8. Leases

We are a party to operating leases for our corporate office in Cupertino, modular offices, land leases and laboratory facilities. We have also entered into several finance leases for machinery and equipment and for the Riverbank Industrial Complex. These finance leases have a purchase option at the end of the term that we are reasonably certain we will exercise, so the leases are classified as finance leases. All of our leases aside from our land leases have remaining terms of one year to 11 years; the land leases have remaining terms over 20 years. We apply an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet and recognize those lease payments in the consolidated condensed statements of operations as we incur the expenses.

We evaluate leases in accordance with ASC 842 – Lease Accounting. When discount rates implicit in leases cannot be readily determined, we use the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and to measure lease liabilities and right of use ("ROU") assets. The incremental borrowing rate we use is based on weighted average baseline rates commensurate with our secured borrowing rate, over a similar term. At each reporting period when there is a new lease initiated, the rates established for that quarter are used.

The components of lease expense are as follows:

Cash paid for amounts included in the measurement of lease liabilities:

Supplemental non-cash flow information related to ROU assets and lease liabilities is as follows:

Supplemental balance sheet information related to leases is as follows:

Future minimum lease payments under operating and finance leases as of  September 30, 2026, are as follows:

We act as sublessor in certain leasing arrangements, primarily related to land and buildings. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. Sublease income and head lease expense for these transactions are recognized on a net basis on the consolidated financial statements. Sublease income is recorded in the Selling, General and Administrative expenses ("SG&A") section of the consolidated condensed statements of operations and comprehensive loss.

The following table shows sublease income for the applicable periods:

Future minimum sublease payments to be received as of  September 30, 2026, are as follows: