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Leases

6 Months Ended

Jun. 30, 2021

NOTE 4 – LEASES

We have operating leases for office space in three multitenant facilities with lease terms greater than 12 months, which are recorded as assets and liabilities on our condensed consolidated balance sheets. These leases include our corporate headquarters, located in Rochester, Michigan, a customer service facility in Cranbury, New Jersey, and a technical facility in Zagreb, Croatia. Certain leases contain renewal options and, for the headquarters lease, we have assumed renewal. Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities, adjusted for prepaid lease payments, initial direct costs, and lease incentives received. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rate. Amortization of the right of use assets is recognized as non-cash lease expense on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Short term lease costs include month to month leases in shared office space facilities, such as WeWork, or similar locations.

For the three and six months ended June 30, 2021, the Company’s lease cost consisted of the following components, each of which is included in operating expenses within the Company’s condensed consolidated statements of operations:

	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021

Operating lease cost	$	33,365	$	66,730
Short-term lease cost (1)		16,890		32,814
Total lease cost	$	50,255	$	99,544

(1)

Short-term lease cost includes any lease with a term of less than 12 months.

For the three and six months ended June 30, 2020, the Company’s lease cost consisted of the following components, each of which is included in operating expenses within the Company’s condensed consolidated statements of operations:

	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020

Operating lease cost	$	32,814	$	65,627
Short-term lease cost (1)		36,186		80,815
Total lease cost	$	69,000	$	146,442

(1)

Short-term lease cost includes any lease with a term of less than 12 months.

The table below presents the future minimum lease payments to be made under operating leases as of June 30, 2021:

As of June 30, 2021

2021(a)	$	71,176
2022		104,572
2023		101,414
2024		80,742
2025		70,224
Total		428,128
Less: imputed interest		34,923
Total lease liabilities	$	393,205

(a) For the six-month period beginning July 1, 2021.

The weighted average remaining lease term at June 30, 2021 for operating leases was 3.93 years and the weighted average discount rate used in calculating the operating lease asset and liability was 4.5%. Cash paid for amounts included in the measurement of lease liabilities was $62,069 and $57,019 for the six months ended June 30, 2021 and 2020, respectively. For the six months ended June 30, 2021 and 2020, payments on lease obligations were $71,397 and $68,900, respectively, and amortization on the right of use assets was $60,013 and $56,357, respectively.