Leases

9 Months Ended

Sep. 30, 2023

15. Leases

In October 2021, Private Disc entered into a five-year lease through November 2026 of 7,566 square feet of office space located at 321 Arsenal Street, Watertown, Massachusetts to be used as its corporate headquarters. In June 2023, the lease was amended to allow the landlord to perform certain maintenance activities expected to be completed by the end of 2023 and to provide rent abatement of $0.2 million. The amendment was accounted for as a modification resulting in a new incremental borrowing rate and a reduction to the right-of-use asset and lease liability of $0.2 million. In September 2023, the Company recognized a reassessment event which was accounted for as a modification resulting in a new incremental borrowing rate and a reduction to the right-of-use asset and lease liability of an additional $0.2 million.

In June 2023, the Company entered into a sublease for a term of approximately three and a half years through November 2026, consisting of 9,280 square feet of office space on the second floor of the corporate headquarters in Watertown, Massachusetts. Fixed lease payments include base rent, subject to annual rent increases, and a management fee. Variable lease payments include the Company’s allocated share of costs incurred for real estate taxes, utilities, and other operating expenses applicable to the leased premises. Pursuant to the lease, the Company is also obligated to pay for certain administrative costs, taxes and operating expenses.

The components of lease expense were as follows (in thousands):


	Nine Months Ended September 30,
	2023		2022
Operating lease costs	$	278	$	321
Variable lease costs		109		133
Total lease expense	$	387	$	454

Other information related to the Company’s leases is as follows (in thousands, except term and discount rate amounts):


	Nine Months Ended September 30,
	2023			2022
Weighted average remaining lease term	3.17 years			4.16 years
Weighted average discount rate		10.0	%		5.5	%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases	$	186		$	388

A maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of September 30, 2023, reflective of the Company’s election to account for lease and non-lease components together, is as follows (in thousands):


Year Ending December 31,	Operating Leases
Remaining 2023	$	86
2024		664
2025		850
2026		729
Total minimum lease payments		2,329
Less imputed interest		(369	)
Present value of lease liabilities	$	1,960