LEASES, COMMITMENTS, AND CONTINGENCIES

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

LEASES, COMMITMENTS, AND CONTINGENCIES

LEASES, COMMITMENTS, AND CONTINGENCIES

Leases

The Company had an equipment financing arrangement at the Roseville, Minnesota location that was considered a financing-type lease. This equipment financing arrangement was repaid in full in the first quarter of 2023. The Company was required to deposit cash into a restricted account in an amount equal to the future rent payments required by the lease. As of March 31, 2023, the remaining restricted cash had been returned to the Company.

Upon the completion of the Merger Transactions, the Company assumed financing leases for certain equipment. In the third quarter of 2023, the Company added a financing lease for hardware and software. The financing lease right-of-use (ROU) asset is included in other non-current assets in the consolidated balance sheets.

The Company is obligated under non-cancellable operating leases, primarily for office, laboratory, greenhouse, and warehouse space, as follows:

	As of December 31,
	2023			2022
In Thousands, except remaining term	Remaining Term (years)	Right-of-Use-Asset		Remaining Term (years)	Right-of-Use-Asset
Roseville, Minnesota lease	14.3	$	13,117	15.3	$	13,613
San Diego, California laboratory lease	1.7	3,377		—	—
San Diego, California headquarters lease	1.4	3,178		—	—
San Diego, California greenhouse lease	4.7	1,475		—	—
Other leases	< 1.0 - 3.0	538		< 2.0	2
Total		$	21,685		$	13,615

The Roseville, Minnesota lease includes four options to extend the lease for five years. These options to extend the lease are not recognized as part of the associated operating lease ROU assets and lease liabilities as it is not reasonably certain that the Company will exercise those options. The Company’s lease agreement does not include options to terminate the lease.

Upon the completion of the Merger Transactions, the company assumed additional operating leases.

The Company's headquarters are located in San Diego, California where it has leases for its headquarters facility, which includes office and laboratory space, and it has the first standardized high-throughput (gene editing) trait development facility for editing plants (the Oberlin Facility) with terms that expire in May 2025 and August 2025, respectively. The Company has one option to extend the Oberlin Facility lease for one year. As the Company is not reasonably certain to exercise this option at lease commencement, the option was not recognized as part of the associated operating lease ROU asset or lease liability.

Additionally, the Company has certain leases for greenhouse and warehouse facilities, with terms that expire in August 2028 and August 2026, respectively. The Company had one option to extend the term of the greenhouse lease, for five years, and executed this right with an amended lease agreement beginning in September 2023 and expiring at the end of August 2028. There are no other options to extend this lease. The Company has one option to extend the warehouse lease for five years. However, as the Company is not reasonably certain to exercise this option at lease commencement, the option was not recognized as part of the associated operating lease ROU asset or lease liability.

Certain leases include rent abatement, rent escalations, tenant improvement allowances, and additional charges for common area maintenance and other costs. The Company is required to pay base rent expense as well as its proportionate share of the facilities operating expenses. The non-lease components, consisting primarily of common area maintenance, are paid separately based on actual costs incurred. Therefore, the variable non-lease components were not included in the operating lease ROU assets or lease liabilities and are reflected as expense in the period incurred.

The components of lease expense were as follows:

	Year Ended December 31,
In Thousands	2023		2022
Finance lease costs	$	117	$	75
Operating lease costs	4,511		1,548
Total	$	4,628	$	1,623

Operating lease costs for short-term leases was not material for the year ended December 31, 2023, or 2022.

