LEASES

3 Months Ended

Jun. 30, 2022

The Company has operating leases for its offices and fulfillment centers. Fulfillment and customer service centers and corporate office leases expire at various dates through 2038, excluding renewal options.

On October 29, 2021, the Company entered into a lease agreement for a new office space in New York, New York which will become its new company headquarters. In accordance with the ASC 842 guidance, the lease is classified as an operating lease. This lease for office space is intended to replace our current headquarters in New York, New York. The new lease will require total lease payments of $39.8 million with a lease term of 16.5 years, excluding renewal options. Rent expense will be recorded on a straight-line basis over the lease term.

Lease payments will be required beginning October 1, 2023, however, the Company took initial possession of the new headquarters on April 1, 2022 to begin constructing leasehold improvements, which resulted in a right-of-use asset of $17.0 million, other current asset of $7.6 million and corresponding operating lease liability of $24.6

million, and commencement of operating lease expense. We shall have the right to sublease all, or a portion, of this leased office space provided that certain terms and conditions are met.

The Company also leases certain equipment under operating and finance leases. The terms of equipment leases are generally 5 years and do not contain renewal options. These finance leases expire at various dates through 2026.

The Company’s finance leases as of June 30, 2022 and March 31, 2022 were not material and were included in property and equipment, net, on the Company’s condensed consolidated balance sheets.

The following schedule represents the components of the Company’s operating and finance lease assets (in thousands):


Leases	Classification	June 30, 2022		March 31, 2022

Assets
Operating	Operating lease right-of-use assets	$	45,157	$	29,552
Total operating lease assets		$	45,157	$	29,552
Liabilities
Operating lease liabilities (current)	Operating lease liabilities, current	$	5,182	$	5,060
Operating lease liabilities (non-current)	Operating lease liabilities	$	52,558	$	28,847
Total operating lease liabilities		$	57,740	$	33,907

For the three months ended June 30, 2022 assets acquired in exchange for new operating lease liabilities was $17.0 million. Lease expense primarily pertains to operating lease cost. Lease expense for operating leases was $2.2 million and $0.9 million for the three months ended June 30, 2022 and 2021, respectively. The aforementioned lease expense was included within general and administrative expenses in the condensed consolidated statements of operations.

Cash flows used in operating activities related to operating leases was approximately $0.7 million for the three months ended June 30, 2022.