LEASES

9 Months Ended

Sep. 30, 2023

Operating Leases

The Company leases its facility in Sofia, Bulgaria and computers under non-cancelable operating lease agreements. These operating leases have terms expiring through December 2027.

In connection with the terms of the Purchase Agreement (see Note 4), during May 2023, the Company entered into a Single Tenant Industrial Building Lease (the “Lease”), pursuant to which the Property was leased back to the Company. The Lease has an initial term of ten (10) years commencing from the closing (the “Initial Term”), and a renewal term of five (5) years, exercisable at the Company’s option. The annual fixed rent is $619,500 for the first year of the Initial Term, and is subject to a 4% escalation every year thereafter through the Initial Term. Rent will be reset to the current market rate should the Company exercise the renewal option. The Lease provides for a 3% management fee on rent payments throughout the Initial Term and optional renewal term.

The Lease is a triple net lease, pursuant to which all costs, expenses, and obligations relating to the Property, including, repair and maintenance charges, utility charges, real estate taxes or other taxes that may be imposed that relate to the Property, shall be paid by the Company. In addition, the Lease contains other customary terms and provisions generally contained within leases of this type.

Information about the Company’s weighted average remaining operating lease terms and discount rate assumptions are as follows:


	September 30, 2023	December 31, 2022

Weighted average remaining lease term (in years)	9.2		4.4
Weighted average discount rate	8.42%		2.54%

Maturities of operating lease liabilities as of September 30, 2023 are as follows:


(In thousands)

2023	$	190
2024	773
2025	799
2026	826
2027	855
Thereafter	4,516
Total lease payments	7,959
Less imputed interest	(2,657)
Present value of lease liabilities	5,302
Less current portion of lease liabilities	(310)
Long-term portion of lease liabilities	$	4,992