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 seven real estate leases with lease terms ranging from 52 months to 250 months and six equipment leases (of which five 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. For the years ended December 31, 2024 and 2023, there were no significant variable lease costs. There are no restrictions or covenants imposed by any of the leases, and none of the Company’s leases contain material residual value guarantees.
The components of total lease expense are as follows (in thousands):
| | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | | | 2024 | | 2023 |
| Operating lease cost | | | | | $ | 4,144 | | | $ | 1,536 | |
| Finance lease cost | | | | | 37 | | | 3 | |
| | | | | | | |
| Short-term lease cost | | | | | 94 | | | 333 | |
| Total lease cost | | | | | $ | 4,275 | | | $ | 1,872 | |
The components of supplemental cash flow information related to operating leases are as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2024 | | 2023 |
| Operating Leases | | Finance Leases | | Operating Leases | | Finance Leases |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | |
| Cash flows from operating activities | $ | 2,019 | | | $ | 9 | | | $ | 1,034 | | | $ | 3 | |
| Cash flows from investing activities | $ | 3,823 | | | $ | 2 | | | $ | 1,344 | | | $ | 5 | |
| Cash flows from financing activities | $ | — | | | $ | 35 | | | $ | — | | | $ | 2 | |
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 4,145 | | | $ | 43 | | | $ | 32,393 | | | $ | 93 | |
| Weighted average remaining lease term - operating leases (months) | 204 | | 28 | | 226 | | 35 |
| Weighted average discount rate - operating leases | 6.5 | % | | 7.8 | % | | 6.1 | % | | 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 consolidated balance sheets.
The table below includes the estimated future undiscounted cash flows for operating and finance leases as of December 31, 2024 (in thousands):
| | | | | | | | | | | | | | |
| Year Ending December 31, | | Operating Leases | | Finance Leases |
| | | | |
| 2025 | | $ | 2,522 | | | $ | 47 | |
| 2026 | | 2,614 | | | 41 | |
| 2027 | | 2,175 | | | 17 | |
| 2028 | | 2,232 | | | 5 | |
| 2029 | | 2,710 | | | — | |
| Thereafter | | 57,268 | | | — | |
| Total undiscounted lease payments | | $ | 69,521 | | | $ | 110 | |
| Less: imputed interest | | 32,241 | | | 10 | |
| Present value of lease liabilities | | $ | 37,280 | | | $ | 100 | |