9. LEASES

3 Months Ended

Mar. 31, 2023

. LEASES

We lease our office space and certain equipment under finance and operating leases. Our leases have remaining lease terms of one to ten years. Our office lease agreement includes both lease and

non-lease

components, which are accounted for separately. Our 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 we are reasonably certain to exercise the purchase option.

In September 2021, we entered into an office lease with Redmond East Office Park LLC, a Washington limited liability company, pursuant to which we will lease approximately 16,681 square feet of space located in Redmond, Washington that we will use primarily for general office space and product testing. The lease provides for an initial term of 128 months that commenced November 1, 2021. Pursuant to the lease, annual base rent was approximately $500,000 for the first year and is subject to annual increases of 3.0%. In addition to base rent, we pay additional rent comprised of our proportionate share of any operating expenses, real estate taxes, and management fees. We have the option to extend the term for one

ten-year

renewal period, provided that the rent would be subject to market adjustment at the beginning of the renewal term. The total minimum lease payments related to this lease is $6.4 million.

In September 2021, we entered into a second office lease with Redmond East Office Park LLC, pursuant to which we will lease approximately 36,062 square feet of space located in Redmond, Washington that we will use primarily for general office and lab space. The lease provides for an initial term of 120 months that commenced on December 1, 2022. Pursuant to the lease, annual base rent will be approximately $1.1 million for the first year and is subject to annual increases of 3.0%. In addition to base rent, we will pay additional rent comprised of our proportionate share of any operating expenses, real estate taxes, and management fees. We have the option to extend the term for one

ten-year

renewal period, provided that the rent would be subject to market adjustment at the beginning of the renewal term. The total minimum lease payments related to this lease are $13.0 million.

In April 2022, we entered into an office lease with Universal-Investment-Gesellschaft mbH, a German investment company, pursuant to which we lease approximately 3,533 square feet of space located in Nuremberg, Germany that we use primarily for general office space for business development activities. The lease provides for a term of 60 months that commenced May 1, 2022. Pursuant to the lease, annual base rent is approximately $76,000 per year. The total minimum lease payments related to this lease is approximately $380,000.

In September 2022, we entered into an office lease with Universal-Investment-Gesellschaft mbH, a German investment company, pursuant to which we lease approximately 3,810 square feet of space located in Nuremberg, Germany that we use primarily for general office space for business development activities. The lease provides for a term of 60 months that commenced November 15, 2022. Pursuant to the lease, annual base rent is approximately $92,000 per year. The total minimum lease payments related to this lease is approximately $461,000.

In connection with our January 2023 acquisition of assets from Ibeo, we assumed three leases in Hamburg, Germany. One lease is with IntReal International Real Estate Kapitalverwaltungsgesellschaft and covers approximately 5,511 square feet of space for IT network equipment through December 31, 2026. Pursuant to the lease, annual base rent is approximately $65,000 per year. The total remaining minimum lease payments related to this lease are approximately $259,000. During the quarter ended March 31, 2023, we recorded a

right-of-use

asset in the amount of $234,000 on our balance sheet. A second lease is

with Neuer Holtigbaum and covers approximately

32,529

square feet of office space and long-range laser testing space through August 2023. The total remaining minimum lease payments related to this lease are approximately $

190,000

. The third lease is with BG BAU Berufsgenossenschaft der Bauwirtschaft and covers approximately

13,127

square feet of garage space to house our test and demonstration vehicles through January 31, 2024. The total remaining minimum lease payments related to this lease are approximately $

146,000

The components of lease expense were as follows:


	Three Months Ended March 31,
(in thousands)	2023		2022
Operating lease expense	$	690	$	244

Finance lease expense:
Amortization of leased assets		6		8
Interest on lease liabilities		—		1

Total finance lease expense		6		9

Total lease expense	$	696	$	253

Supplemental cash flow information related to leases was as follows:


	Three Months Ended March 31,
(in thousands)	2023		2022
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	669	$	299
Operating cash flows from finance leases		—		1
Financing cash flows from finance leases		6		8

Supplemental balance sheet information related to leases was as follows:


(in thousands)	March 31, 2023			December 31, 2022
Operating leases
Operating lease right-of-use assets	$	14,746		$	14,579

Current portion of operating lease liability		2,210			1,846
Operating lease liability, net of current portion		13,729			13,829

Total operating lease liabilities	$	15,939		$	15,675

Finance leases
Property and equipment, at cost	$	112		$	112
Accumulated depreciation		85			(80	)

Property and equipment, net	$	27		$	32

Current portion of finance lease obligations	$	15		$	21
Finance lease obligations, net of current portion		—			—

Total finance lease liabilities	$	15		$	21

Weighted Average Remaining Lease Term
Operating leases		9.3 years			9.6 years
Finance leases		0.6 years			0.8 years

Weighted Average Discount Rate
Operating leases		4.6	%		4.6	%
Finance leases		5.6	%		6.3	%

As of March 31, 2023, maturities of lease liabilities were as follows:


(in thousands)	Operating leases			Finance leases
Years Ended December 31,
2023		1,729			15
2024		2,063			—
2025		2,013			—
2026		2,025			—
Thereafter		11,631			—

Total minimum lease payments		19,461			15
Less: amount representing interest		(3,522	)		—

Present value of capital lease liabilities	$	15,939		$	15