LEASES

6 Months Ended

Jun. 30, 2024

Leases

LEASES

9. LEASES

The Company leases office space and certain equipment under operating and finance leases. All leases have remaining lease terms of one to eight years. Office lease agreements include both lease and non-lease components, which are accounted for separately. Finance leases contain options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless the Company is reasonably certain to exercise the purchase option.

In September 2021, the Company entered into a lease agreement for office space in Redmond, Washington which commenced in November 2021. In addition to base rent, the Company pays additional rent comprised of a proportionate share of any operating expenses, real estate taxes, and management fees. The lease, which expires in July 2032, includes an option to extend the term for one ten-year renewal period.

In September 2021, the Company entered into a lease agreement for product testing and lab space in Redmond, Washington which commenced in December 2022. In addition to base rent, the Company will pay additional rent comprised of a proportionate share of any operating expenses, real estate taxes, and management fees. During the quarter ended June 30, 2023, a payment of $3.0 million was received as an incentive to terminate the Company’s previous lease. The gain is recorded as other income in the condensed consolidated statement of operations. The lease, which expires in December 2032, contains an option to extend the term for one ten-year renewal period.

In April 2022, the Company entered into a lease agreement for product testing for engineering and development activities in Nuremberg, Germany which commenced in May 2022. In June 2024, the Company abandoned the space prior to its expiration of November 2027. Impairment expense of $0.2 million is recorded within sales, marketing, general and administrative expense on the condensed consolidated statement of operations.

In September 2022, the Company entered into a lease agreement for office space in Nuremberg, Germany which commenced in November 2022. In June 2024, the Company entered into an early termination agreement to decrease the expiration from April 2027 to April 2025, resulting in an insignificant early termination fee. Impairment expense of $0.1 million is recorded within sales, marketing, general and administrative expense on the condensed consolidated statement of operations.

Additionally, in connection with the January 2023 acquisition of assets from Ibeo, the Company assumed three leases in Hamburg, Germany. The first lease, which is for space for IT network equipment, will be abandoned prior to its expiration date of December 2026 in November 2024. Impairment expense of $0.1 million is recorded within sales, marketing, general and administrative expense on the condensed consolidated statement of operations. The second lease, which is for office space and long-range laser testing space, originally expired in August 2023 and was extended during the quarter ended September 30, 2023 to August 2024. The third lease, which is for garage space to house the Company’s test and demonstration vehicles, expires in July 2024.

In December 2023, the Company entered into a lease agreement in Hamburg, Germany for office space to replace the existing Hamburg, Germany leases. The lease, which is expected to commence between August 2024 and December 2024, provides for a term of 60 months. The lease liability associated with this forward-starting lease are excluded from the tables below.

The components of lease expense are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2024		2023		2024		2023
Operating lease expense	$	668	$	592	$	1,333	$	1,282
Finance lease expense:
Amortization of leased assets		-		6		-		12
Interest on lease liabilities		-		-		-		-
Total finance lease expense		-		6		-		12
Total lease expense	$	668	$	598	$	1,333	$	1,294

Supplemental cash flow information related to leases is as follows:

	Six Months Ended
	June 30,
(in thousands)	2024		2023
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	1,299		1,096
Operating cash flows from finance leases		-		-
Financing cash flows from finance leases		-		13

Supplemental balance sheet information related to leases is as follows:

	June 30,			December 31,
(in thousands)	2024			2023
Operating leases
Operating lease right-of-use assets	$	12,348		$	13,758
Current portion of operating lease liabilities		2,113			2,323
Operating lease liabilities, net of current portion		11,936			12,714
Total operating lease liabilities	$	14,049		$	15,037
Finance leases
Property and equipment, at cost	$	112		$	112
Accumulated depreciation		(106	)		(97	)
Property and equipment, net	$	6		$	15
Weighted Average Remaining Lease Term
Operating leases		8.1 years			8.4 years
Weighted Average Discount Rate
Operating leases		4.6	%		4.6	%

As of June 30, 2024, maturities of lease liabilities are as follows:

(in thousands)	Operating
Years Ended December 31,	leases
2024 (remainder of year)	$	1,110
2025		2,017
2026		1,979
2027		1,950
Thereafter		9,663
Total minimum lease payments		16,719
Less: amount representing interest		(2,670	)
Present value of capital lease liabilities	$	14,049