3. Commitments and Contingencies

Leases

In December 2016, the Company entered into an operating lease for office space in Solana Beach, California (the “Initial Lease”). The Initial Lease commenced on January 1, 2017, and as amended, expired on October 31, 2023.

Upon expiration of the Initial Lease, the Company entered into an operating lease for a new office space in Solana Beach, California commencing on November 1, 2023 and expiring on October 31, 2024 (the “Short-Term Lease”). The Short-Term Lease qualified as a short-term lease under ASC 842 and was not recorded on the balance sheet. Operating lease expense for the Short-Term Lease was recognized on a straight-line basis over the lease term as general administrative expense within the statement of operations.

Upon expiration of the Short-Term Lease, the Company entered into an amendment for the same office space in Solana Beach commencing on November 1, 2024 and expiring on March 31, 2027 (the “Current Lease”). As the Current Lease agreement did not include an implicit rate, the Company estimated the incremental borrowing rate of 10% utilized to discount future minimum lease payments based on information available at lease commencement. Operating lease expense for the Current Lease is recognized on a straight-line basis over the lease term. The Company recognized a right-of-use asset obtained in exchange for new lease obligations of $0.2 million upon commencement of the Current Lease. The new lease liability obligation is recorded in operating lease liability and operating lease liability, net of current portion in the balance sheets. As of June 30, 2025, the remaining lease term was 1.8 years.