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Leases | 6 Months Ended
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Jun. 30, 2024
Leases [Abstract] |
Leases | Note 7 – Leases The Company has operating and finance leases for facilities and certain equipment. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term. The Company does not combine lease and non-lease components in the recognition of lease expense. As of June 30, 2024 the Company held four leases for office, manufacturing and warehouse facilities in Aliso Viejo, California. The four leases are for approximately 137,000 square feet in the aggregate. For one such operating lease, the lessor provided $900,000 in tenant allowances. On April 4, 2022, the Company entered into a thirty-four-month sublease agreement for a portion of the 5 Columbia Building, in Aliso Viejo, CA. The sublease commencement date was June 13, 2022 and was to expire on March 31, 2025. The base rent receivable was $11,410 per month. On January 4, 2023 the Company entered into a second amendment to the sublease agreement adjusting the base rent receivable to $5,319 per month. On August 1, 2024 the sublease was cancelled. New lease and lease amendments On April 18, 2024, the Company entered into a new lease, and amendments to two existing leases, for three of its facilities comprising the Company’s headquarters, manufacturing, research and development and administrative offices in Aliso Viejo, California, as described in further detail below. 125 Columbia On April 18, 2024, the Company entered into a Standard Industrial/Commercial Single-Tenant Lease – Net (the “125 Columbia Lease”) with BML Management, LLC, for an approximately 26,825 square foot industrial and research and development facility in Aliso Viejo, California. The 125 Columbia Lease commences on June 1, 2024 and will end on January 31, 2031. The Company has two options to extend the term of the 125 Columbia Lease, with each option to extend being for a term of 60 months, commencing when the prior term expires. The base rent is initially $41,579 per month, payable on the first day of each month commencing on June 1, 2024, subject to adjustment as set forth in the 125 Columbia Lease. 5 Columbia On April 18, 2024 and June 3, 2024, the Company entered into Lease Amendment #2 and Lease Amendment #3, respectively to that certain Lease Agreement dated January 10, 2018, as amended on April 5, 2022, with Clifford D. Downs, for an approximately 19,680 square foot industrial facility located at 5 Columbia in Aliso Viejo, California (collectively the “5 Columbia Amendments”). Pursuant to the 5 Columbia Amendments, the term of the lease was extended 70 months, beginning on April 1, 2025 and ending on January 31, 2031. The parties agreed to the base rent rate payable over the 70 month term as set forth in the 5 Columbia Amendments. The base rent is initially $30,701 per month and includes fixed rent escalations beginning on April 1, 2027. The Company has two options to extend the term of the lease, with each option to extend being for a term of 60 months, commencing when the prior term expires. 100 Columbia On April 18, 2024, the Company entered into a Fifth Amendment to that certain Commercial Lease Agreement, dated August 31, 2015, as amended November 23, 2015, December 22, 2015, January 18, 2016, and November 12, 2016, with Accuride International Inc., for an approximately 42,106 square foot industrial facility located at 100 Columbia in Aliso Viejo, California (the “April 2024 100 Columbia Amendment”). Pursuant to the April 2024 100 Columbia Amendment, the term of the lease was extended 76 months, beginning on October 1, 2024 and ending on January 31, 2031. The parties agreed to the base rent rate payable over the 76 month term as set forth in the April 2024 100 Columbia Amendment. The base rent is initially $64,843 per month and includes fixed rent escalations beginning on October 1, 2025. The Company has two options to extend the term of the lease at the end of the