From time to time, Orion leases assets from third parties. Orion also leases certain assets to third parties.

Orion accounts for leases in accordance with Accounting Standards Codification ("ASC") 842. Under ASC 842, both finance and operating lease ROU assets and lease liabilities for leases with initial terms in excess of 12 months are recognized at the commencement date based on the present value of lease payments over the lease term. Orion recognizes lease expense for leases with an initial term of 12 months or less, referred to as short term leases, on a straight-line basis over the lease term.

A summary of Orion’s assets leased from third parties follows (dollars in thousands):


	Balance sheet classification	December 31, 2024		March 31, 2024
Assets
Operating lease assets	Other long-term assets	$	983	$	1,770
Liabilities
Current liabilities
Operating lease liabilities	Accrued expenses and other	$	1,029	$	990
Non-current liabilities
Operating lease liabilities	Other long-term liabilities		167		1,121
Total lease liabilities		$	1,196	$	2,111

Orion had operating lease costs of $0.3 million and $0.9 million for the three and nine months ended December 31, 2024, respectively. Orion had operating lease costs of $0.5 million and $1.5 million for the three and nine months ended December 31, 2023, respectively.

The estimated maturity of lease liabilities for each of the remaining years is shown below (dollars in thousands):


Maturity of Lease Liabilities	Operating Leases
Fiscal 2025 (period remaining)	$	251
Fiscal 2026		889
Fiscal 2027		106
Thereafter		—
Total lease payments	$	1,246
Less: Interest		(50	)
Present value of lease liabilities	$	1,196

Orion provides long-term financing to one customer who engages Orion in large turnkey projects that span between three and nine months. The customer executes an agreement providing for monthly payments, at a fixed monthly amount, of the contract price, plus interest, over typically a five-year period. The total transaction price in these contracts is allocated between product and services in the same manner as all other turnkey projects. The portion of the transaction associated with the installation is accounted for consistently with all other installation related performance obligations under ASC 606.

While Orion retains ownership of the light fixtures during the financing period, the transaction terms and the underlying economics associated with used lighting fixtures results in Orion essentially ceding ownership of the lighting fixtures to the customer after completion of the agreement. Therefore, the portions of the transaction associated with the sale of the multiple individual light fixtures is accounted for as a sales-type lease under ASC 842.

Revenues, and production and acquisition costs, associated with sales-type leases are included in Product revenue and Cost of product revenue in the Consolidated Statement of Operations. These amounts are recorded for each fixture separately based on the customer’s monthly acknowledgment that specified fixtures have been installed and are operating as specified. The execution of the acknowledgment is considered the commencement date as defined in ASC 842.

The following chart shows the amount of revenue and cost of sales arising from sales-type leases during the quarter ended December 31, 2024 and 2023 (dollars in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2024		2023		2024		2023
Product revenue	$	147	$	—	$	356	$	—
Cost of product revenue	$	123	$	—	$	319	$	—