|
14. Operating Lease Obligation
San Diego
On September 10, 2021, the Company entered into a lease for 11,383 square feet of space in San Diego, California. Terms of the lease include the following:
|
● |
The length of term of the lease is 88 months from the lease commencement date (as defined).
|
|
● |
The lease commencement date is September 16, 2022.
|
|
● |
The monthly rent for the first year of the lease is $51,223 and increases approximately 3% per year.
|
|
● |
The lease provides for a base rent abatement for months two through five in the first year of the lease. |
|
● |
The landlord provided a tenant improvement allowance of $81,860 to be used for improvements as specified in the lease.
|
|
● |
The Company is responsible for other expenses such as electric, janitorial, etc. |
|
● |
The Company opened an irrevocable letter of credit in the amount of $188,844 in favor of the landlord. The letter of credit expires on October 8, 2025 and renews annually as required.
|
As discussed above, the lease provides for scheduled increases in base rent and scheduled rent abatements. Rent expense is charged to operations using the straight-line method over the term of the lease which results in rent expense being charged to operations at inception
of the lease in excess of required lease payments. This excess (formerly classified as deferred rent) is shown as a reduction of the operating lease ROU asset in the accompanying condensed consolidated balance sheets. Rent expense for the San Diego facility commenced in fiscal year 2022, when the Company began making improvements to the facility.
The following tables present the components of lease expense and supplemental balance sheet information related to the operating lease obligation (in thousands).
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
September 30, |
|
|
September 30, |
|
2024 |
|
|
2023 |
Operating lease cost: |
$ |
141 |
|
|
$ |
141 |
Total lease cost |
$ |
141 |
|
|
$ |
141 |
|
|
|
|
|
|
|
Other information: |
|
|
|
|
|
|
Cash paid for amounts included in the measurement lease liability: |
|
|
|
|
|
|
Operating cash flows from operating lease |
$ |
141 |
|
|
$ |
141 |
Operating cash flows from operating lease obligation |
$ |
160 |
|
|
$ |
155 |
Future minimum payments under the operating lease obligation are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
Fiscal year ending on September 30: |
|
Principal |
|
Imputed Interest |
|
Total |
2025 |
|
$ |
449 |
|
$ |
204 |
|
$ |
653 |
2026 |
|
|
504 |
|
|
170 |
|
|
674 |
2027 |
|
|
561 |
|
|
132 |
|
|
693 |
2028 |
|
|
626 |
|
|
89 |
|
|
715 |
2029 |
|
|
694 |
|
|
42 |
|
|
736 |
Thereafter |
|
|
187 |
|
|
2 |
|
|
189 |
|
|
|
|
|
|
|
|
|
|
Total minimum lease payments |
|
|
3,021 |
|
$ |
639 |
|
$ |
3,660 |
Less: current portion |
|
|
(449) |
|
|
|
|
|
|
Long-term portion of minimum lease obligation |
|
$ |
2,572 |
|
|
|
|
|
|
|