Annual report pursuant to Section 13 and 15(d)

LEASE OBLIGATIONS

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LEASE OBLIGATIONS
12 Months Ended
Dec. 31, 2020
LEASE OBLIGATIONS  
13. LEASE OBLIGATIONS

13. LEASE OBLIGATIONS

 

The Company leases certain properties and equipment for its ADMA BioCenters subsidiary and certain equipment for its ADMA BioManufacturing subsidiary, which leases provide the right to use the underlying assets and require lease payments through the respective lease terms which expire at various dates through 2031. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

 

The Company determines if an arrangement is an operating lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. All other leases are recorded on the balance sheet with assets representing the right to use the underlying asset for the lease term and lease liabilities representing the obligation to make lease payments arising from the lease. Right-to-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of the lease payments is determined using the Company’s incremental borrowing rate as of the date of application of ASU 2016-02, or the lease commencement date. For the lease liabilities recognized upon the application of ASU 2016-02, the Company used a discount rate of 13% to determine the present value of its lease obligations. The Company’s operating lease expense is recognized on a straight-line basis over the lease term and is reflected in Plasma center operating expenses and Selling, general and administrative expenses. Aggregate lease expense and cash paid for the Company’s operating leases for the year ended December 31, 2020 was $0.7 million and $0.5 million, respectively. For the year ended December 31, 2019 aggregate lease expense and cash paid on these leases was $0.6 million.

 

In connection with the adoption of ASU 2016-02 on January 1, 2019 (see Note 2), the Company recognized right-to-use assets of $1.4 million and lease liabilities of approximately $1.6 million. Including a finance lease the Company entered into in June 2018, the Company has aggregate lease liabilities of $4.7 million and $1.5 million as of December 31, 2020 and 2019, respectively, which are comprised primarily of the leases for the Company’s plasma collection centers. The Company’s operating leases have a weighted average remaining term of 8.7 years. Scheduled payments under the Company’s lease obligations are as follows:

 

Year ended December 31, 2021

 

$ 954,133

 

2022

 

 

1,031,213

 

2023

 

 

1,009,159

 

2024

 

 

871,532

 

2025

 

 

866,475

 

Thereafter

 

 

3,168,953

 

Total payments

 

 

7,901,465

 

Less: imputed interest

 

 

(3,201,632 )

Current portion

 

 

(365,682 )

Balance at December 31, 2020

 

$ 4,334,151

 

    

During the year ended December 31, 2020, the Company entered into an additional property lease where the Company intends to construct a new plasma collection facility. As of December 31, 2020, the Company had not taken possession of the property pertaining to this lease, which has a lease commencement date of February 1, 2021. With the exception of an advance deposit and an initial months’ rent totaling approximately $34,000, no payments were made under this lease during the year ended December 31, 2020. The initial term of the first lease is for 133 months, with monthly rental payments varying between approximately $13,000 and $17,000, including common area maintenance charges.