EVERSPIN TECHNOLOGIES INC. Commitments Disclosure
5. Commitments and Contingencies
Leases
Operating leases consist of fabrication, lab, and office space expiring at various dates through 2029. Finance leases relate to a server lease expiring in February 2029. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The undiscounted future non-cancellable lease payments under the Company’s operating and finance leases were as follows (in thousands):
As of December 31, 2024 |
| Amount | |
2025 | $ | 1,481 | |
2026 | 1,497 | ||
2027 | 1,380 | ||
2028 | 595 | ||
Thereafter | 48 | ||
Total lease payments | 5,001 | ||
Less: imputed interest | (359) | ||
Total lease liabilities | 4,642 | ||
Less: current portion of lease liabilities | (1,306) | ||
Total lease liabilities, net of current portion | $ | 3,336 | |
Other information related to the Company's operating lease liabilities was as follows:
December 31, | December 31, | |||||
| 2024 |
| 2023 | |||
Weighted-average remaining lease term (years) |
| 3.39 | 4.37 |
| ||
Weighted-average discount rate | 4.50 | % | 4.50 | % | ||
Other information related to the Company’s finance lease liabilities was as follows:
December 31, | December 31, | |||||
| 2024 |
| 2023 | |||
Weighted-average remaining lease term (years) |
| 4.15 | 1.09 |
| ||
Weighted-average discount rate | 3.90 | % | 4.50 | % | ||
Lease costs for the Company’s operating leases were $1.4 million for both of the years ended December 31, 2024 and 2023, respectively. Lease costs for the Company’s finance lease were immaterial for the years ended December 31, 2024 and 2023.
Legal Proceedings
From time to time, the Company may become involved in legal proceedings arising from the ordinary course of its business. Management is currently not aware of any matters that it expects will have a material adverse effect on the financial position, results of operations or cash flows of the Company.
Indemnifications
In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ insurance.
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.