Leases

12 Months Ended

Dec. 31, 2021

Note 10. Leases

The Company leases spa and clinic locations at various domestic and international airports. Additionally, the Company leases its corporate office in New York City. Certain leases entered into by the Company are accounted for in accordance with ASC 842. The Company determines if an arrangement is a lease at inception and if it qualifies under ASC 842. The Company’s lease arrangements generally contain fixed payments throughout the term of the lease and most also contain a variable component to determine the lease obligation where a certain percentage of sales is used to calculate the lease payments. The Company enters into leases that expire, are amended and extended, or are extended on a month-to-month basis. Leases are not included in the calculation of the total lease liability and the right of use asset when they are month-to-month.

All qualifying leases held by the Company are classified as operating leases. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company records its operating lease assets and liabilities based on required guaranteed payments under each lease agreement. The Company uses its incremental borrowing rate, which approximates the rate at which the Company can borrow funds on a secured basis, using the information available at commencement date of the lease in determining the present value of guaranteed lease payments. The interest rate implicit in the lease is generally not determinable in transactions where a company is the lessee.

The Company reviews all of its existing lease agreements to determine whether there were any modifications to lease agreements and to assess if any agreements should be accounted for pursuant to the guidance in ASC 842. Upon adoption of ASC 842, the Company used 11.24% as its incremental borrowing rate for its leases. The Company did exercise its option to extend the term of existing lease contracts during the years ended December 31, 2021 and 2020. Since the existing lease liability did not originally consider the extension of the lease term for these leases, the Company reassessed the incremental borrowing rate of 9.0% to be used to calculate the lease liability.

The following is a summary of the activity in the Company’s current and long-term operating lease liabilities for the year ended December 31, 2021 and 2020:


	Year ended December 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(4,230)	$	(2,344)
Leased assets obtained in exchange for new and modified operating lease liabilities	$	(3,646)	$	(3,144)
Leased assets surrendered in exchange for termination of operating lease liabilities	$	9	$	11

As of December 31, 2021, future minimum operating leases commitments are as follows:


Calendar Years ending December 31,	Amount
2022	$	3,506
2023		3,071
2024		2,545
2025		1,760
2026		718
Thereafter		808
Total future lease payments		12,408
Less: interest expense at incremental borrowing rate		(2,168)
Net present value of lease liabilities	$	10,240

Other assumptions and pertinent information related to the Company’s accounting for operating leases are:


Weighted average remaining lease term:	4.11	years
Weighted average discount rate used to determine present value of operating lease liability:	10.06	%

Variable lease payments calculated monthly as a percentage of a product and services revenue were $576 and $611 for the years ended December 31, 2021 and 2020, respectively.

Rent expense for operating leases for the years ended December 31, 2021 and 2020 were $2,069 and $2,057, respectively.

The Company performed assessments of its right of use lease assets for impairment for the years ended December 31, 2021 and 2020. Based upon the results of the impairment tests, the Company recorded impairment expenses of approximately $747 and $6,341 which is included in Impairment/disposal of assets on the consolidated statement of operations and comprehensive income (loss) for the years ended December 31, 2021 and 2020, respectively.