SmartKem, Inc. Leases Disclosure
6. LEASES:
The Company has operating leases consisting of office space, lab space, and equipment with remaining lease terms of 1 to 3 years, subject to certain renewal options as applicable.
The table below presents certain information related to the lease costs for the Company’s operating leases for the periods ended:
Year Ended December 31, | ||||||
(in thousands) |
| 2024 |
| 2023 | ||
Operating lease cost | $ | 293 | $ | 276 | ||
Short-term lease cost |
| 29 | 7 | |||
Variable lease cost |
| — | 162 | |||
Total lease cost | $ | 322 | $ | 445 | ||
The total lease cost is included in the consolidated statements of operations as follows:
Year Ended December 31, | ||||||
(in thousands) |
| 2024 |
| 2023 | ||
Research and development | $ | 293 | $ | 419 | ||
General and administrative |
| 29 |
| 26 | ||
Total lease cost | $ | 322 | $ | 445 | ||
Right of use lease assets and lease liabilities for our operating leases were recorded in the consolidated balance sheets as follows:
| December 31, | December 31, | ||||
(in thousands) |
| 2024 |
| 2023 | ||
Assets |
|
|
| |||
Right of use assets - Operating Leases | $ | 120 | $ | 285 | ||
Total lease assets | $ | 120 | $ | 285 | ||
Liabilities |
|
|
|
| ||
Current liabilities: |
|
|
|
| ||
Lease liability, current - Operating Leases | $ | 47 | $ | 230 | ||
Noncurrent liabilities: |
|
|
| |||
Lease liability, non-current - Operating Leases |
| 25 |
| 19 | ||
Total lease liabilities | $ | 72 | $ | 249 | ||
The Company had no right of use lease assets or lease liabilities classified financing leases as of December 31, 2024 and 2023.
The table below presents certain information related to the cash flows for the Company’s operating leases for the periods ended:
Year Ended December 31, | ||||||
(in thousands) |
| 2024 |
| 2023 | ||
Operating cash outflows from operating leases | $ | 281 | $ | 266 | ||
Supplemental non-cash amounts of operating lease liabilities arising from obtaining right of use assets | $ | 82 | $ | 50 | ||
The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating leases as of the period ended:
Year Ended December 31, | ||||||
| 2024 |
| 2023 | |||
Weighted average remaining lease term (in years) – operating leases | 1.47 | 1.31 | ||||
Weighted average discount rate – operating leases |
| 10.31% |
| 7.88% | ||
Undiscounted operating lease liabilities as of December 31, 2024, by year and in the aggregate, having non-cancelable lease terms in excess of one year were as follows:
December 31, | |||
(in thousands) | 2024 | ||
2025 | $ | 51 | |
2026 | 22 | ||
2027 | 5 | ||
Total undiscounted lease payments | 78 | ||
Less imputed interest | (6) | ||
Total net lease liabilities | $ | 72 | |
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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.