Supplemental cash flow information related to leases was as follows:

	Year Ended December 31,
In Thousands	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows (operating leases)	$	3,178	$	276
Financing cash flows (finance leases)	$	297	$	376

Supplemental balance sheet information related to leases was as follows:

	As of December 31,
	2023				2022
	Operating		Financing		Operating		Financing
Weighted average remaining lease term (years)	10.6		1.3		15.3		0.4
Weighted average discount rate	7.5	%	9.8	%	7.9	%	8.1	%

As of December 31, 2023, future minimum payments under operating and finance leases were as follows:

In Thousands	Operating		Financing		Total
2024	7,134		210		7,344
2025	4,797		120		4,917
2026	1,993		—		1,993
2027	1,920		—		1,920
2028	1,863		—		1,863
Thereafter	15,438		—		15,438
	33,145		330		33,475
Less: interest	(10,193)		(30)		(10,223)
Total	$	22,952	$	300	$	23,252
Current portion	5,927		187		6,114
Noncurrent portion	$	17,025	$	113	$	17,138

Cibus Non-Profit Foundation

During 2022, Cibus Global created the Cibus Charitable Foundation, Inc., a nonprofit legal entity (the Cibus Non-Profit Foundation). As of December 31, 2023, the Cibus Non-Profit Foundation has not received any donations or commenced operations. The Company is obligated to make donations to the Cibus Non-Profit Foundation each fiscal year at a rate of 1.0 percent of all net royalty revenue in the applicable fiscal year that is equal to or greater than $100 million up to, and including, $1.0 billion, and then steps up to 2.0 percent in respect of any portion of such net royalty revenue in excess of $1.0 billion. For purposes of this calculation, net royalty revenue refers to all royalty payments received by the Company, net of all taxes (other than income taxes) and all amounts payable pursuant to the Royalty Liability. The donation payable by the Company may be reduced, including to zero, to the extent necessary to comply with any covenant or obligation in any instrument evidencing third party indebtedness, to permit a financing to occur, to preclude undercapitalization, to satisfy working capital requirements or provide for strategic needs of the Company, to ensure timely payment of the Company's liabilities and debts to third parties as they become due, or to comply with applicable law. The Company has agreed not to enter any change of control transaction unless the surviving entity assumes the obligation to pay such donations to the Cibus Non-Profit Foundation.

This obligation is contingent upon the Cibus Non-Profit Foundation obtaining and maintaining its status as a 501(c)(3) charitable organization, although such registration has not yet been achieved. The Cibus Non-Profit Foundation must use all donations received consistent with its mission statement: to drive sustainable agriculture and sustainable agricultural communities in the developing world. Accordingly, as of December 31, 2023, the Company had not recorded a liability related to its obligations to the Cibus Non-Profit Foundation within the accompanying consolidated financial statements.

Litigation and Claims

In the fourth quarter of 2022, the Company reached a settlement with one of its technology vendors regarding alleged intellectual property infringement. As a result of the settlement, the Company received $0.75 million in the fourth quarter of 2022, and it received the final installment of $0.75 million in the first quarter of 2023.

The Company is not currently a party to any material pending legal proceeding.

LEASES, COMMITMENTS, AND CONTINGENCIES

LEASES, COMMITMENTS, AND CONTINGENCIES

Leases

The Company had an equipment financing arrangement at the Roseville, Minnesota location that was considered a financing-type lease. This equipment financing arrangement was repaid in full in the first quarter of 2023. The Company was required to deposit cash into a restricted account in an amount equal to the future rent payments required by the lease. As of March 31, 2023, the remaining restricted cash had been returned to the Company.

Upon the completion of the Merger Transactions, the Company assumed financing leases for certain equipment. In the third quarter of 2023, the Company added a financing lease for hardware and software. The financing lease right-of-use (ROU) asset is included in other non-current assets in the consolidated balance sheets.

The Company is obligated under non-cancellable operating leases, primarily for office, laboratory, greenhouse, and warehouse space, as follows:

	As of December 31,
	2023			2022
In Thousands, except remaining term	Remaining Term (years)	Right-of-Use-Asset		Remaining Term (years)	Right-of-Use-Asset
Roseville, Minnesota lease	14.3	$	13,117	15.3	$	13,613
San Diego, California laboratory lease	1.7	3,377		—	—
San Diego, California headquarters lease	1.4	3,178		—	—
San Diego, California greenhouse lease	4.7	1,475		—	—
Other leases	< 1.0 - 3.0	538		< 2.0	2
Total		$	21,685		$	13,615

The Roseville, Minnesota lease includes four options to extend the lease for five years. These options to extend the lease are not recognized as part of the associated operating lease ROU assets and lease liabilities as it is not reasonably certain that the Company will exercise those options. The Company’s lease agreement does not include options to terminate the lease.

