Table of Contents 13 The components of lease expense, included within general and administrative expenses and sales and marketing expenses in the condensed consolidated statements of operations and comprehensive loss, are as follows: Three months ended Three months ended Six months ended Six months ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Operating lease expense Operating lease expense $ 457,248 $ 549,451 $ 1,399,379 $ 826,329 Short-term lease expense 175,689 382,387 323,565 771,307 $ 632,937 $ 931,838 $ 1,722,944 $ 1,597,636 June 30, 2023 December 31, 2022 Weighted average remaining operating lease term (in years) 9.14 9.41 Weighted average operating lease discount rate 10.46 % 10.28 % As of June 30, 2023, the maturities of the Company's operating lease liabilities (excluding short-term leases) are as follows: June 30, 2023 2023 (remaining six months) $ 1,476,829 2024 2,860,671 2025 2,789,540 2026 2,847,403 2027 2,598,847 Thereafter 15,230,661 Total minimum lease payments 27,803,951 Less: interest 10,513,303 Present value of lease obligations 17,290,648 Less: Current portion 1,162,673 Long-term portion of lease obligations $ 16,127,975 During the three months ended June 30, 2023, the Company terminated the lease of its previous Burnaby, BC, Canada headquarters, and derecognized the right-of-use assets of $828,193 and lease liability of $936,029. The gain on this disposal was $107,836 and is recorded within other income (expense), net in the condensed consolidated statement of operations and comprehensive loss. 10. Contract termination liability On September 29, 2017, the Company entered into a manufacturing agreement with Zongshen, which was amended on June 23, 2021 (as amended, the "Manufacturing Agreement"). Pursuant to the Manufacturing Agreement, Zongshen agreed to manufacture the Company's SOLO vehicles, and the Company agreed to certain target purchase volumes for the period from June 1, 2021, to November 30, 2023. On December 20, 2022, the Company gave notice to Zongshen to immediately cease all production of SOLO vehicles due to the economic hardship and issues noted with the vehicles. As a result, Zongshen claimed $22.8 million in relation to the termination of the Manufacturing Agreement. As of December 31, 2022, the Company estimated a $15.7 million termination provision, representing the Company's best assessment of the settlement amount, which is presented as a contract termination liability within the Company's condensed consolidated balance sheets. On May 8, 2023, the Company entered into a settlement deed (the "Settlement Agreement") with Zongshen, effective as of May 4, 2023. The Settlement Agreement resolves all outstanding claims relating to the Manufacturing Agreement and the related cancellation notice and defective notice provided by the Company to Zongshen. As of June 30, 2023, in fulfillment of all obligations under the Settlement Agreement and in settlement of the existing contract termination liability of $15.7 million, the Company paid $8.0 million in cash to Zongshen, de-recognized existing prepaid deposits of $7,167,340 and accounts payable to Zongshen of $281,462, and recognized 129 SOLO vehicle inventories received from Zongshen valued at $44,244, resulting in a gain on settlement of contract termination liability of $858,366.
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