Leases
In June 2020, the Company entered into two sublease agreements with RSI for two floors of office space in New York, which expired on February 27, 2024 and April 29, 2024, respectively. In March 2024, the Company entered into a short-term lease with an unrelated party for office space in New York and therefore all related lease payments will be recognized in operating expenses on a straight-line basis over the lease term.
In March 2022, the Company entered into a lease agreement with an unrelated party for office space in a building in North Carolina that was scheduled to expire on March 31, 2024. In February 2024, the Company amended the lease agreement to extend the non-cancelable lease term through March 31, 2025. The amended lease agreement includes an option at the Company’s election to renew for one additional year.
These leases are classified as operating leases. The aggregate weighted-average remaining lease term was 0.7 years and 1.0 years as of March 31, 2024 and 2023, respectively. As the Company’s operating leases do not provide an implicit rate, estimated incremental borrowing rates based on the information available at the time of execution of each lease agreement were used in determining the present value of lease payments. The weighted-average incremental borrowing rate for the Company’s operating leases was 5.4% and 3.9% for the years ended March 31, 2024 and 2023, respectively. Variable lease costs such as common area costs and other operating costs are expensed as incurred and were de minimis for the years ended March 31, 2024 and 2023.
During the years ended March 31, 2024 and 2023, the Company incurred $1.2 million in rent expense and paid $1.2 million in cash related to contractual rent obligations under the operating leases. The following table provides a reconciliation of the Company’s remaining undiscounted contractual rent obligations due within each respective fiscal year ending March 31 to the operating lease liabilities recognized as of March 31, 2024 (in thousands):
| | | | | | | | |
Year Ending March 31, | | Operating Leases |
| 2025 | | $ | 141 | |
| | |
| Total undiscounted payments | | 141 | |
Less: imputed interest | | (3) | |
Present value of operating lease liabilities | | $ | 138 | |
| | |
| | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.