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Leases | 3 Months Ended
--- | ---
Mar. 31, 2025
Leases [Abstract] |
Leases | Leases The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. Under ASC 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset. The Company made an accounting policy election not to recognize right-of-use ("ROU") assets and lease liabilities for leases with a term of twelve months or less. For all other leases, the Company recognizes ROU assets and lease liabilities based on the present value of lease payments over the lease term at the commencement date of the lease. Lease payments may include fixed rent escalation clauses or payments that depend on an index (such as the consumer price index). Subsequent changes to an index and any other periodic market-rate adjustments to base rent are recorded in variable lease expense in the period incurred. The ROU assets also include any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by any lease incentives. The Company has made an accounting policy election to account for lease and non-lease components in its contracts as single lease components for all asset classes. The non-lease components typically represent additional services transferred to the Company, such as common area maintenance for real estate, which are variable in nature and recorded in variable lease expense in the period incurred. The Company uses its incremental borrowing rate which is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term and amount in a similar economic environment to determine the present value of lease payments as the Company’s leases do not have a readily determinable implicit discount rate. Judgment is applied in assessing factors such as Company specific credit risk, lease term, nature, and quality of the underlying collateral, currency, and economic environment in determining the incremental borrowing rate to apply to each lease. The Company leases office and manufacturing space under operating lease agreements that have initial terms ranging from approximately 8 to 10 years. The Company leases furniture under a financing lease agreement that has an initial term of approximately 8 years. The furniture financing lease agreement is immaterial to the Company's condensed consolidated financial statements. Some leases include one or more options to renew, generally at the Company's sole discretion, with renewal terms that can extend the lease term by up to 5 years. In addition, certain leases contain termination options, where the rights to terminate are held by either the Company, the lessor, or both parties. Options to extend a lease are included in the lease term when it is reasonably certain that the Company will exercise the option. Options to terminate a lease are excluded from the lease term when it is reasonably certain that the Company will not exercise the option. The Company’s leases generally do not contain any material restrictive covenants or residual value guarantees. Supplemental cash flow information related to leases is as follows (in thousands):
| Three Months Ended March 31,
| 2025 |  | 2024
Cash paid for amounts included in measurement of lease liabilities: |  |  |
Operating cash outflows - payments on operating leases | $ | 340 |  |  | $ | 331 |
Operating cash outflows - payments on financing leases | $ | 12 |  |  | $ | 9 |
Financing cash outflows - payments on financing leases | $ | 7 |  |  | $ | 10 |
Supplemental balance sheet information related to the Company’s operating and financing leases is as follows (in thousands):
| March 31, 2025 |  | December 31, 2024
Operating Leases: |  |  |
Operating lease assets | $ | 4,747 |  |  | $ | 4,998 |
Operating lease liabilities, short-term | $ | 1,186 |  |  | $ | 1,167 |
Operating lease liabilities, long-term | 4,479 |  |  | 4,784 |
Total operating lease liabilities | $ | 5,665 |  |  | $ | 5,951 |
Financing Leases: |  |  |
Office furniture and fixtures | $ | 386 |  |  | $ | 386 |
Accumulated depreciation | (230) |  |  | (221) |
Net property, plant and equipment | $ | 156 |  |  | $ | 165 |
Lease liabilities, short-term | $ | 49 |  |  | $ | 47 |
Lease liabilities, long-term | 162 |  |  | 170 |
Total financing lease liabilities | $ | 211 |  |  | $ | 217 |
Weighted-average remaining lease term - operating leases (in years): | 4.29 |  | 4.54
Weighted-average remaining lease term - financing leases (in years): | 4.25 |  | 4.50
Weighted-average discount rate - operating leases: | 3.8 | % |  | 3.8 | %
Weighted-average discount rate - financing leases: | 12.0 | % |  | 12.0 | %
The components of lease expense were as follows (in thousands):
| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Operating lease cost | $ | 305 |  |  | $ | 305 |  |  |  |  |
Financing lease cost - amortization of right-of-use asset | 9 |  |  | 12 |  |  |  |  |
Financing lease cost - interest on lease liability | 12 |  |  | 9 |  |  |  |  |
Variable lease cost | 203 |  |  | 205 |  |  |  |  |
Total lease cost | $ | 529 |  |  | $ | 531 |  |  |  |  |
Operating lease cost is recognized on a straight-line basis over the lease term. Total rent expense, including the Company’s share of the lessors’ operating expenses, was $0.5 million for each of the three months ended March 31, 2025 and 2024. Financing lease cost includes asset amortization on a straight-line basis over the lease term and interest accretion calculated using the effective interest method. Total financing lease asset depreciation and interest expense was less than $0.1 million for each of the three months ended March 31, 2025 and 2024. Maturities of the Company’s operating lease liabilities as of March 31, 2025 were as follows (in thousands):
| Operating Lease Maturities
2025 (excluding the three months ended March 31) | $ | 1,028 |
2026 | 1,401 |
2027 | 1,435 |
2028 | 1,469 |
2029 | 804 |
Total lease payments | $ | 6,137 |
Less imputed interest | (472) |
Total present value of lease liabilities | $ | 5,665 |
Maturities of the Company’s financing lease liability as of March 31, 2025 were as follows (in thousands):
| Financing Lease Maturities
2025 (excluding the three months ended March 31) | $ | 56 |
2026 | 75 |
2027 | 75 |
2028 | 75 |
2029 | 39 |
Total lease payments | $ | 320 |
Less imputed interest | (109) |
Total present value of lease liabilities | $ | 211 |
