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LEASES

9 Months Ended

Sep. 30, 2025

6. LEASES

We have lease agreements for equipment and facilities under long-term, non-cancellable leases. We determine if an arrangement is a lease at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether we obtain substantially all of the economic benefits from, and have the ability to direct, the use of the asset. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

Operating leases are included in operating lease right-of-use assets, current operating lease liabilities, and long-term operating lease liabilities in our condensed consolidated balance sheets. Operating lease right-of-use assets and corresponding operating lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term, plus payments made prior to lease commencement and any initial direct costs. Operating lease expense for operating lease assets is recognized on a straight-line basis over the lease term. As most of our leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

We also have elected to apply a practical expedient for short-term leases whereby we do not recognize a lease liability or a right-of-use asset for leases with a term of 12 months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related right-of-use asset or lease obligation for such contracts.

Our leases have remaining lease terms that expire at various dates through 2029. Some of our lease terms may include options to extend or terminate the lease, and the Company includes those leases when it is reasonably certain we will exercise that option.

The following table summarizes the components of lease cost:


	Three Months Ended				Nine Months Ended
	September 30				September 30
(in thousands)	2025		2024		2025		2024
LEASE COST
OPERATING LEASE COST:
Total long-term operating lease cost		91		92		269		278
Total short-term operating lease cost		252		196		627		578
TOTAL LEASE COST	$	343	$	288	$	896	$	856

The following table summarizes supplemental cash flow information related to leases:


	Three Months Ended				Nine Months Ended
	September 30				September 30
(in thousands)	2025		2024		2025		2024
OTHER INFORMATION:
Cash paid for amounts included in the measurement of lease obligation:
Operating cash flows used in operating leases	$	91	$	92	$	269	$	278

The following table presents other lease information related to the Company’s leases:


	September 30,		December 31,
	2025		2024
WEIGHTED-AVERAGE REMAINING LEASE TERM (YEARS):
Operating leases	1.6		2.0

WEIGHTED-AVERAGE DISCOUNT RATE:
Operating leases	3.5	%	3.5	%

Future lease payments under non-cancellable leases as of September 30, 2025 were as follows:


(in thousands)	Operating Lease Obligations
REMAINING FISCAL 2025	$	89
2026		170
2027		57
2028		41
2029		12
TOTAL LEASE PAYMENTS		370
Less imputed interest		(7)
LEASE OBLIGATION AS OF SEPTEMBER 30, 2025	$	363

Related Party Leases

The Company’s subsidiary in the United Kingdom leased facilities used for manufacturing and office space from a related party with related lease costs. During both the three months ended September 30, 2025 and 2024, the related party lease cost was $0.1 million. During the nine months ended September 30, 2025 and 2024, the related party lease cost was $0.2 million and $0.1 million, respectively. The Company’s French subsidiary leased a fleet of vehicles from a related party with related lease costs of $0.1 million during both the three months ended September 30, 2025 and 2024, and related lease costs of $0.2 million and $0.1 million during the nine months ended September 30, 2025 and 2024, respectively.