The Company leases a corporate office facility, short-term parking spaces and miscellaneous office equipment under operating lease agreements. The Company’s lease agreements have terms not exceeding eight years. As of June 30, 2024, the Company does not have any finance leases.

On May 22, 2024, the Company entered into a Termination of Lease agreement (“Lease Termination”) with Green Front LLC (the "Landlord"), related to the Company’s early termination of its leased office space located at 55 Green Street, San Francisco, California (the "Lease"). The effective termination date for the Lease was June 1, 2024. The letter of credit originally issued in connection with the lease has been entirely drawn and there is no remaining balance on the letter of credit as of the date of the agreement. The Company had leasehold improvements and fixed assets at the Lease premises with net book values of $6.0 million and $1.0 thousand, respectively, that were surrendered to the Landlord. As a result of the Termination of Lease agreement, the Company was obligated for the following: Pay the Landlord $1.0 million as partial payment of the termination fee, execute and deliver to the Landlord a Promissory Note of $1.1 million, pay the Landlord all sublease rents, license fees, or other payments for occupancy of the premises, surrender and vacate the premises and surrender to the Landlord all existing tenant-owned furniture, fixtures, and equipment in the premises on the effective termination date, assign to Landlord all existing licenses and other occupancy agreements for any portion of the premises, and assign to Landlord all service contracts. The Company agreed to pay to the Landlord the aggregate sum of $2.1 million (“Termination Fee”), consisting of the $1.0 million fee payment noted above and the Promissory Note of $1.1 million. The Company recognized a $2.9 million net loss as a result of the Lease Termination.

The Company elects not to apply the lease recognition requirements to its short-term leases. Accordingly, the Company recognizes lease payments related to short-term leases in the statements of operations and comprehensive loss on a straight-line basis over the lease term which has not changed from prior recognition.

For leases with terms greater than 12 months, the Company records the related operating or finance right of use asset and lease liability at the present value of lease payments over the lease term. The Company is generally not able to readily determine the implicit rate in the lease and therefore uses the determined incremental borrowing rate at lease commencement to compute the present value of lease payments. The incremental borrowing rate represents an estimate of the market interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. When determining lease term, the Company considers renewal options that are reasonably certain to exercise and termination options that are reasonably certain to be exercised, in addition to the non-cancellable lease term.

The Company’s sole remaining real estate leasing agreement includes terms requiring the Company to reimburse the lessor for its share of real estate taxes, insurance, operating costs and utilities which are accounted for as variable lease costs when incurred since the Company has elected to not separate lease and non-lease components, and hence are not included in the measurement of lease liability.

The components of lease expense and income for the periods indicated are as follows (in thousands):


	Six Months Ended June 30,
	2024			2023
Operating lease costs	$	1,403		$	1,579
Short-term lease costs		312			504
Variable lease costs(1)		374			461
Sublease income		(627	)		(717	)
Total Lease Costs	$	1,462		$	1,827

(1)

Variable lease cost primarily relates to common area maintenance and property taxes on leased real estate.

Operating lease costs and short-term lease costs are included within general and administrative and operating expenses within the consolidated statements of operations. Variable lease costs are included within operating expenses, and sublease income is included within revenue within the consolidated statements of operations.

Other information related to leases for the periods indicated are as follows (in thousands):


	Six Months Ended June 30,
	2024		2023
Operating cash flows used for lease liabilities	$	1,752	$	2,025

The weighted average remaining lease term for our operating leases was 5.5 years, and the weighted average discount rate for the Company’s operating leases was 10.3%.

The Company calculated the weighted-average discount rates using incremental borrowing rates, which equal the rates of interest that it would pay to borrow funds on a fully collateralized basis over a similar term.

Future minimum payments under operating leases as of June 30, 2024, are as follows (in thousands):


	Year ending December 31,
From July 1, 2024 to December 31, 2024	$	149
2025		298
2026		298
2027		298
2028		298
Thereafter		298
Total undiscounted future cash flows	$	1,639
Less: Imputed interest		(369	)
Total	$	1,270