Leases | Leases The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. Under ASC 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset. The Company made an accounting policy election not to recognize right-of-use ("ROU") assets and lease liabilities for leases with a term of twelve months or less. For all other leases, the Company recognizes ROU assets and lease liabilities based on the present value of lease payments over the lease term at the commencement date of the lease. Lease payments may include fixed rent escalation clauses or payments that depend on an index (such as the consumer price index). Subsequent changes to an index and any other periodic market-rate adjustments to base rent are recorded in variable lease expense in the period incurred. The ROU assets also include any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by any lease incentives. The Company has made an accounting policy election to account for lease and non-lease components in its contracts as single lease components for all asset classes. The non-lease components typically represent additional services transferred to the Company, such as common area maintenance for real estate, which are variable in nature and recorded in variable lease expense in the period incurred. The Company uses its incremental borrowing rate which is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term and amount in a similar economic environment to determine the present value of lease payments as the Company’s leases do not have a readily determinable implicit discount rate. Judgment is applied in assessing factors such as Company specific credit risk, lease term, nature, and quality of the underlying collateral, currency, and economic environment in determining the incremental borrowing rate to apply to each lease. The Company leases office and manufacturing space under operating lease agreements that have initial terms ranging from approximately 8 to 10 years. The Company leases furniture under a financing lease agreement that has an initial term of approximately 8 years. The furniture financing lease agreement is immaterial to the Company's condensed consolidated financial statements. Some leases include one or more options to renew, generally at the Company's sole discretion, with renewal terms that can extend the lease term by up to 5 years. In addition, certain leases contain termination options, where the rights to terminate are held by either the Company, the lessor, or both parties. Options to extend a lease are included in the lease term when it is reasonably certain that the Company will exercise the option. Options to terminate a lease are excluded from the lease term when it is reasonably certain that the Company will not exercise the option. The Company’s leases generally do not contain any material restrictive covenants or residual value guarantees. Supplemental cash flow information related to leases is as follows (in thousands):
| Three Months Ended March 31,
| 2025 |  | 2024
Cash paid for amounts included in measurement of lease liabilities: |  |  |
Operating cash outflows - payments on operating leases | $ | 340 |  |  | $ | 331 |
Operating cash outflows - payments on financing leases | $ | 12 |  |  | $ | 9 |
Financing cash outflows - payments on financing leases | $ | 7 |  |  | $ | 10 |
Supplemental balance sheet information related to the Company’s operating and financing leases is as follows (in thousands):
| March 31, 2025 |  | December 31, 2024
Operating Leases: |  |  |
Operating lease assets | $ | 4,747 |  |  | $ | 4,998 |
Operating lease liabilities, short-term | $ | 1,186 |  |  | $ | 1,167 |
Operating lease liabilities, long-term | 4,479 |  |  | 4,784 |
Total operating lease liabilities | $ | 5,665 |  |  | $ | 5,951 |
Financing Leases: |  |  |
Office furniture and fixtures | $ | 386 |  |  | $ | 386 |
Accumulated depreciation | (230) |  |  | (221) |
Net property, plant and equipment | $ | 156 |  |  | $ | 165 |
Lease liabilities, short-term | $ | 49 |  |  | $ | 47 |
Lease liabilities, long-term | 162 |  |  | 170 |
Total financing lease liabilities | $ | 211 |  |  | $ | 217 |
Weighted-average remaining lease term - operating leases (in years): | 4.29 |  | 4.54
Weighted-average remaining lease term - financing leases (in years): | 4.25 |  | 4.50
Weighted-average discount rate - operating leases: | 3.8 | % |  | 3.8 | %
Weighted-average discount rate - financing leases: | 12.0 | % |  | 12.0 | %
The components of lease expense were as follows (in thousands):
| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Operating lease cost | $ | 305 |  |  | $ | 305 |  |  |  |  |
Financing lease cost - amortization of right-of-use asset | 9 |  |  | 12 |  |  |  |  |
Financing lease cost - interest on lease liability | 12 |  |  | 9 |  |  |  |  |
Variable lease cost | 203 |  |  | 205 |  |  |  |  |
Total lease cost | $ | 529 |  |  | $ | 531 |  |  |  |  |
Operating lease cost is recognized on a straight-line basis over the lease term. Total rent expense, including the Company’s share of the lessors’ operating expenses, was $0.5 million for each of the three months ended March 31, 2025 and 2024. Financing lease cost includes asset amortization on a straight-line basis over the lease term and interest accretion calculated using the effective interest method. Total financing lease asset depreciation and interest expense was less than $0.1 million for each of the three months ended March 31, 2025 and 2024. Maturities of the Company’s operating lease liabilities as of March 31, 2025 were as follows (in thousands):
| Operating Lease Maturities
2025 (excluding the three months ended March 31) | $ | 1,028 |
2026 | 1,401 |
2027 | 1,435 |
2028 | 1,469 |
2029 | 804 |
Total lease payments | $ | 6,137 |
Less imputed interest | (472) |
Total present value of lease liabilities | $ | 5,665 |
Maturities of the Company’s financing lease liability as of March 31, 2025 were as follows (in thousands):
| Financing Lease Maturities
2025 (excluding the three months ended March 31) | $ | 56 |
2026 | 75 |
2027 | 75 |
2028 | 75 |
2029 | 39 |
Total lease payments | $ | 320 |
Less imputed interest | (109) |
Total present value of lease liabilities | $ | 211 |

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance 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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- 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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