LEASES

12 Months Ended

Dec. 31, 2023

Operating Leases

The Company leases its facilities in Clearwater, Florida and Sofia, Bulgaria under non-cancelable operating lease agreements. In connection with the terms of the Purchase Agreement (see Note 6), 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. During the year ended December 31, 2022, the Company’s leases on the vehicles in Clearwater, Florida expired and the Company purchased the vehicles at fair value. During the year ended December 31, 2022, the Company entered into a one year extension on one of its leases on computer equipment. This extension resulted in reclassification of the lease from finance to operating. This lease expired during the year ended December 31, 2023 and the Company continued to rent the equipment on a month-to-month basis. During the year ended December 31, 2022, the Company entered into a five-year extension of its Sofia, Bulgaria facility. These operating leases have terms expiring through May 2033.

Finance Leases

The Company has entered into non-cancelable finance leases for certain computer equipment and a vehicle in Clearwater, Florida. During the year ended December 31, 2023, the Company’s lease on the vehicle in Clearwater, Florida expired and the Company purchased the vehicle for the purchase price specified in the lease agreement. Upon termination of the lease, the vehicle was transferred to fixed assets. During the year ended December 31, 2022, the Company entered into a 63-month lease for computer equipment. The computer equipment lease expires in July 2027.

Information about the Company’s lease costs are as follows:


	Year Ended December 31,
(in thousands)	2023		2022
Operating lease costs	$	732	$	213
Finance lease costs:
Amortization of right-of-use assets	31		138
Interest on lease liabilities	2		5
Variable lease costs	44		16
Total lease costs	$	809	$	372

Cash information related to our leases are as follows:


	Year Ended December 31, 2023				Year Ended December 31, 2022
(in thousands)	Operating		Finance		Operating		Finance






Cash paid for lease liabilities	$	643	$	40	$	219	$	153

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


	Year Ended December 31, 2023		Year Ended December 31, 2022
	Operating	Finance	Operating	Finance
Weighted average remaining lease term (in years)	8.9	3.6	4.4	3.9
Weighted average discount rate	8.42%	2.32%	2.54%	2.60%

Maturities of lease liabilities as of December 31, 2023 are as follows:


(In thousands)	Operating		Finance
2024	$	778	$	21
2025	805		21
2026	832		21
2027	860		12
2028	764		—
Thereafter	3,752		—
Total lease payments	7,791		75
Less imputed interest	(2,548)		(2)
Present value of lease liabilities	5,243		73
Less current portion of lease liabilities	(347)		(20)
Long-term portion of lease liabilities	$	4,896	$	53

LEASES