Annual report pursuant to Section 13 and 15(d)

LEASE OBLIGATIONS

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LEASE OBLIGATIONS
12 Months Ended
Dec. 31, 2021
LEASE OBLIGATIONS [Abstract]  
LEASE OBLIGATIONS

12.

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 2033. 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 lease commencement date.  For the lease liabilities recognized during the years ended December 31, 2021 and 2020, 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 for the Company’s operating leases for the years ended December 31, 2021 and 2020 was $1.4 million and $0.7 million, respectively. Aggregate cash paid on these leases for the years ended December 31, 2021 and 2020 was $1.1 million and $0.5 million, respectively.

 

During the year ended December 31, 2021, the Company recognized additional right-to-use assets and corresponding lease liabilities of $3.6 million in connection with four new property leases where the Company has opened or intends to open additional plasma collection facilities. Including a finance lease the Company entered into in June 2018, the Company has aggregate lease liabilities of $8.1 million and $4.7 million as of December 31, 2021 and 2020, 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 9.1 years. Scheduled payments under the Company’s lease obligations are as follows:


Year ended December 31, 2022

  $ 1,596,006  

2023

    1,641,603  

2024

    1,517,229  

2025

    1,525,793  

2026

    1,260,391  

Thereafter

    6,345,559  

Total payments

    13,886,581  

Less: imputed interest

    (5,833,109 )

Current portion

    (591,084 )

Balance at December 31, 2021

  $ 7,462,388  

    


On June 11, 2021, the Company entered into an additional property lease that the Company intends to use to store certain inventory for its ADMA BioManufacturing business segment. The Company has not taken possession of this leased property and its lease commencement date has not been determined. With the exception of a security deposit and six months’ rent totaling $0.3 million, no payments have been made under this lease. The initial term of the lease is for 90 months with monthly rental payments varying between approximately $14,000 and $24,000, including common area maintenance charges. On January 22, 2022, the Company entered into an additional property lease for its ninth plasma collection facility. The Company has not taken possession of this leased property and its lease commencement date has not been determined. With the exception of a security deposit and an initial month’s rent totaling approximately $44,000, no payments have been made under this lease. The initial term of the lease is for 126 months with monthly rental payments varying between approximately $18,000 and $25,000, including common area maintenance charges.