NOTE 8 – LEASES

The Company leases space under operating leases for administrative, manufacturing and laboratory facilities in Cleveland, Ohio. The Company also leases office space in New York, New York, that the Company sublets. The Company also leases certain office equipment under operating leases, which have a non-cancelable lease term of less than one year and the Company has elected the practical expedient to exclude these short-term leases from the Company’s right-of-use assets and lease liabilities.

During 2023, the Company terminated one of its operating leases for office space. The termination resulted in a gain of $1.1 million representing the difference between the carry value of the right-of-use assets and the related lease liabilities. This gain was recorded in the year ended December 31, 2023, and is included in loss/(gain) on operating lease right-of-use assets in the consolidated statement of operations and comprehensive loss.

During 2023, the Company modified one of its operating leases for office space to add up to 14,032 square feet to the Company’s existing facility in Cleveland, Ohio. The lease modification resulted in the recognition of $0.4 million of additional right-of-use assets and related lease liabilities in the Company’s consolidated balance sheet during the year ended December 31, 2023.

During 2022, the Company announced a strategic partner to take over development activities of ABO-102 and that the Company was discontinuing development of ABO-101. As a result, the Company determined the portion of the lease that was dedicated to the future facility for the ABO-101 and ABO-102 programs, had no future value and thus, the Company recorded an impairment charge of $1.6 million for the year ended December 31, 2022 and is included in loss/(gain) on operating lease right-of-use assets in the consolidated statement of operations and comprehensive loss.

In November 2022, the Company entered into a sublease agreement with an unrelated third party to occupy approximately 5,700 square feet of the Company’s administrative offices in New York, New York. Because the future sublease income under the executed sublease agreement is less than the amount the Company pays its landlord, the Company recorded an impairment charge of $0.9 million for the year ended December 31, 2022. In April of 2023, the Company entered into a sublease agreement with an unrelated third party to occupy approximately 4,670 square feet of the Company’s administrative offices in New York, New York. The Company expects to receive $1.1 million in future sublease income through September 2025 from the two subleases noted above.

The following table provides a summary of the Company’s operating lease liabilities (in thousands):

SUMMARY OF OPERATING LEASE LIABILITIES

Lease costs and rent are reflected in general and administrative expenses and research and development expenses in the consolidated statements of operations and comprehensive loss, as determined by the underlying activities. The following table provides a summary of the components of lease costs and rent (in thousands):

  SCHEDULE OF COMPONENTS OF LEASE COST

Cash paid for amounts included in the measurement of operating lease liabilities was $1.2 million and $1.8 million for the years ended December 31, 2023 and 2022, respectively.

Future minimum lease payments and obligations, which do not include short-term leases, related to the Company’s operating lease liabilities as of December 31, 2023 were as follows (in thousands):

  SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

The weighted-average remaining term of the Company’s operating leases was 65 months and the weighted-average discount rate used to measure the present value of the Company’s operating lease liabilities was 7.4% as of December 31, 2023.

The Company received $0.5 million and $0.1 million during the year ended December 31, 2023 and 2022, respectively, of sublease income which is recorded in other income on the consolidated statement of operations and comprehensive loss. Future cash receipts from the Company’s sublease agreements as of December 31, 2023 are as follows (in thousands):

 SCHEDULE OF FUTURE CASH RECEIPTS FROM OPERATING SUBLEASE