Right-of-Use Assets and Lease Obligations

12 Months Ended

Dec. 31, 2024

Right-of-Use Assets and Lease Obligations

The Company leases all realty used at its production and warehouse facilities, corporate headquarters, commercialization operations center and research and laboratory facilities. None of these three leases include the characteristics specified in ASC 842, Leases, that require classification as financing leases and, accordingly, these leases are accounted for as operating leases. These leases, as amended, provide remaining terms between 3.3 years and 8.8 years, including renewal options expected to be exercised to extend the lease periods. See Part II, Properties for details.

During the year ended December 31, 2023, the Company recognized a lease supporting its manufacturing facilities as a finance lease. Commitments under finance leases are not significant, and are included in Property and equipment, net, and Notes Payable, net on the Balance Sheets.

The Company does not recognize a right-to-use asset and lease liability for short-term leases, which have terms of 12 months or less on its Balance Sheets. For longer-term lease arrangements that are recognized on the Company's Balance sheets, the right-of-use asset and lease liability is initially measured at the commencement date based upon the present value of the lease payments due under the lease. These payments represent the combination of the fixed lease and fixed non-lease components that are due under the arrangement. The costs associated with the Company’s short-term leases, as well as variable costs relating to the Company’s lease arrangements, are not material to the financial results.

The implicit interest rates of the Company’s lease arrangements are generally not readily determinable and as such, the Company applies an incremental borrowing rate, which is established based upon the information available at the lease commencement date, to determine the present value of lease payments due under an arrangement. Measurement of the operating lease liability reflects a range of an estimated discount rate of 14.8% to 15.6% applied to minimum lease payments, including expected renewals, based on the incremental borrowing rate experienced in the Company’s collateralized debt refinancing.

The Company’s lease costs are recorded in manufacture and supply, research and development and selling, general and administrative expenses in its Statements of Operations and Comprehensive Loss. For the years ended December 31, 2024 and

2023, total operating lease expenses totaled $1,814 and $1,745, respectively, including variable lease expenses such as common area maintenance and operating costs of $487 and $447, respectively.

The Company’s payments due under its operating leases are as follows:


	Amount
2025	$	1,284
2026	1,318
2027	1,346
2028	1,180
2029 and thereafter	3,915

Total lease payments	9,043
Less: imputed interest	(3,565)
Total operating lease liabilities	$	5,478