current term, with each option to extend being for a 5 year term. The lessor provided $50,000 in tenant allowances. On June 3, 2024, the Company entered into a Sixth Amendment to that certain Commercial Lease Agreement, dated August 31, 2015, as amended April 18, 2024 as amended November 23, 2015, December 22, 2015, January 18, 2016, and November 12, 2016, with Accuride International Inc., for the property located at 100 Columbia in Aliso Viejo, California (the “June 2024 100 Columbia Amendment”). The June 2024 100 Columbia Amendment updated certain notification requirements. Under these lease agreements, the Company is required to pay approximately $10.8 million in future minimum lease payments of which $0.2 million will be paid in 2024, $1.4 million will be paid in 2025, $1.6 million will be paid in 2026, $1.8 million will be paid in both 2027 and 2028, and $4.0 million will be paid thereafter. The following table presents the lease balances within the Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (in thousands):
|  |  |  | June 30, |  |  | December 31, |
Leases |  | Classification |  | 2024 |  |  | 2023 |
Assets |  |  |  |  |  |  |  |
Operating |  | Operating leases right-of-use assets |  | $ | 10,818 |  |  | $ | 2,444 |
Finance |  | Property and equipment, net |  |  | 142 |  |  |  | 156 |
Total lease assets |  |  |  |  | 10,960 |  |  |  | 2,600 |
Liabilities |  |  |  |  |  |  |  |
Current |  |  |  |  |  |  |  |
Operating |  | Lease liabilities |  |  | 710 |  |  |  | 1,764 |
Finance |  | Lease liabilities |  |  | 26 |  |  |  | 37 |
Noncurrent |  |  |  |  |  |  |  |
Operating |  | Long-term lease liabilities |  |  | 10,553 |  |  |  | 1,093 |
Finance |  | Long-term lease liabilities |  |  | 121 |  |  |  | 118 |
Total lease liabilities |  |  |  | $ | 11,410 |  |  | $ | 3,012 |
For the three and six months ended June 30, 2024 and 2023, the components of operating and finance lease expenses were as follows (in thousands):
|  |  |  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
Lease Cost |  | Classification |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Operating lease cost |  | Cost of sales |  | $ | 3 |  |  | $ | 3 |  |  | $ | 7 |  |  | $ | 7 |
|  | Research and development |  |  | 23 |  |  |  | 24 |  |  |  | 48 |  |  |  | 61 |
|  | Selling, general and administrative |  |  | 588 |  |  |  | 438 |  |  |  | 1,027 |  |  |  | 887 |
Finance lease cost |  | Research and development |  |  | — |  |  |  | 29 |  |  |  | 17 |  |  |  | 63 |
|  | Selling, general and administrative |  |  | 8 |  |  |  | 9 |  |  |  | 15 |  |  |  | 18 |
Finance lease cost |  | Interest expense |  |  | 5 |  |  |  | 2 |  |  |  | 11 |  |  |  | 7 |
Maturities of the Company’s operating and finance lease liabilities as of June 30, 2024 were as follows (in thousands):
|  | Operating |  |  | Finance |
Year Ended December 31, |  | Leases |  |  | Leases |
2024 (remainder) |  | $ | 1,004 |  |  | $ | 22 |
2025 |  |  | 2,434 |  |  |  | 46 |
2026 |  |  | 2,637 |  |  |  | 46 |
2027 |  |  | 2,782 |  |  |  | 46 |
2028 |  |  | 2,871 |  |  |  | 39 |
2029 |  |  | 2,954 |  |  |  | — |
Thereafter |  |  | 3,308 |  |  |  | — |
Total lease payments |  |  | 17,990 |  |  |  | 199 |
Less: imputed interest |  |  | (6,727 | ) |  |  | (52 | )
Total lease liabilities |  | $ | 11,263 |  |  | $ | 147 |
The weighted average remaining lease term and weighted average discount rate used to determine lease liabilities related to the Company’s operating and finance leases as of June 30, 2024 and December 31, 2023 were:
|  | June 30, |  |  | December 31, |
Lease Term and Discount Rate |  | 2024 |  |  | 2023 |
Weighted average remaining lease term (years) |  |  |  |  |  |
Operating leases |  |  | 6.58 |  |  |  | 1.69 |
Finance leases |  |  | 4.35 |  |  |  | 4.37 |
Weighted average discount rate |  |  |  |  |  |
Operating leases |  |  | 14.4 | % |  |  | 10.4 | %
Finance leases |  |  | 14.4 | % |  |  | 14.0 | %

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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