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LEASES | 3 Months Ended
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Mar. 31, 2021
LEASES |
LEASES | ​ (7) LEASES The Company has five operating leases; four pertaining to its corporate headquarters and one for its warehouse facility located in Englewood, CO. Details of each lease are as follows:
| ● | The Company entered into a sublease agreement on October 20, 2017 with CSG Systems Inc. for approximately 41,715 square feet. The term of the sublease runs through June 30, 2023, with an option to extend for an additional two years through June 30, 2025. During the first year of the sublease, the rent per square foot is $7.50, which increased to $19.75 during the second year of the sublease and each year thereafter increasing by an additional $1 per square foot. The Company has not yet determined whether it is reasonably certain to exercise its renewal option and has therefore only considered the initial term when determining the lease liability and lease asset. The Company is also obligated to pay its proportionate share of building operating expenses. The sub-landlord agreed to contribute approximately $0.2 million toward tenant improvements which was accounted for as a reduction of the operating lease asset and subsequently treated as a reduction of rent expense over the term of the lease. Upon lease commencement, the Company recorded an
|  | operating lease liability of $3.9 million and a corresponding right-of-use asset for $3.6 million. The remaining lease term was 2.3 years at March 31, 2021.
| ● | The Company entered into an amendment to its sublease agreement, above, on March 11, 2019 for an additional 21,420 square feet of office space. The term of the sublease for the additional space began on June 1, 2019 and runs through June 30, 2023, with an option to extend the term for an additional two years through June 30, 2025. During the first seven months of the Amendment to the Sublease, the rent per square foot was $10.00, which increased to $20.75 from January 1, 2020 through October 31, 2020. For annual periods beginning November 1, 2020, the price per square foot increases by an additional $1 per square foot. Upon lease commencement, the Company recorded an operating lease liability and a corresponding right-of-use asset for $1.6 million each. The remaining lease term was 2.3 years at March 31, 2021.
| ● | The Company entered into an amendment to its sublease agreement, above, on January 3, 2020 for an additional 22,546 square feet of office space. The term of the sublease began on March 9, 2020 and will run through June 30, 2025. From the commencement date through October 31, 2020, the rent per square foot is $13.00, increasing to $21.75 per square foot from November 1, 2020 through October 31, 2021. The price per square foot increases by an additional $1 annually beginning November 1, 2021. Upon lease commencement, the Company recorded an operating lease liability and a corresponding right-of-use asset for $1.4 million each. The remaining lease term was 2.3 years at March 31, 2021.
| ● | The Company entered into a lease agreement on September 17, 2020 with GIG CW Compark, LLC for approximately 50,488 square feet. The term of the lease began on January 5, 2021 and will run through June 5, 2026. The lease includes an option to extend the lease for one additional five year period. Base rent began at $9.40 per square feet increasing each year thereafter by an additional $0.30 per square foot. The Company has not yet determined whether or not it is reasonably certain to exercise its renewal option. The Company is also obligated to pay its proportional share of building operating expenses. The landlord agreed to contribute approximately $0.4 million toward tenant improvements. The Company determined that lease commencement occurred earlier than lease inception on January 5, 2021 as the Company began making significant tenant improvements and storing inventory at this location during December 2020. Upon lease commencement, the Company recorded an operating lease liability of $2.4 million and a corresponding right-of-use asset of $2.1 million. The remaining lease term was 5.2 years at March 31, 2021.
| ● | Subsequent to March 31, 2021, the Company entered into a sublease agreement on April 9, 2021 with Cognizant Trizetto Software Group, Inc. for approximately 166,912 square feet of office space as its new corporate headquarters. The term of the sublease will begin upon move in at some point during second quarter and will run through April 29, 2028. The Company is entitled to rent credits equal to twenty-one months of base rent at the initial rate. During the first thirty-three months of the sublease, the rent per square foot is $26.50. The price per square foot increases by an additional $0.50 during each subsequent twelve-month period of the sublease. The Company estimates that it will record a right-of-use asset and liability of $13.4 million each upon lease commencement.
