The following table presents lease expense recognized during the three and nine months ended September 30, 2025 and 2024:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
Finance lease expense:
Amortization of right-of-use assets	$	442	$	217	$	1,190	$	676
Interest on lease liabilities		110		112		355		348
Operating lease expense		182		601		977		1,886
Total lease expense	$	734	$	930	$	2,522	$	2,910

Amortization of right-of-use assets was recorded within research and development, and selling, general, and administrative expenses, interest on lease liabilities was recorded within interest expense, net, and operating lease expense was recorded within research and development, and selling, general, and administrative expenses, each in the unaudited condensed consolidated statements of net loss.

The operating lease for the Company’s primary office location expired on March 31, 2024. The Company is currently on a month-to-month lease and in negotiations with the landlord to renew the lease. During 2025, the Company reassessed the expected renewal term of one of its operating leases, which resulted in decreases in the related right-of-use asset and lease liability of $4.3 million and $4.5 million, respectively.

Operating and finance lease right-of-use assets and liabilities as of September 30, 2025 and December 31, 2024 were as follows:


	September 30, 2025		December 31, 2024
Assets:
Operating lease right-of-use assets	$	9,944	$	14,604
Finance lease right-of-use assets	$	4,143	$	3,708

Liabilities:
Current:
Operating lease liabilities	$	395	$	1,128
Finance lease liabilities	$	1,047	$	856
Noncurrent:
Operating lease liabilities	$	10,553	$	16,466
Finance lease liabilities	$	2,266	$	1,996

As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments.

The Company leases various equipment through purchase and leaseback agreements with terms between five and seven years. The purchase and leaseback agreements provide an option for Firefly to purchase the equipment for nominal consideration that the Company is reasonably certain to exercise. The purchase and leaseback agreements were evaluated under the sale and leaseback guidance in ASC 842-40, Leases – Sale and Leaseback Transactions. Due to the purchase option, the transactions were accounted for as failed sales and leasebacks, and the Company has accounted for the purchase and leaseback agreements as financings.

As a result, the Company continues to reflect the manufacturing equipment on its unaudited condensed consolidated balance sheets in property and equipment, net, and continues to recognize depreciation expense over its estimated useful life. In 2024, the Company recorded an initial financing liability of $34.7 million, net of transaction costs, in notes payable. As of September 30, 2025, the Company’s related notes payable, current and non-current, were $5.9 million and $22.6 million, respectively. As of December 31, 2024, the Company’s related notes payable, current and non-current, were $5.5 million and $27.1 million, respectively. The Company does not recognize rent expense related to these purchase and leaseback agreements. Instead, periodic lease payments are recognized as interest expense and reductions of the principal balance of the finance liability.

For the three months ended September 30, 2025, payments of $1.4 million were made under the purchase and leaseback agreements, including interest expense of $0.6 million, and during the nine months ended September 30, 2025, payments of $4.1 million were made under the purchase and leaseback agreements, including interest expense of $1.8 million.

For the three months ended September 30, 2024, payments of $1.0 million were made under the purchase and leaseback agreements, including interest expense of $0.5 million, and during the nine months ended September 30, 2024, payments of $1.2 millions were made under the purchase and leaseback agreements, including interest expenses of $0.7 million.

The Company is required to maintain a minimum cash balance of $22.5 million throughout the term of the purchase and leaseback agreements.