LEASES

6 Months Ended

Jun. 30, 2023

9. LEASES:

The Company has entered into operating leases to facilitate the expansion of its manufacturing, research and development, and selling, general and administrative activities. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when those events are reasonably certain to occur. The interest rate implicit in lease contracts is typically not readily determinable and as such the Company uses the appropriate incremental borrowing rate based on information available at the lease commencement date in determining the present value of the lease payments. Current lease agreements do not

contain any residual value guarantees or material restrictive covenants. As of June 30, 2023, the Company did not have any finance leases and had one additional operating lease that has not yet commenced.

The following table presents the Company’s operating lease cost and supplemental cash flow information related to the Company’s operating leases (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	1,223	$	1,073	$	2,444	$	2,171
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	—	$	—	$	—	$	—

The following table presents the Company’s operating right-of-use assets and liabilities (in thousands):


	June 30, 2023		December 31, 2022
Right-of-use assets	$	29,486	$	31,486
Short-term lease liabilities		3,760		3,737
Long-term lease liabilities		27,195		29,039

The following table presents weighted average assumptions used to compute the Company’s right-of-use assets and lease liabilities:


	June 30, 2023
Weighted average remaining lease term (in years)		7.3
Weighted average discount rate		3.4	%

As of June 30, 2023, current operating leases had remaining terms between five months and eight years with options to extend the lease terms.

Undiscounted future minimum lease payments as of June 30, 2023, by year and in the aggregate, having non-cancelable lease terms in excess of one year were as follows (in thousands):


	Maturities of Operating Lease Liabilities
2023 (1)	$	2,301
2024		4,555
2025		4,599
2026		4,688
2027		4,779
Thereafter		13,583
Total lease payments		34,505
Less: Imputed interest		(3,550	)
Present value of lease payments	$	30,955

(1)

Scheduled maturities of lease liabilities represent the period from July 1, 2023 to December 31, 2023.