Enzo Biochem, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Leases

Leases

6 Months Ended

Jan. 31, 2024

Note 9 - Leases

The Company determines if an arrangement is or contains a lease at contract inception. The Company leases buildings, office space, and equipment through operating leases. Generally, a right-of-use asset, representing the right to use the underlying asset during the lease term, and a lease liability, representing the payment obligation arising from the lease, are recognized on the balance sheet at lease commencement based on the present value of the payment obligation. For operating leases, expense is recognized on a straight-line basis over the lease term. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company primarily uses its incremental borrowing rate in determining the present value of lease payments as the Company’s leases generally do not provide an implicit rate.

The Company has lease agreements with (i) right-of-use asset payments and (ii) non-lease components (e.g. payments related to maintenance fees, utilities, etc.) which have generally been combined and accounted for as a single lease component. The Company’s leases have remaining terms of less than 1 year to 4 years, some of which include options to extend the leases for up to 3 years. The Company’s lease terms may include renewal options that are reasonably certain to be exercised and termination options that are reasonably certain not to be exercised.

Certain of the Company’s lease agreements include rental payments adjusted periodically for inflation or a market rate which are included in the lease liabilities.

Leases	Balance Sheet Classification	January 31, 2024		July 31, 2023
Assets
Operating	Right-of-use assets	$	3,187	$	3,626
Total lease assets		$	3,187	$	3,626

Liabilities
Current:
Operating	Current portion of operating lease liabilities	$	862	$	980

Non-current:
Operating	Operating lease liabilities, non-current		2,785		3,160
Total lease liabilities		$	3,647	$	4,140

Components of lease cost were as follows:

	Three months ended January 31,				Six months ended January 31,
	2024		2023		2024		2023
Operating lease cost – net (a)	$	141	$	114	$	281	$	376

(a)

Net of $126 and $252 of sublease income for the three and six months ended January 31, 2024, respectively, and $114 for the three and six months ended January 31, 2023.

The maturities of the Company’s lease liabilities as of January 31, 2024 are as follows:

Maturity of lease liabilities, years ending July 31,	Operating leases
2024	$	571
2025		896
2026		886
2027		881
2028		808
Total lease payments		4,042
Less: Interest (a)		(395	)
Present value of lease liabilities	$	3,647

(a)	Primarily calculated using the Company’s incremental borrowing rate.

Lease term and discount rate for the for the six months ended January 31 were as follows:

Lease term and discount rate	2024			2023
Weighted-average remaining lease term (years) - operating leases		4.3 years			5.3 years

Weighted-average discount rate – operating leases		5.1	%		5.1	%

See Note 5 for cash flow information on cash paid for amounts included in the measurement of lease liabilities for the six months ended January 31, 2024 and 2023.