Note 3 – Leases

Operating lease right-of-use assets and liabilities are recognized at the present value of the future lease payments as of the lease commencement date. Operating lease expense is recognized on a straight-line basis over the lease term.

The Company currently has a lease agreement which allows for the use of a laboratory facility, entered into on February 16, 2023, with base rent of $7,206 per month for a period of 64 months, which increases at the rate of 3% per year, that commenced June 1, 2023. The lease included a six-month 50% rent abatement upon commencement. Additional common area maintenance (“CAM”) fees are charged monthly and revised annually. In addition to monthly base rent, the Company pays monthly CAM fees, which are being expensed as incurred. An irrevocable letter of credit (“LOC”) for the security deposit of $43,234 and base rent of $3,891, including 50% abatement, and $3,315 of CAM cost, was due and paid on execution of the lease agreement. Alexandria Real Estate (ARE-QRS-CORP) is the beneficiary of the LOC. The current LOC expired on March 1, 2026.

Following the Company’s discontinuation of its clinical trial for Ropidoxuridine, the Company committed to a plan to pursue a sublease for its laboratory space. During May 2026, the Company executed a sublease agreement for its laboratory space, with the subtenant taking occupancy on May 15, 2026. The sublease has a stated term through August 30, 2028 and is coterminous with the underlying lease. The sublease may terminate earlier if the underlying lease is terminated prior to its contractual expiration date. During the three and six months ended June 30, 2026, the Company recognized $6.0 thousand of sublease income which is included as a reduction to general and administrative expenses in the condensed consolidated statements of operation.

As a result of the previously identified decline in the expected economic benefit of the leased space, the Company recorded total non-cash impairment charges of $109.2 thousand related to its operating lease right-of-use asset during the year ended December 31, 2025, to reflect the reduced expected economic value of the operating lease right-of-use asset based on estimated sublease rates. The impairment charges are recorded within research and development expenses in the condensed consolidated statements of operations.

The following summarizes the right-of use asset and lease information for the Company’s operating leases:

 Schedule of Right-of Use Asset and Lease Information about Operating Lease

Future non-cancelable minimum lease payments under the operating lease liability as of June 30, 2026, are as follows:

Schedule of Future Non-cancelable Minimum Lease Payments Under Operating Lease Liability