Upon the completion of the Merger Transactions, the company assumed additional operating leases.

The Company's headquarters are located in San Diego, California where it has leases for its headquarters facility, which includes office and laboratory space, and it has the first standardized high-throughput (gene editing) trait development facility for editing plants (the Oberlin Facility) with terms that expire in May 2025 and August 2025, respectively. The Company has one option to extend the Oberlin Facility lease for one year. As the Company is not reasonably certain to exercise this option at lease commencement, the option was not recognized as part of the associated operating lease ROU asset or lease liability.

Additionally, the Company has certain leases for greenhouse and warehouse facilities, with terms that expire in August 2028 and August 2026, respectively. The Company had one option to extend the term of the greenhouse lease, for five years, and executed this right with an amended lease agreement beginning in September 2023 and expiring at the end of August 2028. There are no other options to extend this lease. The Company has one option to extend the warehouse lease for five years. However, as the Company is not reasonably certain to exercise this option at lease commencement, the option was not recognized as part of the associated operating lease ROU asset or lease liability.

Certain leases include rent abatement, rent escalations, tenant improvement allowances, and additional charges for common area maintenance and other costs. The Company is required to pay base rent expense as well as its proportionate share of the facilities operating expenses. The non-lease components, consisting primarily of common area maintenance, are paid separately based on actual costs incurred. Therefore, the variable non-lease components were not included in the operating lease ROU assets or lease liabilities and are reflected as expense in the period incurred.

The components of lease expense were as follows:

	Year Ended December 31,
In Thousands	2023		2022
Finance lease costs	$	117	$	75
Operating lease costs	4,511		1,548
Total	$	4,628	$	1,623

Operating lease costs for short-term leases was not material for the year ended December 31, 2023, or 2022.

Supplemental cash flow information related to leases was as follows:

	Year Ended December 31,
In Thousands	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows (operating leases)	$	3,178	$	276
Financing cash flows (finance leases)	$	297	$	376

Supplemental balance sheet information related to leases was as follows:

	As of December 31,
	2023				2022
	Operating		Financing		Operating		Financing
Weighted average remaining lease term (years)	10.6		1.3		15.3		0.4
Weighted average discount rate	7.5	%	9.8	%	7.9	%	8.1	%

As of December 31, 2023, future minimum payments under operating and finance leases were as follows:

In Thousands	Operating		Financing		Total
2024	7,134		210		7,344
2025	4,797		120		4,917
2026	1,993		—		1,993
2027	1,920		—		1,920
2028	1,863		—		1,863
Thereafter	15,438		—		15,438
	33,145		330		33,475
Less: interest	(10,193)		(30)		(10,223)
Total	$	22,952	$	300	$	23,252
Current portion	5,927		187		6,114
Noncurrent portion	$	17,025	$	113	$	17,138

Cibus Non-Profit Foundation

During 2022, Cibus Global created the Cibus Charitable Foundation, Inc., a nonprofit legal entity (the Cibus Non-Profit Foundation). As of December 31, 2023, the Cibus Non-Profit Foundation has not received any donations or commenced operations. The Company is obligated to make donations to the Cibus Non-Profit Foundation each fiscal year at a rate of 1.0 percent of all net royalty revenue in the applicable fiscal year that is equal to or greater than $100 million up to, and including, $1.0 billion, and then steps up to 2.0 percent in respect of any portion of such net royalty revenue in excess of $1.0 billion. For purposes of this calculation, net royalty revenue refers to all royalty payments received by the Company, net of all taxes (other than income taxes) and all amounts payable pursuant to the Royalty Liability. The donation payable by the Company may be reduced, including to zero, to the extent necessary to comply with any covenant or obligation in any instrument evidencing third party indebtedness, to permit a financing to occur, to preclude undercapitalization, to satisfy working capital requirements or provide for strategic needs of the Company, to ensure timely payment of the Company's liabilities and debts to third parties as they become due, or to comply with applicable law. The Company has agreed not to enter any change of control transaction unless the surviving entity assumes the obligation to pay such donations to the Cibus Non-Profit Foundation.

