Leases

9 Months Ended

Sep. 30, 2025

Leases [Abstract]

Leases

NOTE 5 - LEASES

The Company leases real estate for administrative office space, research, marketing and light manufacturing operations of the lessee’s aerospace related research and development business under operating leases.

The Company has five real estate leases with lease terms ranging from 52 months to 313 months and seven equipment leases (of which six are finance leases) with lease terms ranging from 36 months to 60 months, some of which contain options to extend and some of which contain options to terminate the lease without cause at the option of lessee.

The Company’s real estate leasing agreements include terms requiring the Company to reimburse the lessor for its share of real estate taxes, insurance, operating costs and utilities which the Company accounts for as variable lease costs when incurred since the Company has elected to not separate lease and non-lease components, and hence are not included in the measurement of lease liability. There are no restrictions or covenants imposed by any of the leases, and none of the Company’s leases contain material residual value guarantees.

Lunar Production and Operations Center Expansion

In July 2025, we executed an amendment to our ground lease agreement to expand our Lunar Production and Operations Center (“LPOC”) at the Houston Spaceport at Ellington Airport. The expansion calls for an additional investment of approximately $12.6 million by the Company for the construction of new production and testing facilities, plus support infrastructure, to scale our lunar lander assembly, Earth-reentry systems, Lunar Terrain Vehicle development, and NASA’s Near Space Network Services. The amendment expands the total leased project site by an additional tract of approximately 3.0 acres. The amendment extends the lease term from 20 years to 25 years (ending October 2048), with three optional renewal periods of 5 years each, and reduces the right-of-use assets and liabilities by approximately $7.1 million. The Company accounted for this amendment as a lease modification by remeasuring the right-of-use assets and liabilities as of the effective date. Should construction costs exceed the estimated expansion investment, the Company will consider and account for the excess as variable lease payments or, if the excess costs are significant, the Company will remeasure the lease liability and right-of-use asset. Furthermore, the amendment includes lease components that have not yet commenced. The Company expects to recognize additional lease liabilities of approximately $7.9 million as the expansion phases are completed in 2026.

Spaceport Facility Lease Agreement

In July 2025, we executed a sublease for additional office and production space at the Houston Spaceport at Ellington Airport totaling approximately 116,000 square feet. The leased production space includes turn-key production equipment, including test facilities, that allow for an efficient and cost-effective expansion of our manufacturing capabilities. The lease agreement has a remaining term of 7 years. As of September 30, 2025, the Company recorded operating right-of-use assets of $6.5 million and operating lease liabilities of $6.7 million.

The components of total lease expense are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Operating lease cost	$	1,232	$	1,050	$	3,547	$	2,982
Finance lease cost	10		9		30		27
Variable lease cost	96		—		264		—
Short-term lease cost	137		21		401		48
Total lease cost	$	1,475	$	1,080	$	4,242	$	3,057

The components of supplemental cash flow information are as follows (in thousands):

	Nine Months Ended September 30,
	2025						2024
	Operating Leases			Finance Leases			Operating Leases			Finance Leases
Cash paid for amounts included in the measurement of lease liabilities:
Cash flows from operating activities	$	2,695		$	6		$	1,535		$	27
Cash flows from investing activities	$	—		$	—		$	2,491		$	2
Cash flows from financing activities	$	—		$	32		$	—		$	26
Right-of-use assets obtained in exchange for new lease liabilities	$	6,607		$	—		$	4,264		$	44
Right-of-use assets reduced due to lease modifications	$	7,103		$	—		$	—		$	—
Weighted average remaining lease term (months)	215			25			207			31
Weighted average discount rate	11.3		%	8.0		%	6.5		%	7.8		%

The operating and finance lease ROU assets, current operating lease liabilities, current finance lease liabilities, non-current operating lease liabilities, and non-current finance lease liabilities are disclosed in our condensed consolidated balance sheets.

The table below includes the estimated future undiscounted cash flows for operating and finance leases as of September 30, 2025 (in thousands):

	Operating Leases		Finance Leases
Remainder of 2025	$	646	$	12
2026	15,327		45
2027	3,659		21
2028	3,834		8
2029	4,340		—
Thereafter	81,297		—
Total undiscounted lease payments	$	109,103	$	86
Less: imputed interest	72,770		6
Present value of lease liabilities	$	36,333	$	80

Leases

NOTE 5 - LEASES

The Company leases real estate for administrative office space, research, marketing and light manufacturing operations of the lessee’s aerospace related research and development business under operating leases.

