Neonode Inc. Leases Disclosure
| 9. | Leases |
The Company has leases mainly consisting of the corporate office. This kind of lease typically has an original lease term of one to three years. Future renewal options that are not likely to be executed as of the consolidated balance sheet date are excluded from right-of-use assets and related lease liabilities. The lease is automatically renewed at a cost increase of 2% on an annual basis, unless we provide written notice nine months prior to the respective expiration dates.
Operating lease right of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company has entered into various short-term operating leases with an initial term of months or less. These leases are not recorded on the Company's Consolidated Balance Sheets. All operating lease expense is recognized on a straight-line basis over the lease term. Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. For finance leases, the implicit rate is used, since it is readily available.
The components of lease expense were as follows (in thousands):
| Years ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Finance lease cost: | ||||||||
| Amortization of leased assets | $ | 6 | $ | 6 | ||||
| Interest on lease liabilities | 1 | 1 | ||||||
| Operating lease cost | 31 | 330 | ||||||
| Short-term lease cost | 418 | $ | 98 | |||||
| Total lease cost | $ | 456 | 435 | |||||
The Company made cash payments regarding operating leases of $27,000 and $0 for the years ended December 31, 2024 and 2023, respectively. The Company made cash payments regarding of $18,000 and $96,000 for the years ended December 31, 2024 and 2023, respectively.
The following table shows right-of-use assets and lease liabilities:
| December 31, | ||||||||
| (in thousands) | 2024 | 2023 | ||||||
| Right-of-use assets: | ||||||||
| Operating leases | $ | 634 | $ | - | ||||
| Finance leases | 21 | 23 | ||||||
| Total right-of-use assets | $ | 655 | $ | 23 | ||||
| Lease liabilities: | ||||||||
| Current portion of operating lease obligations | $ | 225 | $ | |||||
| Operating lease obligations, net of current portion | 319 | |||||||
| Current portion of finance lease obligations | 2 | 8 | ||||||
| Finance lease obligations, net of current portion | 2 | |||||||
| Total lease liabilities | $ | 546 | $ | 10 | ||||
Lease liability maturities are as follows:
| (in thousands) | Operating Leases | Finance Leases | Total | |||||||||
| 2025 | $ | 249 | 2 | $ | 251 | |||||||
| 2026 | 328 | 328 | ||||||||||
| Total | 577 | 2 | 579 | |||||||||
| Less: Imputed interest | (33 | ) | (33 | ) | ||||||||
| Total lease liabilities | $ | 544 | 2 | $ | 546 | |||||||
| Lease liabilities, current | $ | 225 | $ | 2 | $ | 227 | ||||||
| Lease liabilities, non-current | 319 | 319 | ||||||||||
| Total lease liabilities | $ | 544 | $ | 2 | $ | 546 | ||||||
The weighted-average remaining lease term related to the Company’s operating lease liabilities as of December 31, 2024 and December 31, 2023 was 1.9 years and 0.8 years, respectively. The discount rate related to the Company’s operating lease liabilities as of December 31, 2024 and December 31, 2023 was 5.0% for each of the years.
The weighted-average remaining lease term related to the Company’s finance lease liabilities as of December 31, 2024 and December 31, 2023 was 0.2 years and 1.3 years, respectively. The discount rate related to the Company’s operating lease liabilities as of December 31, 2024 and December 31, 2023 was 3.0% and 2.6%, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 21, 2025 | Showing above |
| 2023 | Feb 28, 2024 | |
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.