Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.23.1
Leases
3 Months Ended
Mar. 31, 2023
Leases [Abstract]  
Leases

NOTE 9 – LEASES

 

The Company has operating leases for administrative offices and research and development facilities, and certain finance leases for equipment. The operating leases have remaining terms of less than three years to less than seven years. Leases with an initial term of 12 months or less will not be recorded on the condensed consolidated balance sheets as operating leases or finance leases, and the Company will recognize lease expense for these leases on a straight-line basis over the lease term. Certain leases include options to renew, with renewal terms that can extend the lease term for seven years. The exercise of lease renewal options for the Company’s existing leases is at the Company’s sole discretion and not included in the measurement of lease liability and ROU asset as they are not reasonably certain to be exercised. Certain finance leases also include options to purchase the leased equipment. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The leases do not contain any residual value guarantees or material restrictive covenants.

In July 2022, the Company exercised its option to extend the term for its lease of its principal executive office at 9301 Amberglen Blvd, Building J, Austin TX 78729 (the “Property”) for an additional five-year term beginning August 31, 2023 and ending August 31, 2028 pursuant to the terms and conditions of that certain lease by and between the Company and NW Austin Office Partners LLC, dated October 1, 2016, as previously amended (the “Lease Agreement”).

In October 2022, the Company entered into that certain Fourth Amendment to Lease between the Company and NW Austin Office Partners LLC (the “Lease Amendment”) which amended the Lease Agreement to document the exercise of the Company’s option to extend the term of its lease of the Property for an additional six-year term beginning August 31, 2023 and ending August 31, 2029 (the “Extension Term”). Pursuant to the terms of the Lease Amendment, the aggregate commitments will be $6.7 million over the six-year Extension Term and the parties agreed that so long as the Company is not in default an aggregate amount of $0.2 million shall be abated in installments from the monthly lease commitments until exhausted. The Lease Amendment also provides that prior to the expiration of the Extension Term, the Company has the option to extend the Extension Term for an additional period of seven years.

The following table summarizes the components of lease expense for the three months ended March 31, 2023 and March 31, 2022 and (in thousands):

 

Three Months Ended

March 31,

 

 

2023

 

 

2022

 

Operating leases

 

 

 

 

 

 

 

Operating lease expense

$

727

 

 

$

601

 

Variable lease expense

 

104

 

 

 

119

 

Total operating lease expense

$

831

 

 

$

720

 

 

 

The following table summarizes the balance sheet classification of leases at March 31, 2023 (in thousands):

 

March 31,

 

 

2023

 

Operating leases

 

 

 

Operating lease right-of-use assets

$

10,652

 

 

 

 

 

Operating lease liabilities, current1

$

2,286

 

Operating lease liabilities, non-current

 

11,635

 

Total operating lease liabilities

$

13,921

 

 

1.

Included in other current liabilities.

 

The following table presents other information on leases as of March 31, 2023 and December 31, 2022:

 

 

March 31,

 

December 31,

 

 

2023

 

2022

Weighted average remaining lease term, operating leases

 

5.31 years

 

5.54 years

Weighted average discount rate, operating leases

 

8.22%

 

8.21%

 

Maturities of lease liabilities were as follows as of March 31, 2023 (in thousands):

 

 

Operating Leases

 

2023 (remaining)

 

$

2,479

 

2024

 

 

3,369

 

2025

 

 

3,299

 

2026

 

 

2,564

 

2027

 

 

2,636

 

Thereafter

 

 

2,872

 

Total lease payments

 

$

17,219

 

Less:

 

 

 

 

Imputed interest

 

 

(3,298

)

Total lease liabilities

 

$

13,921

 

 

Supplemental cash flow information related to the Company’s leases were as follows (in thousands):

 

 

Three Months Ended

March 31,

 

 

 

2023

 

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

 

 

 

 

Operating cash flows operating leases

 

$

806