Quarterly report pursuant to Section 13 or 15(d)

12. LEASE OBLIGATIONS

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12. LEASE OBLIGATIONS
3 Months Ended
Mar. 31, 2020
Leases [Abstract]  
12. LEASE OBLIGATIONS

The Company leases certain properties and equipment for its ADMA Bio Centers 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 2030. 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 of 13%. 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 three months ended March 31, 2020 and 2019 was $0.1 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. On July 11, 2019, the Company entered into a new property lease where the Company intends to construct a new plasma collection facility, and the lease commencement date for this property was February 1, 2020. In connection with this lease the Company recognized a lease liability and corresponding right-to-use asset in the amount $0.5 million. The right-to-use assets are reflected in Deposits and other assets in the accompanying consolidated balance sheets. Including a finance lease the Company entered into in June 2018, the Company has aggregate lease liabilities of $2.0 million and $1.5 million as of March 31, 2020 and December 31, 2019, respectively, which are comprised primarily of the lease for the Company’s plasma collection centers and an administrative office lease in Roswell, GA related to the Company’s ADMA Bio Centers subsidiary. The Company’s operating leases have a weighted average remaining term of 7.5 years. Scheduled payments under the Company’s lease obligations are as follows:

 

  Remainder of 2020     $ 320,128  
  Year ended December 31, 2021       481,708  
  2022       480,982  
  2023       461,853  
  2024       417,721  
  Thereafter       978,007  
  Total payments       3,140,399  
  Less: imputed interest       (1,114,773 )
  Current portion       (193,987 )
  Balance at March 31, 2020     $ 1,831,639  

 

As of April 15, 2020, the Company had entered into two additional property leases where the Company intends to construct new plasma collection facilities. The Company has not taken possession of these two leased properties and their lease commencement dates have not been determined. With the exception of advance deposits and initial months’ rent totaling approximately $63,000, no payments have been made under these leases. The initial terms of each lease are from 10 to 11 years with monthly rental payments varying between approximately $13,000 and $27,000, including common area maintenance charges.