Ernexa Therapeutics Inc. Leases Disclosure

 

12.

Leases

 

Operating Leases

 

As of December 31, 2025, the Company had operating leases for offices in the Borough of Manhattan in New York, New York (the “Manhattan Lease”), and Cambridge, Massachusetts (the “Cambridge Lease”), which expire in 2027 and 2028, respectively.

 

During the year ended December 31, 2024, the Company entered into a sublease termination agreement with a sublessor related to a sublease of office, laboratory, and research and development space in Somerville, Massachusetts (the “Somerville Sublease Termination Agreement”), which was effective on August 31, 2024. Prior to the Somerville Sublease Termination Agreement, the Company was paying approximately $0.6 million per month in base rent, parking, common area maintenance costs and taxes under the Somerville Sublease, which was originally scheduled to expire in 2033.

 

Pursuant to the Somerville Sublease Termination Agreement, the Company agreed to the following: to surrender and vacate the premises; that the Company’s right, title and interest in all furniture, fixtures and laboratory equipment at the premises will become the property of the sublessor; and that both parties will be released of their obligations under the sublease. As a result of the sublease termination, the Company recognized a gain on lease termination of approximately $1.6 million for the year ended December 31, 2024, which includes a loss on disposal of fixed assets of approximately $0.5 million.

 

For the years ended December 31, 2025 and 2024, the net operating lease expenses were as follows (in thousands):

 Schedule of Net Operating Lease Expense

		2025				2024
		Years ended December 31,
		2025				2024
Operating lease expense		$	271			$	4,447
Sublease income			(84	)			(84	)
Variable lease expense			21				893
Total lease expense		$	208			$	5,256

 

The tables below show the beginning balances of the operating ROU assets and lease liabilities as of January 1, 2025 and the ending balances as of December 31, 2025, including the changes during the period (in thousands).

 Schedule of Operating Lease Right-of-use Assets and Liabilities

		Operating Lease ROU Assets
Operating lease ROU assets at January 1, 2025		$	670
Amortization of operating lease ROU assets			(198	)
Remeasurment of ROU asset			14
Impairment of ROU asset			(33	)
Operating lease ROU assets at December 31, 2025		$	453

 

		Operating Lease Liabilities
Operating lease liabilities at January 1, 2025		$	684
Principal payments on operating lease liabilities			(208	)
Remeasurment of lease liability			14
Operating lease liabilities at December 31, 2025			490
Less non-current portion			(277	)
Current portion at December 31, 2025		$	213

 

The Cambridge Lease, which commenced in June 2021, included a tenant improvement allowance of up to $50,000 (the “TI Allowance”), which was not paid or payable at lease commencement, and the amount of payment from the lessor was contingent on future events (e.g., the timing and the amount of qualified costs the Company incurs to construct leasehold improvements). Therefore, the TI Allowance was not previously included in the consideration of the contract when the Company measured the lease liability and ROU asset.

 

 

During the year ended December 31 2025, the Company made some leasehold improvements to the Cambridge office space of approximately $0.1 million, of which $50,000 qualified to be reimbursed under the TI Allowance. As a result, the contingent aspects of the TI Allowance were resolved and became fixed, which resulted in the Company remeasuring the lease liability. The TI Allowance of $50,000 was deducted from the ROU asset balance immediately prior to the re-measurement. The remaining unpaid lease payments, including the reimbursement of the TI Allowance, which is considered a reduction in the consideration of the contract, were then remeasured using the current index and interest rate and resulted in an approximately $14,000 increase to the lease liability, with a corresponding adjustment to the ROU asset. The $0.1 million of leasehold improvements was recorded as a fixed asset and is being depreciated over the remaining lease term.

 

During the year ended December 31, 2025, the Company tested the Manhattan Lease ROU asset for recoverability and determined that the carrying value of the ROU asset was more than its fair value. As a result, the Company recognized an impairment loss of approximately $33,000 during the year ended December 31, 2025, which was recorded in general and administrative expense in the accompanying consolidated statement of operations. There were no impairment losses recognized for the year ended December 31, 2024.

 

As of December 31, 2025, the Company’s operating leases had a weighted-average remaining life of 2.2 years with a weighted-average discount rate of 11.93%. The maturities of the operating lease liabilities are as follows (in thousands):

Maturities of Operating Lease Liabilities 

		As of December 31, 2025
2026		$	254
2027			200
2028			95
Total payments			549
Less imputed interest			(59	)
Total operating lease liabilities		$	490

 

In February 2026, the Company entered into a lease termination agreement related to the Manhattan Lease. See Note 18 for more information on this agreement.

 

Manhattan Sublease

 

In April 2019, the Company entered into a sublease with an unaffiliated third party (the “Subtenant”), whereby the Subtenant agreed to sublease the space rented by the Company under the Manhattan Lease. The term of this sublease expires on October 31, 2026 with no option to extend. Rent payments by the Subtenant under the sublease began on September 1, 2019. The sublease stipulates an annual rent increase of 2.25%. The Subtenant is also responsible for paying to the Company all tenant energy costs, annual operating costs, and annual tax costs attributable to the subleased space during the term of the sublease.

 

The Company received sublease payments of approximately $0.1 million for each of the years ended December 31, 2025 and 2024, respectively. The Company treats the sublease as a separate lease, as the Company was not relieved of the primary obligation under the related lease. The Company continues to account for the related lease as a lessee and in the same manner as prior to the commencement date of the sublease. The Company accounts for the sublease as a lessor of the lease. The sublease is classified as an operating lease, as it does not meet the criteria of a sale-type or direct financing lease.

 

In February 2026, the Company entered into a sublease termination agreement with the Subtenant. See Note 18 for more information on this agreement.