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Leases
 6 Months Ended
Jun. 30, 2024
Leases [Abstract]  
Leases
9. Leases
The Company determines if an arrangement is a lease at its commencement if the Company is both able to identify an asset and conclude that the Company has the right to control the identified asset. Leases are classified as finance leases or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. A right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and a lease liability represents the Company’s obligation to make lease payments related to the lease. The Company recognizes operating and finance lease ROU assets and liabilities at the commencement date based on the present value of lease payments over the lease term. The lease term includes renewal options when it is reasonably certain that the option will be exercised, and excludes termination options. The Company’s leases do not provide an implicit rate; therefore, the Company uses its incremental borrowing rate
based on information available at the commencement date to determine the present value of lease payments. The incremental borrowing rate used is estimated based on what the Company would be required to pay for a collateralized loan for a similar asset over a similar term. The Company’s leases do not include any material residual value guarantees, or bargain purchase options.
To the extent that the Company’s agreements have variable lease payments, the Company includes variable lease payments that depend on an index or a rate in the measurement and classification of a lease and excludes those that depend on facts or circumstances occurring after the commencement date, other than the passage of time. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is recorded in Operating expenses on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. Amortization of ROU assets on finance leases is recorded on a straight-line basis within Operating expenses in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. Interest expense incurred on finance lease liabilities is recorded in Interest expense on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. The Company has elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Additionally, the Company does not separate lease and non-lease components. Operating leases are included in ROU assets, Operating leases liabilities, current portion and Operating lease liabilities, less current portion in the Company's Unaudited Condensed Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment, net, Finance lease liabilities, current portion, and Finance lease liabilities, less current portion in the Company's Unaudited Condensed Consolidated Balance Sheets.
The Company’s lease arrangements consist primarily of its corporate office, store, and vehicle lease agreements. The leases expire at various dates through 2032, some of which include options to extend the lease term for additional 5-year periods.
During the three months ended June 30, 2024, the Company moved out of a leased store facility and a leased research facility while working with the landlords to negotiate the related lease terminations, resulting in a lease ROU asset impairment loss of $7.5 million for the loss of use of these two leased facilities. As of June 30, 2024, the lease liabilities of the two leases remained to be on the Company’s books. In addition, the Company terminated one of its operating leases in China, resulting in a net lease ROU asset impairment loss of $0.1 million during the three months ended June 30, 2024.
Total lease costs for the six months ended June 30, 2024 and 2023 were:
(in thousands)Six Months Ended June 30, 2024Six Months Ended June 30, 2023
Finance lease cost
Amortization of right-of-use assets$— $273 
Interest on lease liabilities— 275 
Total finance lease cost— 548 
Operating lease cost2,772 5,915 
Variable lease cost— 257 
Total lease cost$2,772 $6,720 
The following table summarizes future lease payments as of June 30, 2024:
(in thousands)
Fiscal yearOperating Leases
2024 (six months)$2,712 
20254,743
20264,755
20272,661
20281,813
Thereafter7,471
Total24,155 
Less: Imputed Interest8,456 
Present value of net lease payments15,699
Lease liability, current portion$2,894 
Lease liability, net of current portion12,805 
Total lease liability$15,699 

Supplemental information and non-cash activities related to operating leases are as follows:
(in thousands)Six Months Ended June 30, 2024Six Months Ended June 30, 2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$1,853 $5,709 
Operating cash flows from finance leases— 275
Financing cash flows from finance leases— 1,016
$1,853 $7,000 
Lease liabilities arising from new right-of-use assets
Operating leases$30 $— 
Finance leases— $— 
June 30, 2024December 31, 2023
Weighted average remaining lease term (in years)
Operating leases5.65.7
Finance leases0.05.0
Weighted average discount rate
Operating leases15.2 %15.6 %
Finance leases— 9.2 %
Leases
9. Leases
The Company determines if an arrangement is a lease at its commencement if the Company is both able to identify an asset and conclude that the Company has the right to control the identified asset. Leases are classified as finance leases or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. A right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and a lease liability represents the Company’s obligation to make lease payments related to the lease. The Company recognizes operating and finance lease ROU assets and liabilities at the commencement date based on the present value of lease payments over the lease term. The lease term includes renewal options when it is reasonably certain that the option will be exercised, and excludes termination options. The Company’s leases do not provide an implicit rate; therefore, the Company uses its incremental borrowing rate
based on information available at the commencement date to determine the present value of lease payments. The incremental borrowing rate used is estimated based on what the Company would be required to pay for a collateralized loan for a similar asset over a similar term. The Company’s leases do not include any material residual value guarantees, or bargain purchase options.
To the extent that the Company’s agreements have variable lease payments, the Company includes variable lease payments that depend on an index or a rate in the measurement and classification of a lease and excludes those that depend on facts or circumstances occurring after the commencement date, other than the passage of time. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is recorded in Operating expenses on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. Amortization of ROU assets on finance leases is recorded on a straight-line basis within Operating expenses in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. Interest expense incurred on finance lease liabilities is recorded in Interest expense on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. The Company has elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Additionally, the Company does not separate lease and non-lease components. Operating leases are included in ROU assets, Operating leases liabilities, current portion and Operating lease liabilities, less current portion in the Company's Unaudited Condensed Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment, net, Finance lease liabilities, current portion, and Finance lease liabilities, less current portion in the Company's Unaudited Condensed Consolidated Balance Sheets.
The Company’s lease arrangements consist primarily of its corporate office, store, and vehicle lease agreements. The leases expire at various dates through 2032, some of which include options to extend the lease term for additional 5-year periods.
During the three months ended June 30, 2024, the Company moved out of a leased store facility and a leased research facility while working with the landlords to negotiate the related lease terminations, resulting in a lease ROU asset impairment loss of $7.5 million for the loss of use of these two leased facilities. As of June 30, 2024, the lease liabilities of the two leases remained to be on the Company’s books. In addition, the Company terminated one of its operating leases in China, resulting in a net lease ROU asset impairment loss of $0.1 million during the three months ended June 30, 2024.
Total lease costs for the six months ended June 30, 2024 and 2023 were:
(in thousands)Six Months Ended June 30, 2024Six Months Ended June 30, 2023
Finance lease cost
Amortization of right-of-use assets$— $273 
Interest on lease liabilities— 275 
Total finance lease cost— 548 
Operating lease cost2,772 5,915 
Variable lease cost— 257 
Total lease cost$2,772 $6,720 
The following table summarizes future lease payments as of June 30, 2024:
(in thousands)
Fiscal yearOperating Leases
2024 (six months)$2,712 
20254,743
20264,755
20272,661
20281,813
Thereafter7,471
Total24,155 
Less: Imputed Interest8,456 
Present value of net lease payments15,699
Lease liability, current portion$2,894 
Lease liability, net of current portion12,805 
Total lease liability$15,699 

Supplemental information and non-cash activities related to operating leases are as follows:
(in thousands)Six Months Ended June 30, 2024Six Months Ended June 30, 2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$1,853 $5,709 
Operating cash flows from finance leases— 275
Financing cash flows from finance leases— 1,016
$1,853 $7,000 
Lease liabilities arising from new right-of-use assets
Operating leases$30 $— 
Finance leases— $— 
June 30, 2024December 31, 2023
Weighted average remaining lease term (in years)
Operating leases5.65.7
Finance leases0.05.0
Weighted average discount rate
Operating leases15.2 %15.6 %
Finance leases— 9.2 %