Leased Properties

3 Months Ended

Mar. 31, 2022

LEASED PROPERTIES

The Company's lease for its corporate headquarters (3,169 square feet of office space) commenced on July 1, 2018. In February 2022, the Company entered into an amendment to extend the term of the lease for two years such that the term now expires on August 31, 2024.

MBI, a wholly owned subsidiary the Company acquired in November 2019, leases general office space in Lexington, Massachusetts and warehouse space in Billerica, Massachusetts. The Lexington lease commenced on July 1, 2013. In February 2022, the Company entered into an amendment to extend the term of the lease for three years such that the term now expires on December 31, 2025, subject to the landlord's right to terminate the lease on December 31, 2023. The Billerica lease commenced on October 1, 2016 and terminated on March 31, 2022.

Under the terms of each lease, the lessee pays base annual rent (subject to an annual fixed percentage increase), plus property taxes, and other normal and necessary expenses, such as utilities, repairs, and maintenance. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. The leases do not require material variable lease payments, residual value guarantees or restrictive covenants.

The leases do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. 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 the lease within a particular currency environment. The Company uses an incremental borrowing rate of 7% for operating leases that commenced prior to January 2019 (and all of the Company's operating leases commenced prior to such date). The depreciable lives of operating leases and leasehold improvements are limited by the expected lease term.

At March 31, 2022, the Company reported operating lease ROU assets of approximately $1.2 million in other non-current assets, and approximately $294,000 and $913,000, respectively, in current portion of lease liabilities and lease liabilities long-term on the condensed consolidated balance sheet.

Total operating lease costs were approximately $169,000 and $135,000 for the three months ended March 31, 2022 and March 31, 2021, respectively. Operating lease costs consist of monthly lease payments expense, common area maintenance and other repair and maintenance costs and are included in general and administrative expenses in the condensed consolidated statements of operations.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately $123,000 and $112,000 for the three months ended March 31, 2022 and March 31, 2021, respectively. These amounts are included in operating activities in the condensed consolidated statements of cash flows. Further, at March 31, 2022, operating leases had a weighted average remaining lease term of 3.13 years.

As of March 31, 2022, future minimum lease payments under the Company's operating leases are as follows:



Remainder of 2022	$	288,000
2023	422,000
2024	384,000
2025	297,000
Total future minimum lease payments	1,391,000
Less: accreted interest	183,000
Total operating lease liabilities	$	1,208,000