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Note 5 - Leases

6 Months Ended

Jun. 30, 2025

5.	LEASES

The Company leases office facilities in Northern California under non-cancelable operating leases. In July 2024, the Company entered into two new long-term leases, one of which the Company uses as its headquarters.

In August 2024, one of the Company's existing leases, originally set to expire on November 30, 2026 was terminated early. In conjunction with the early termination, the Company recorded a net gain of $491 on termination of the operating lease during the year ended December 31, 2024. The net gain included a gain of $5,954, comprised of a $16,325 net liability reduction, partially offset by a $10,371 decrease in its remaining right of use asset. Additionally, in accordance with terms in the lease agreement and based on certain assumptions, the Company recorded a lease termination loss of $5,463, representing estimated unpaid rent for the remaining term. The net gain was recorded in general and administrative expenses in the condensed consolidated statement of operations and comprehensive loss. The lease termination liability was reduced by the draw-down of the $2,150 letter of credit by the landlord in August 2024; the remaining liability of $3,313 as of December 31, 2024 was recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheet.

On April 28, 2025, the Company and the former landlord entered into a settlement agreement to resolve all outstanding disputes related to the early termination of the lease. Under the terms of the agreement, the Company paid $1,400 in cash and will issue a warrant to purchase up to 350,000 shares of the Company's common stock at an initial exercise price of $2.22 per share with an estimated fair value of $301. The Company recorded a net gain on termination of operating lease of $1,612 during the six months ended June 30, 2025. See Note 17, Commitments and Contingencies, for further discussion.

The components of operating lease expenses, excluding the gain on early termination of operating lease, for the six months ended June 30, 2025 and 2024, are as follows (in thousands):

	*Three months ended June 30,*				*Six months ended June 30,*
	*2025*		*2024*		*2025*		*2024*
Operating lease cost	$	70	$	582	$	141	$	1,171
Variable lease cost		4		85		8		169
Total operating lease cost	$	74	$	667	$	149	$	1,340

Maturities of lease liabilities, excluding the lease termination liability, are as follows (in thousands):

	*Operating leases*
Years ending - December 31:	*(unaudited)*
2025 (remaining six months)	$	139
2026		283
2027		258
Total lease payments		680
Less amount to discount to present value		(67	)
Present value of lease liabilities	$	613