This obligation is contingent upon the Cibus Non-Profit Foundation obtaining and maintaining its status as a 501(c)(3) charitable organization, although such registration has not yet been achieved. The Cibus Non-Profit Foundation must use all donations received consistent with its mission statement: to drive sustainable agriculture and sustainable agricultural communities in the developing world. Accordingly, as of December 31, 2023, the Company had not recorded a liability related to its obligations to the Cibus Non-Profit Foundation within the accompanying consolidated financial statements.

Litigation and Claims

In the fourth quarter of 2022, the Company reached a settlement with one of its technology vendors regarding alleged intellectual property infringement. As a result of the settlement, the Company received $0.75 million in the fourth quarter of 2022, and it received the final installment of $0.75 million in the first quarter of 2023.

The Company is not currently a party to any material pending legal proceeding.

LEASES, COMMITMENTS, AND CONTINGENCIES

LEASES, COMMITMENTS, AND CONTINGENCIES

Leases

The Company had an equipment financing arrangement at the Roseville, Minnesota location that was considered a financing-type lease. This equipment financing arrangement was repaid in full in the first quarter of 2023. The Company was required to deposit cash into a restricted account in an amount equal to the future rent payments required by the lease. As of March 31, 2023, the remaining restricted cash had been returned to the Company.

Upon the completion of the Merger Transactions, the Company assumed financing leases for certain equipment. In the third quarter of 2023, the Company added a financing lease for hardware and software. The financing lease right-of-use (ROU) asset is included in other non-current assets in the consolidated balance sheets.

The Company is obligated under non-cancellable operating leases, primarily for office, laboratory, greenhouse, and warehouse space, as follows:

	As of December 31,
	2023			2022
In Thousands, except remaining term	Remaining Term (years)	Right-of-Use-Asset		Remaining Term (years)	Right-of-Use-Asset
Roseville, Minnesota lease	14.3	$	13,117	15.3	$	13,613
San Diego, California laboratory lease	1.7	3,377		—	—
San Diego, California headquarters lease	1.4	3,178		—	—
San Diego, California greenhouse lease	4.7	1,475		—	—
Other leases	< 1.0 - 3.0	538		< 2.0	2
Total		$	21,685		$	13,615

The Roseville, Minnesota lease includes four options to extend the lease for five years. These options to extend the lease are not recognized as part of the associated operating lease ROU assets and lease liabilities as it is not reasonably certain that the Company will exercise those options. The Company’s lease agreement does not include options to terminate the lease.

Upon the completion of the Merger Transactions, the company assumed additional operating leases.

The Company's headquarters are located in San Diego, California where it has leases for its headquarters facility, which includes office and laboratory space, and it has the first standardized high-throughput (gene editing) trait development facility for editing plants (the Oberlin Facility) with terms that expire in May 2025 and August 2025, respectively. The Company has one option to extend the Oberlin Facility lease for one year. As the Company is not reasonably certain to exercise this option at lease commencement, the option was not recognized as part of the associated operating lease ROU asset or lease liability.

Additionally, the Company has certain leases for greenhouse and warehouse facilities, with terms that expire in August 2028 and August 2026, respectively. The Company had one option to extend the term of the greenhouse lease, for five years, and executed this right with an amended lease agreement beginning in September 2023 and expiring at the end of August 2028. There are no other options to extend this lease. The Company has one option to extend the warehouse lease for five years. However, as the Company is not reasonably certain to exercise this option at lease commencement, the option was not recognized as part of the associated operating lease ROU asset or lease liability.

