The Company has historically entered into lease arrangements for its facilities. As of June 30, 2022, the Company had three operating leases with required future minimum payments. In applying the transition guidance under Accounting Standards Codification (“ASC”) 842, Leases, the Company determined the classification of these leases to be operating leases and recorded right-of-use assets and lease liabilities as of the effective dates. The Company’s leases generally do not include termination or purchase options.

The Company entered into an agreement with an equipment leasing company in 2018, which provided up to $1.4 million for equipment purchases in the form of sale and leasebacks or direct leases. As of June 30, 2022, the Company had completed the sale and leaseback for four pieces of equipment and is leasing three other items directly from the leasing company. The terms of the leases are three years and afterwards provide for either annual extensions or an outright purchase of the equipment.

The equipment leases require two advance rental payments to be held as security deposits. The security deposits held amounted to approximately $246,000 and $141,000 as of June 30, 2022 and December 31, 2021. They are included in other non-current assets on the condensed balance sheets.

The Company has an operating lease for office space in Birmingham, Alabama, for a 63-month term, ending in March 2026, with an option to extend five years. Throughout the term of the lease, the Company is responsible for paying certain costs and expenses, in addition to the rent, as specified in the lease, including a proportionate share of applicable taxes, operating expenses and utilities.

The Company has an operating lease for office space in New York, New York, with a term commencing on September 15, 2021 and continuing through March 2027. Throughout the term of the lease, the Company is responsible for paying certain costs and expenses, in addition to the rent, as specified in the lease, including a proportionate share of applicable taxes, operating expenses and utilities.

The Company has a build-to-suit lease agreement with a third party to build out the Company's labs in Birmingham Alabama. The agreement has a threshold of $4.0 million in total costs incurred. The costs incurred and classified as construction in progress on the condensed balance sheets were $1.3 million and $0.2 million as of June 30, 2022 and December 31, 2021.

The operating leases require security deposits at the inception of each lease. The security deposits amounted to approximately $262,000 and $278,000 as of June 30, 2022 and December 31, 2021, respectively. As of June 30, 2022, approximately $252,000 was included in restricted cash, $10,000 was included in other current assets and $17,000 was included in other non-current assets. As of December 31, 2021, approximately $251,000 was included in restricted cash, $9,000 was included in other current assets and $17,000 was included in other non-current assets.

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s finance and operating leases for the three and six months ended June 30, 2022 and 2021 (in thousands, unless otherwise noted):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Lease Cost
Amortization of finance right-of-use assets	$	102	$	138	$	251	$	250
Interest on finance lease liabilities		12		25		26		46
Operating lease cost		104		53		216		105
Short-term lease cost		107		134		212		249
Total lease cost	$	325	$	350	$	705	$	650


	June 30, 2022
Other Operating Lease Information
Cash paid for amounts included in the measurement of lease liability – finance leases	$	282
Cash paid for amounts included in the measurement of lease liability – operating leases	$	171
Weighted-average remaining lease term – finance leases	1.43 years
Weighted-average remaining lease term – operating leases	4.28 years
Weighted-average discount rate – finance leases		10.2	%
Weighted-average discount rate – operating leases		10.4	%

The following table reconciles the undiscounted cash flows to the operating and financing lease liabilities at June 30, 2022 (in thousands):


	Financing Leases		Operating Leases
Remainder of 2022	$	179	$	179
2023		252		468
2024		30		490
2025		—		502
2026		—		291
Thereafter		—		45
Total lease payment		461		1,975
Less: interest		30		398
Total lease liabilities	$	431	$	1,577
Less: Short-term lease liability		299		261
Long-term lease liability		132		1,316