Note 6 - Leases

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

6. LEASES

The Company leases office facilities in Northern California under non-cancelable operating leases. In July 2024, the Company entered into two new long-term leases, one of which the Company uses as its headquarters. 

Some of the Company's leases include options to renew, with renewal terms that, if exercised by the Company, extend the lease term from two to five years. The exercise of these renewal options is at the Company's discretion. The Company's lease agreements do not contain any material terms and conditions of residual value guarantees or material restrictive covenants. The Company's short-term lease expense was determined to not be material.

On November 14, 2023, the Company assigned an operating lease resulting in the Company being relieved of its primary obligation under this lease. As a result of the lease assignment, a new tenant assumed the primary obligation under the lease, with the Company becoming secondarily liable. If the new tenant should fail to perform under the lease, the Company could be liable to fulfill any remaining lease obligations. The lease had a remaining term of 2.7 years as of December 31, 2024 with the Company serving as guarantor for the remaining term. The resulting maximum exposure includes $265 of undiscounted future minimum lease payments plus potential additional payments to satisfy maintenance, taxes, and insurance requirements for the remainder of the lease term.

In August 2024, one of the Company's existing leases, originally set to expire on November 30, 2026, was terminated early. In conjunction with the early termination, the Company recorded a net gain of $491 on termination of the operating lease during the year ended December 31, 2024. The net gain included a gain of $5,954, comprised of a $16,325 net liability reduction, partially offset by a $10,371 decrease in its remaining right of use asset.  Additionally, in accordance with terms in the lease agreement and based on certain assumptions, the Company recorded a lease termination loss of $5,463, representing estimated unpaid rent for the remaining term. The net gain was recorded in general and administrative expenses in the condensed consolidated statement of operations and comprehensive loss. The lease termination liability was reduced by the draw-down of the $2,150 letter of credit by the landlord in August 2024; the remaining lease termination liability of $3,313 is recorded in accrued expenses and other current liabilities in the consolidated balance sheets. See Note 18, Restructuring, and Note 21, Commitments and Contingencies, for further discussion. 

The Company recorded a gain of $35 on early lease termination for one of its leases, originally set to expire in August 2027, within interest income and other on the consolidated statements of operations during the twelve months ended December 31, 2023.

During the year ended December 31, 2023, the Company recorded an impairment charge on right-of-use assets of $2,570, included within impairment of long-lived assets within the Company's consolidated statements of operations. See Note 18, Restructuring.  No impairment charges were recorded for the year ended December 31, 2024.

The components of operating lease expenses, excluding the gain on lease termination, for the years ended December 31, 2024 and 2023 were as follows (in thousands):

	Year ended December 31,
	2024		2023
Operating lease cost	$	1,498	$	2,379
Variable lease cost		204		340
Total operating lease cost	$	1,702	$	2,719

Supplemental cash flow information for the years ended December 31, 2024 and 2023 were as follows (in thousands):

	Year ended December 31,
	2024			2023
Cash paid for operating leases included in operating cash flows	$	(1,497	)	$	(2,500	)

Supplemental balance sheet information related to operating leases as of December 31, 2024 and 2023 was as follows (in thousands):

	As of December 31,
	2024		2023
Operating lease right-of-use assets	$	652	$	11,226
Operating lease liabilities:
Operating lease liabilities, current	$	267	$	2,415
Lease termination liability		3,313		—
Operating lease liabilities, non-current		479		14,858
Total operating lease liabilities	$	4,059	$	17,273

	As of December 31,
	2024			2023
Weighted average remaining lease term (in years)		2.89			7.89
Weighted average discount rate		6.40	%		5.32	%

Maturities of lease liabilities, excluding the lease termination liability, were as follows (in thousands).

Years ending - December 31:
2025	$	275
2026		283
2027		258
Total lease payments		816
Less amount to discount to present value		(70	)
Present value of lease liabilities	$	746