The Company accounts for its leases in accordance with ASU No. 2016-02 (Topic 842) which requires that a lessee recognize the assets and liabilities that arise from operating leases. The ASU requires lessees to recognize a liability for lease obligations, which represents the discounted obligation to make future lease payments, and a corresponding right-of-use (ROU) asset on the balance sheet. The Company leases office space facilities and a research and development laboratory under non-cancelable operating leases with varying expirations extending through fiscal year 2030. The lease agreements provide for renewal options and rent escalation over the lease term as well as require the Company to pay maintenance, insurance and property taxes. Lease expense is recognized on a straight-line basis over the term of the lease.

During the first quarter of 2025, the Company amended its existing lease in Longmont, Colorado. In accordance with ASC 842, the amended lease agreement is considered to be modified and subject to lease modification guidance. The right-of-use (ROU) asset and lease liability related to the agreement were remeasured based on the change in the lease conditions such as rent payment and lease terms. The fair value of the increase in related lease liability and ROU asset is approximately $1.1 million. The amended lease now extends through October 31, 2030.

As of June 30, 2025 and December 31, 2024, the Company had ROU assets of $2.5 million and $1.7 million, respectively, and corresponding operating lease liabilities of $3.3 million and $2.6 million, respectively. For the three and six months ended June 30, 2025 and 2024, the components of operating lease expenses are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2025		2024		2025		2024
Operating leases
Operating lease expense	$	227	$	219	$	445	$	450
Variable lease expense (1)	88		97		186		205
Operating lease expense	315		316		631		655
Short-term lease rent expense	3		4		7		8
Total expense	$	318	$	320	$	638	$	663

(1) Variable lease costs, including property taxes and insurance and common area maintenance fees, are classified in cost of services in the Company's Unaudited Condensed Consolidated Statements of Operations.


Year	(In thousands)
2025 (Remainder)	$	669
2026	1,183
2027	782
2028	657
2029	338
2030	263

Total	3,892
Less present value discount	(606)
Present value of total operating lease liabilities	3,286
Less current portion	(957)
Long-term obligations under operating leases	$	2,329