Certain leases include rent abatement, rent escalations, tenant improvement allowances, and additional charges for common area maintenance and other costs. The Company is required to pay base rent expense as well as its proportionate share of the facilities operating expenses. The non-lease components, consisting primarily of common area maintenance, are paid separately based on actual costs incurred. Therefore, the variable non-lease components were not included in the operating lease ROU assets or lease liabilities and are reflected as expense in the period incurred.

The components of lease expense were as follows:

	Year Ended December 31,
In Thousands	2023		2022
Finance lease costs	$	117	$	75
Operating lease costs	4,511		1,548
Total	$	4,628	$	1,623

Operating lease costs for short-term leases was not material for the year ended December 31, 2023, or 2022.

Supplemental cash flow information related to leases was as follows:

	Year Ended December 31,
In Thousands	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows (operating leases)	$	3,178	$	276
Financing cash flows (finance leases)	$	297	$	376

Supplemental balance sheet information related to leases was as follows:

	As of December 31,
	2023				2022
	Operating		Financing		Operating		Financing
Weighted average remaining lease term (years)	10.6		1.3		15.3		0.4
Weighted average discount rate	7.5	%	9.8	%	7.9	%	8.1	%

As of December 31, 2023, future minimum payments under operating and finance leases were as follows:

In Thousands	Operating		Financing		Total
2024	7,134		210		7,344
2025	4,797		120		4,917
2026	1,993		—		1,993
2027	1,920		—		1,920
2028	1,863		—		1,863
Thereafter	15,438		—		15,438
	33,145		330		33,475
Less: interest	(10,193)		(30)		(10,223)
Total	$	22,952	$	300	$	23,252
Current portion	5,927		187		6,114
Noncurrent portion	$	17,025	$	113	$	17,138

Cibus Non-Profit Foundation

During 2022, Cibus Global created the Cibus Charitable Foundation, Inc., a nonprofit legal entity (the Cibus Non-Profit Foundation). As of December 31, 2023, the Cibus Non-Profit Foundation has not received any donations or commenced operations. The Company is obligated to make donations to the Cibus Non-Profit Foundation each fiscal year at a rate of 1.0 percent of all net royalty revenue in the applicable fiscal year that is equal to or greater than $100 million up to, and including, $1.0 billion, and then steps up to 2.0 percent in respect of any portion of such net royalty revenue in excess of $1.0 billion. For purposes of this calculation, net royalty revenue refers to all royalty payments received by the Company, net of all taxes (other than income taxes) and all amounts payable pursuant to the Royalty Liability. The donation payable by the Company may be reduced, including to zero, to the extent necessary to comply with any covenant or obligation in any instrument evidencing third party indebtedness, to permit a financing to occur, to preclude undercapitalization, to satisfy working capital requirements or provide for strategic needs of the Company, to ensure timely payment of the Company's liabilities and debts to third parties as they become due, or to comply with applicable law. The Company has agreed not to enter any change of control transaction unless the surviving entity assumes the obligation to pay such donations to the Cibus Non-Profit Foundation.

This obligation is contingent upon the Cibus Non-Profit Foundation obtaining and maintaining its status as a 501(c)(3) charitable organization, although such registration has not yet been achieved. The Cibus Non-Profit Foundation must use all donations received consistent with its mission statement: to drive sustainable agriculture and sustainable agricultural communities in the developing world. Accordingly, as of December 31, 2023, the Company had not recorded a liability related to its obligations to the Cibus Non-Profit Foundation within the accompanying consolidated financial statements.

Litigation and Claims

In the fourth quarter of 2022, the Company reached a settlement with one of its technology vendors regarding alleged intellectual property infringement. As a result of the settlement, the Company received $0.75 million in the fourth quarter of 2022, and it received the final installment of $0.75 million in the first quarter of 2023.

The Company is not currently a party to any material pending legal proceeding.