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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 six years. Leases with an initial term of 12 months or less will not be recorded on the 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 right-of-use 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, dated October 1, 2016, by and between the Company and NW Austin Office Partners LLC as previously amended (the “Lease Agreement”).

In October 2022, the Company entered into that certain Fourth Amendment to the Lease Agreement, by and 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 September 1, 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.

Changes in the carrying amounts of the Company’s AROs for the years ended December 31, 2023 and 2022 are shown below (in thousands):

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For the year ended December 31, 2023, there were no revisions to the original estimated cash flows for the Company’s AROs. For the year ended December 31, 2022, in connection with the extension of the lease term for the Property, the original estimated cash flows for the related ARO was reduced by $0.5 million. In addition, resulting from the 2022 change in estimated cash flows, the Company recorded a non-cash adjustment to the remaining ARO asset balance of $0.2 million, which is recorded within Leasehold Improvements, see Note 5, “Property and Equipment.” As the reduction of the ARO was greater than the ARO asset balance, the remainder of the non-cash adjustment was recorded to the ROU asset. For the years ended December 31, 2023 and 2022, the Company recorded non-cash adjustment to the ROU assets of zero and $0.3 million, respectively.

As of December 31, 2023 and 2022, the Company did not have any operating and finance leases that have not yet commenced.

The components of lease expense for the years ended December 31, 2023 and 2022 were as follows (in thousands):

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

The following table presents other information on leases as of December 31, 2023 and 2022 (in thousands):

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Future minimum payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2023 (in thousands):

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Supplemental cash flow information related to the Company’s leases were as follows for the years ended December 31, 2023 and 2022 (in thousands):

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