After the initial adoption of ASC Topic 842 (“ASC 842”), on an on-going basis, the Company evaluates all contracts upon inception and determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If a lease is identified, the Company will apply the guidance from ASC 842 to properly account for the lease.

On November 23, 2020, the Company entered into a lease agreement, pursuant to which the Company permanently leased approximately 8,051 square feet of lab and office space (the “Permanent Lease”) in San Diego once certain tenant improvements were completed by the landlord and the premises were ready for occupancy. Additionally, on November 17, 2021, the Permanent Lease was amended to add an additional 2,892 square feet of office space in the same building. The Permanent Lease commenced on December 17, 2021 and is intended to serve as the Company’s permanent premises for approximately sixty-two months. Monthly rental payments will be approximately $40,800 with 3% annual escalators.

The Company determined that the Permanent Lease is considered an operating lease under ASC 842, and therefore upon the lease commencement date of December 17, 2021, recognized lease liabilities and corresponding right-of-use assets of $2.3 million. The Company records operating lease expense on a straight-line basis over the life of the lease (referred to as “operating lease expense”). Variable lease expenses associated with the Company’s leases, such as payments for additional monthly fees to cover the Company’s share of certain facility expenses (common area maintenance) are expensed as incurred.

The table below summarizes the Company’s lease liabilities and corresponding right-of-use assets as of June 30, 2025 (in thousands except the year and percentage):


	June 30, 2025
ASSETS
Operating lease right-of-use assets	$	755
Total lease right-of-use assets	$	755

LIABILITIES
Current
Operating lease liability	$	524
Noncurrent
Operating lease liability, net of current portion	$	298
Total lease liabilities	$	822

Weighted average remaining lease term:	1.58
Weighted average discount rate:		6	%

Variable lease expense was approximately $39,000 and $1,000 for the three months ended June 30, 2025 and 2024, respectively. Operating lease expense was approximately $126,000 for the three months ended June 30, 2025 and 2024.

Cash outflows associated with the Company’s operating lease for the three months ended June 30, 2025 and 2024 were $134,000 and $130,000, respectively.

Future lease payments relating to the Company’s operating lease liabilities as of June 30, 2025 are as follows (in thousands):


Fiscal year ending March 31, 2026		404
Fiscal year ending March 31, 2027		460
Total future lease payments		864
Less: Imputed interest		(42	)
Total lease obligations		822
Less: Current obligations		(524	)
Noncurrent lease obligations	$	298