Leases

12 Months Ended

Dec. 31, 2021

The Company is obligated under long-term real estate leases for corporate office space that was extended during the third quarter of 2015. Prior to this extension, the lease would have expired in October 2016, the lease is now set to expire in October 2022.

On November 15, 2021, Cumberland entered into a lease, pursuant to which the Company will lease approximately 16,631 rentable square feet of space at the new development Broadwest located in Nashville, Tennessee with 1600 West End Avenue Partners, LLC. The Leased Premise will serve as the Company's new corporate headquarters. The initial term of the Lease is one hundred fifty-seven (157) months, with two consecutive options to renew for a period of five years each, and will commence on the earlier of November 1, 2022, the date

which Tenant takes occupancy of the Leased Premise, or the date which Tenant receives a temporary or permanent certificate of occupancy for the Leased Premise.

The Company will be responsible for paying rent to the Landlord under the Lease beginning three months after the Commencement Date. The Company will pay a base rent of $33.06 per square foot of rentable space with a gradual rental rate increase of 2.5% for each year period thereafter of the prior year's base rental. In addition to the monthly base rent, the Company is responsible for its percentage share of the operating expenses of the Building. The Lease also provides for a tenant improvement allowance for the space.

In addition, the research lab space at CET, under an agreement amended in July 2012, is leased through April 2023, with an option to extend the lease through April 2028. The Company also subleases a portion of the space under these leases.

Rent expense is recognized over the expected term of the lease, including renewal option periods, if applicable, on a straight-line basis as a component of general and administrative expense. Rent expense and sublease income as follows for the years ended December 31:


	2021		2020		2019

Rent expense	$	1,209,102	$	1,166,411	$	1,246,143

Sublease income*	$	699,889	$	680,627	$	688,020

*Minor amounts due in 2022.

In March 2016, the FASB issued ASU 2016-02. ASU 2016-02’s core principle is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information. The primary effect of adopting ASU 2016-02 to the Company was to record right-of-use assets and obligations for the leases currently classified as operating leases.

The Company’s significant operating leases include the lease of approximately 25,500 square feet of office space in Nashville, Tennessee for its corporate headquarters. This lease currently expires in October 2022. The operating leases also include the lease of approximately 14,200 square feet of wet laboratory and office space in Nashville, Tennessee by CET, our majority-owned subsidiary, where it operates the CET Life Sciences Center. This lease currently expires in April 2023.

Operating lease liabilities were recorded as the present value of remaining lease payments not yet paid for the lease term discounted using the incremental borrowing rate associated with each lease. Operating lease right-of-use assets represent operating lease liabilities adjusted for lease incentives and initial direct costs. As the Company’s leases do not contain implicit borrowing rates, the incremental borrowing rates were calculated based on information available at January 1, 2019. Incremental borrowing rates reflect the Company’s estimated interest rates for collateralized borrowings over similar lease terms. The weighted-average remaining lease term is 1 years and the weighted-average incremental borrowing rate used to discount the present value of the remaining lease payments is 7.42%.

Lease Position

At December 31, 2021 and 2020, the Company recorded the following on the Consolidated Balance Sheet:


Right-of-Use Assets	December 31, 2021		December 31, 2020
Operating lease right-of-use assets	$	1,024,200	$	2,028,148


Lease Liabilities	December 31, 2021		December 31, 2020
Operating lease current liabilities	$	969,677	$	1,016,779
Operating lease non-current liabilities	90,016		1,059,693
Total	$	1,059,693	$	2,076,472

Excluding the Broadwest lease, cumulative future minimum sublease income under non-cancelable operating subleases totals approximately $0.1 million and will be paid through the leases ending in October 2022 and April 2023. Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) are as follows:


Maturity of Leases Liabilities at December 31, 2021	Operating Leases
2022	1,019,313
2023	92,478
Total lease payments	1,111,791
Less: Interest	(52,098)
Present value of lease liabilities	$	1,059,693