Operating Leases
The Company had an operating lease for one office which expired in 2025, however, based on prior understanding with the building’s management, continue to occupy a portion of office space in the building on a non-committal basis. The Company estimates its incremental borrowing rate at lease commencement to determine the present value of lease payments as the Company's lease did not provide an implicit rate of return. The Company recognized lease expense on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of ASU No. 2016-02, Leases (Topic 842), the Company elected to account for non-lease components associated with its leases and lease components as a single lease
component. The Company's lease included an option for the Company to extend the lease term and/or sub-lease space in whole or in part for which the Company has not exercised.
Operating lease liabilities and right-of-use assets were recorded in the following captions of the Company's balance sheet as follows (in thousands):
| | | | | | | | |
| December 31, 2025 | December 31, 2024 |
| Right-of-Use Assets: | | |
| Other assets | $ | — | | $ | 138 | |
| Total Right-of-Use Asset | $ | — | | $ | 138 | |
| | |
| Operating Lease Liabilities: | | |
| Accrued liabilities | $ | — | | $ | 137 | |
| Other long-term liabilities | — | | — | |
| Total Operating Lease Liabilities | $ | — | | $ | 137 | |
As of December 31, 2024, the weighted average remaining lease term for the Company's operating lease was 0.75 years, and the weighted average discount rate for the Company's operating leases was 9.625%.
Operating lease costs were $0.1 million and $0.2 million for the years ended December 31, 2025 and 2024, respectively and includes both cash and non-cash expenses for operating leases. The operating lease costs are recognized evenly over the lease term, therefore, the timing of the expense may differ from the timing of actual cash payments. Cash payments and lease costs can differ due to the timing of cash payments relative to the level expense. Operating lease costs are included in research and development and general and administrative expense in the accompanying consolidated statements of operations.
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.