2027		90
Total lease payments		352
Less: imputed interest		(58	)
Present value of operating lease liabilities	$	294