Item 2. Properties
ITEM 2 – PROPERTIES
We lease approximately 13,500 square feet
of office space in Lancaster, California. The original lease had a five-year term with two, three-year options to extend. The initial
five-year term expired in February 2011, and we extended the lease to February 2, 2014. In June 2013, the lease was amended to
extend the term to February 2, 2017. The amended lease also provides for an annual base rent increase of 3% per year and two, two-year
options to extend. In May 2016 the Company exercised two, two-year options extending the term of the lease through February 2,
2021 at a fixed rate of $25,000 per month. The new extension agreement gives the Company the right, upon 90 days’ prior notice,
to terminate the lease in the last two years of the term upon payment of a recapture payment equal to the 3% base payment increase
that would have been due under the original agreement.
Our Buffalo subsidiary leases approximately
12,623 square feet of space in Buffalo, New York. The initial five-year term expired in October 2018 and was renewed for a three-year
option to extending it to November 2021. The new base rent is $16,147 per month.
DILIsym leases approximately 2,700 square
feet of space in Research Triangle Park, North Carolina. The initial three-year term was due to expire October 2020. An amendment
to the initial lease became effective April 1, 2020. This amendment added 686 square feet and extended the term of the lease to
September 30, 2023. The new base rent is approximately $7,500 per month with an annual 3% adjustment.
In Paris, France Lixoft leases approximately
2,300 square feet of office space, which as of April 1, 2020, had minimum payments equaling approximately $288,000. The lease is
for a 9-year term, with an option to terminate every 3 years, and expires in November of 2024. The rent is $16,555 per quarter
and can be adjusted each December based on a consumer price index.
Rent expense, including common area maintenance
fees for the fiscal years ended August 31, 2020, 2019 and 2018 was $644,000, $584,000, and $567,000, respectively.
The Company believes its existing facilities
and equipment are in good operating condition and are suitable for the conduct of its business.
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