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LEASES

12 Months Ended

Dec. 31, 2024

(10) LEASES

We determine if an arrangement is an operating or finance lease at the inception of each contract. If the contract is classified as an operating lease, we record a right-of-use (“ROU”) asset and corresponding liability reflecting the total remaining present value of fixed lease payments over the expected term of the lease agreement. The expected term of the lease may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. If our lease does not provide an implicit rate in the contract, we use our incremental borrowing rate when calculating the present value.

We have operating leases for office space with remaining lease terms ranging from one month to approximately eight years. As most of the leases do not provide an implicit rate, we calculate the ROU assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date. Imputed interest on our operating leases was $0.3 million as of December 31, 2024. At December 31, 2024 and 2023, respectively, we had approximately $0.7 million of ROU operating lease assets recorded within buildings and equipment on the consolidated balance sheets. Operating lease expense associated with ROU assets is recognized on a monthly basis over the lease term in operating costs on the consolidated statements of operation.

We entered into three finance leases during 2023 and five finance leases during 2024, which are accounted for as failed sale-leaseback transactions. Finance lease assets are included in finance lease right-of-use assets on the consolidated balance sheets and the associated finance lease liabilities are reflected within current portion of lease financing and long-term lease financing on the consolidated balance sheets as applicable. Depreciation on our finance lease assets was $5.2 million and $2.3 million for the years ended December 31, 2024 and 2023, respectively. Interest expense on our finance lease liability was $1.5 million during the year ended December 31, 2024. Imputed interest expense on our future remaining finance lease liability was $1.7 million for the year ended December 31, 2024. We had deferred financing fees of $0.2 million and $0.1 million at December 31, 2024 and 2023, respectively, in connection with entry into the finance leases. These deferred financing fees will be amortized on a straight-line basis over the term of the finance leases.

Information related to leases was as follows as of December 31st (in thousands):


	December 31,
	2024			2023
Operating lease information:
Operating cash outflows from operating leases	$	169		$	208
Weighted average remaining lease term in years		8.0			8.5
Weighted average discount rate		9.5	%		9.5	%
Finance lease information:
Financing cash outflows from finance leases	$	5,633		$	—
Proceeds from sale and leaseback arrangement		5,134			11,082
Weighted average remaining lease term in years		2.18			3.00
Weighted average discount rate		9.0	%		8.5	%

We recognized the following costs related to our leases in our consolidated balance sheets:


		For the Year Ended December 31,		For the Year Ended December 31,
		2024		2023

		(In thousands)
Operating lease assets	Buildings and equipment	$	664	$	712
Operating lease liabilities:
Current operating lease liabilities	Accounts payable and accrued liabilities	$	99	$	58
Non-current operating lease liabilities	Other long-term liabilities		565		654
Total operating lease liability		$	664	$	712

Finance lease assets	Finance lease right-of-use assets	$	13,034	$	12,346
Finance lease liabilities:
Current finance lease liabilities	Current portion of lease financing	$	6,912	$	3,933
Non-current finance lease liabilities	Long-term lease financing		8,749		8,157
Total finance lease liabilities		$	15,661	$	12,090

Future minimum lease payments under non-cancellable leases as of December 31, 2024, were as follows:


	Operating Leases		Finance Leases

	(In thousands)
2025	$	108	$	8,147
2026		121		7,972
2027		125		1,391
2028		129		—
2029		133		—
Thereafter		361		—
Total minimum lease payments	$	977	$	17,510
Less imputed interest and deferred finance fees		(313)		(1,849)
Total lease liability	$	664	$	15,661