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LEASES
 12 Months Ended
Dec. 31, 2024
Leases  
LEASES

10. LEASES

 

The Company leases office space and certain equipment under operating and finance leases. All leases have remaining lease terms of one to eight years. Office lease agreements include both lease and non-lease components, which are accounted for separately. Finance leases contain options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless the Company is reasonably certain to exercise the purchase option.

 

In September 2021, the Company entered into a lease agreement for product testing and lab space in Redmond, Washington which commenced in November 2021. In addition to base rent, the Company pays additional rent comprised of a proportionate share of any operating expenses, real estate taxes, and management fees. The lease, which expires in July 2032, includes an option to extend the term for one ten-year renewal period.

 

In September 2021, the Company entered into a lease agreement for office space in Redmond, Washington which commenced in December 2022. In addition to base rent, the Company will pay additional rent comprised of a proportionate share of any operating expenses, real estate taxes, and management fees. During the quarter ended June 30, 2023, a payment of $3.0 million was received as an incentive to terminate the Company’s previous lease. The gain is recorded as other income in the consolidated statements of operations. The lease, which expires in December 2032, contains an option to extend the term for one ten-year renewal period. Subsequent to the date of these financial statements, on February 13, 2025, the Company signed a Letter of Intent (“LOI”) with a third party to sublease a portion of this office space. The sublease, which, if executed, would commence on or around April 1, 2025, has an expected term of 57 months and expected monthly rent of $0.1 million.

 

In April 2022, the Company entered into a lease agreement for product testing for engineering and development activities in Nuremberg, Germany which commenced in May 2022. In June 2024, the Company abandoned the space prior to its expiration of November 2027. During the year ended December 31, 2024, impairment expense of $0.2 million was incurred and is recorded within sales, marketing, general and administrative expense on the consolidated statements of operations.

 

In September 2022, the Company entered into a lease agreement for office space in Nuremberg, Germany which commenced in November 2022. In June 2024, the Company entered into an early termination agreement to decrease the expiration from April 2027 to April 2025, resulting in an insignificant early termination fee. During the year ended December 31, 2024, impairment expense of $0.1 million was incurred and is recorded within sales, marketing, general and administrative expense on the consolidated statements of operations.

 

Additionally, in connection with the January 2023 acquisition of assets from Ibeo, the Company assumed three leases in Hamburg, Germany. Each lease was abandoned or expired in 2024, resulting in impairment expense of $0.1 million during the year ended December 31, 2024.

 

In December 2023, the Company entered into a lease agreement for office space in Hamburg, Germany which commenced in November 2024. The lease, which expires in October 2029, includes an option to extend the term for two three-year renewal periods.

 

The components of lease expense are as follows:

  

(in thousands)         
   Year Ended December 31, 
(in thousands)  2024   2023   2022 
Operating lease expense  $2,701   $2,625   $1,501 
Finance lease expense:               
Amortization of leased assets   -    21    26 
Interest on lease liabilities   -    -    2 
Total finance lease expense   -    21    28 
Total lease expense  $2,701   $2,646   $1,529 

 

 

Supplemental cash flow information related to leases is as follows:

  

(in thousands)         
   Year Ended December 31, 
(in thousands)  2024   2023   2022 
Cash paid for amounts included in measurement of lease liabilities:               
Operating cash flows from operating leases  $2,491   $2,500   $1,280 
Operating cash flows from finance leases   -    -    2 
Financing cash flows from finance leases   -    21    26 

 

Supplemental balance sheet information related to leases is as follows:

  

(in thousands)      
   December 31, 
(in thousands)  2024   2023 
Operating leases          
Operating lease right-of-use assets  $16,746   $13,758 
           
Current portion of operating lease liabilities   2,682    2,323 
Operating lease liabilities, net of current portion   15,954    12,714 
Total operating lease liabilities  $18,636   $15,037 
           
Finance leases          
Property and equipment, at cost  $112   $112 
Accumulated depreciation   (112)   (97)
Property and equipment, net  $-   $15 
           
Weighted Average Remaining Lease Term          
Operating leases    6.8 years     8.4 years 
           
Weighted Average Discount Rate          
Operating leases   4.9%   4.6%

 

As of December 31, 2024, maturities of lease liabilities are as follows:

  

(in thousands)  Operating 
Years Ended December 31,  Leases 
2025   2,974 
2026   3,351 
2027   3,316 
2028   3,279 
2029   3,115 
Thereafter   5,716 
Total minimum lease payments   21,751 
Less: amount representing interest   (3,115)
Present value of capital lease liabilities  $18,636