The Company has five finance leases for office equipment as follows:
| ● | The Company entered into an equipment lease on September 20, 2019 with Konica Minolta Premier Finance for a copier/printer and related software located at its corporate offices. The term of the equipment lease agreement is 5 years with the option to purchase the equipment at the end of the lease. The Company does not expect to exercise the option to purchase the equipment and, accordingly, has not considered the effect of the purchase in the evaluation of the lease asset and liability. Rent is to be paid monthly at a fixed rate for the term of the equipment lease agreement. Upon lease commencement, the Company recorded a finance lease liability and a corresponding right-of-use asset for $0.2 million each. The remaining lease term was 3.6 years at March 31, 2021.
| ● | The Company entered into an equipment lease on March 3, 2020 with Konica Minolta Premier Finance for copiers/printers and related software located at its corporate offices. The term of the equipment lease agreement is 4 years with the option to purchase the equipment at the end of the lease. The Company does not expect to exercise the option to purchase the equipment and, accordingly, has not considered the effect of the purchase in the evaluation of the lease asset and liability. Rent is to be paid monthly at a fixed rate for the term of the equipment lease agreement. Upon lease commencement, the Company recorded a finance lease liability and a corresponding right-of-use asset for $0.1 million each. The remaining lease term was 3.0 years at March 31, 2021.
| ● | The Company entered into an equipment lease on November 25, 2020 with Konica Minolta Premier Finance for copiers/printers and related software located at its Grasslands warehouse facility in Colorado. The term of the equipment lease is 5 years with the option to purchase the equipment at the end of the lease. The Company does not expect to exercise the option to purchase the equipment and, accordingly, has not considered the effect of the purchase in the evaluation of the lease asset and liability. Rent is to be paid monthly at a fixed rate for the term of the equipment lease agreement. Upon lease commencement, the Company recorded a finance lease liability and a corresponding right-of-use asset for $0.1 million each. The remaining lease term was 4.7 years at March 31, 2021.
| · | The Company entered into an equipment lease on December 14, 2020 with Konica Minolta Premier Finance for mail solution and related software located at its Grasslands warehouse facility in Colorado. The term of the equipment lease is 5.3 years with the option to purchase the equipment at the end of the lease. The Company does not expect to exercise the option to purchase the equipment and, accordingly, has not considered the effect of the purchase in the evaluation of the lease asset and liability. Rent is to be paid monthly at a fixed rate for the term of the equipment lease agreement. Upon lease commencement, the Company recorded a finance lease liability and a corresponding right-of-use asset for $0.2 million each. The remaining lease term was 5.3 years at March 31, 2021.
| ● | The Company entered into an equipment lease on November 3, 2020 with Altitude Leasing for a baler located at its Grasslands warehouse facility in Colorado. The term of the equipment lease is 3 years with no option to purchase the equipment at the end of the lease. Rent is to be paid monthly at a fixed rate for the term of the equipment lease agreement. Upon lease commencement, the Company recorded a finance lease liability and a corresponding right-of-use asset for $8,000 each. The remaining lease term was 2.8 years at March 31, 2021.
The Company’s operating leases do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring the lease liability. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The Company’s incremental borrowing rate was determined to be 4.0% for its operating lease liabilities. The Company’s equipment lease agreements have implicit rates from 8.3% to 20.7%, which were used to measure its finance lease liability. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Operating lease liability |  | Financing lease liability
April 1, 2021 through December 31, 2021 | ​ | ​ | 1,768 | ​ | ​ | 110
2022 |  | ​ | 2,447 |  | ​ | 147
2023 |  | ​ | 1,514 |  | ​ | 147
2024 |  | ​ | 512 |  | ​ | 116
2025 |  | ​ | 528 |  | ​ | 73
2026 | ​ | ​ | 223 | ​ | ​ | 19
Total undiscounted future minimum lease payments |  | ​ | 6,992 |  | ​ | 612
Less: Difference between undiscounted lease payments and discounted lease liabilities: |  | ​ | (578) |  | ​ | (111)
Total lease liabilities | ​ | $ | 6,414 | ​ | $ | 501
​ Operating lease costs were $0.6 million and $0.4 million for the three months ended March 31, 2021 and 2020, respectively. For the three months ended March 31, 2021, $0.2 million of operating lease costs incurred primarily at our manufacturing and warehouse facility were included in cost of sales and $0.4 million were included in general and administrative expenses on the consolidated statement of operations. All operating lease costs for the three months ended March 31, 2020 were included in general and administrative expenses on the consolidated statement of operations.

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- Definition The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 + Details
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