Leases

12 Months Ended

Dec. 31, 2023

The Company leases office and manufacturing facilities under non-cancellable operating leases expiring at various dates through April 2028. The Company’s lease agreements do not contain any material terms and conditions of residual value guarantees or material restrictive covenants. The Company adopted ASU 2016-02, Leases (Topic 842) using the modified retrospective method on January 1, 2022.

The Company determines if an arrangement is or contains a lease at inception. Operating leases are included in operating lease right-of use assets and operating lease liabilities in the Company’s consolidated balance sheets.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the commencement date based on an amount equal to the present value of lease payments over the lease term. The Company’s leases do not provide an implicit rate; therefore, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company uses the implicit rate when it is readily determinable. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed it to carry forward existing lease classification and to exclude leases with original terms of one year or less. Further, the Company elected to combine lease and non-lease components for all asset classes. Variable lease payments are defined as payments made for the right to use an asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time. Any variable lease components are expensed as incurred. The operating lease right-of-use assets also include adjustments related to prepaid or deferred lease payments and lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term.

The components of lease expense for the years ended December 31, 2023 and 2022 were as follows (in thousands):


	Year Ended December 31,
	2023		2022
Operating lease cost	$	3,074	$	1,516
Variable lease cost	813		845
Total operating lease cost	$	3,887	$	2,361

Supplemental cash flow information for the years ended December 31, 2023 and 2022 related to leases was as follows (in thousands):


	Year Ended December 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for operating leases included in operating activities	$	2,564	$	1,838
Right of use assets obtained in exchange for lease obligations:
Operating leases	$	11,190	$	1,827

Supplemental balance sheet information related to leases was as follows (in thousands):


	December 31, 2023		December 31, 2022
Operating lease right-of-use assets	$	10,038	$	445
Operating lease liabilities:
Operating lease liabilities, current	$	1,875	$	211
Operating lease liabilities, non-current	8,720		281
Total operating lease liabilities	$	10,595	$	492

The operating lease right-of-use assets were recorded in other assets in the consolidated balance sheets.

Weighted average remaining term and discount rates were as follows (term in years):


	December 31, 2023		December 31, 2022
Weighted average remaining lease term	4.27		3.06
Weighted average discount rate	14.48	%	13.78	%

Maturities of lease liabilities were as follows (in thousands):


Year Ending December 31,
2024	$	3,250
2025	3,328
2026	3,324
2027	3,368
Thereafter	847
Total undiscounted lease payments	$	14,117

Less: Present value adjustment for minimum lease commitments	(3,522)
Net Lease Liabilities	$	10,595