The Company has five real estate leases with lease terms ranging from 52 months to 313 months and seven equipment leases (of which six are finance leases) with lease terms ranging from 36 months to 60 months, some of which contain options to extend and some of which contain options to terminate the lease without cause at the option of lessee.

The Company’s real estate leasing agreements include terms requiring the Company to reimburse the lessor for its share of real estate taxes, insurance, operating costs and utilities which the Company accounts for as variable lease costs when incurred since the Company has elected to not separate lease and non-lease components, and hence are not included in the measurement of lease liability. There are no restrictions or covenants imposed by any of the leases, and none of the Company’s leases contain material residual value guarantees.

Lunar Production and Operations Center Expansion

In July 2025, we executed an amendment to our ground lease agreement to expand our Lunar Production and Operations Center (“LPOC”) at the Houston Spaceport at Ellington Airport. The expansion calls for an additional investment of approximately $12.6 million by the Company for the construction of new production and testing facilities, plus support infrastructure, to scale our lunar lander assembly, Earth-reentry systems, Lunar Terrain Vehicle development, and NASA’s Near Space Network Services. The amendment expands the total leased project site by an additional tract of approximately 3.0 acres. The amendment extends the lease term from 20 years to 25 years (ending October 2048), with three optional renewal periods of 5 years each, and reduces the right-of-use assets and liabilities by approximately $7.1 million. The Company accounted for this amendment as a lease modification by remeasuring the right-of-use assets and liabilities as of the effective date. Should construction costs exceed the estimated expansion investment, the Company will consider and account for the excess as variable lease payments or, if the excess costs are significant, the Company will remeasure the lease liability and right-of-use asset. Furthermore, the amendment includes lease components that have not yet commenced. The Company expects to recognize additional lease liabilities of approximately $7.9 million as the expansion phases are completed in 2026.

Spaceport Facility Lease Agreement

In July 2025, we executed a sublease for additional office and production space at the Houston Spaceport at Ellington Airport totaling approximately 116,000 square feet. The leased production space includes turn-key production equipment, including test facilities, that allow for an efficient and cost-effective expansion of our manufacturing capabilities. The lease agreement has a remaining term of 7 years. As of September 30, 2025, the Company recorded operating right-of-use assets of $6.5 million and operating lease liabilities of $6.7 million.

The components of total lease expense are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Operating lease cost	$	1,232	$	1,050	$	3,547	$	2,982
Finance lease cost	10		9		30		27
Variable lease cost	96		—		264		—
Short-term lease cost	137		21		401		48
Total lease cost	$	1,475	$	1,080	$	4,242	$	3,057

The components of supplemental cash flow information are as follows (in thousands):

	Nine Months Ended September 30,
	2025						2024
	Operating Leases			Finance Leases			Operating Leases			Finance Leases
Cash paid for amounts included in the measurement of lease liabilities:
Cash flows from operating activities	$	2,695		$	6		$	1,535		$	27
Cash flows from investing activities	$	—		$	—		$	2,491		$	2
Cash flows from financing activities	$	—		$	32		$	—		$	26
Right-of-use assets obtained in exchange for new lease liabilities	$	6,607		$	—		$	4,264		$	44
Right-of-use assets reduced due to lease modifications	$	7,103		$	—		$	—		$	—
Weighted average remaining lease term (months)	215			25			207			31
Weighted average discount rate	11.3		%	8.0		%	6.5		%	7.8		%

The operating and finance lease ROU assets, current operating lease liabilities, current finance lease liabilities, non-current operating lease liabilities, and non-current finance lease liabilities are disclosed in our condensed consolidated balance sheets.

The table below includes the estimated future undiscounted cash flows for operating and finance leases as of September 30, 2025 (in thousands):

	Operating Leases		Finance Leases
Remainder of 2025	$	646	$	12
2026	15,327		45
2027	3,659		21
2028	3,834		8
2029	4,340		—
Thereafter	81,297		—
Total undiscounted lease payments	$	109,103	$	86
Less: imputed interest	72,770		6
Present value of lease liabilities	$	36,333	$	80