11. Lease Commitments

Operating Leases

The Company leases office space in Miami, Florida and laboratory space in Bothell, Washington under operating leases that expire on August 31, 2024 and January 31, 2024, respectively. The lease for our Miami office is with a related party (see below).

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

The components of rent expense and supplemental cash flow information related to leases for the period are as follows (tables in thousands):

 Schedule of Components of Rent Expense and Supplemental Cash Flow Information

The supplemental balance sheet information related to leases for the period is as follows (tables in thousands):

 Schedule of Supplemental Balance Sheet Information

 Schedule of Maturities of Lease Liabilities

The minimum lease payments above do not include common area maintenance (CAM) charges, which are contractual obligations under the Company’s Bothell, Washington lease, but are not fixed and can fluctuate from year to year. CAM charges for the Bothell, Washington facility are calculated and billed based on total common expenses for the building incurred by the lessor and apportioned to tenants based on square footage. In 2021 and 2020, approximately $75,000 and $74,000 of CAM charges for the Bothell, Washington lease were included in operating expenses in the consolidated statements of operations, respectively.

On September 1, 2018, the Company entered into a lease agreement with a limited liability company controlled by Dr. Phillip Frost, a director, and a principal shareholder of the Company for the lease of its Miami office (see Note 13 – Transactions with Related Parties). On September 1, 2021, the Company extended this lease agreement into additional three-year with monthly lease payments under this lease total $186,000 through September 2024. The minimum lease payments above include taxes and fees, which are expected to be approximately $9,000 annually. As of December 31, 2021, the remaining right of use asset relating to this lease was $154,000 and the remaining lease obligation was $154,000.

Rent expense, excluding capital leases and CAM charges, for 2021 and 2020 totaled $230,000 and $228,000, respectively.

Finance Leases

In November 2018, the Company entered into two lease agreements to acquire equipment with 18 monthly payments of $18,000 payable through May 27, 2020 and 36 monthly payments of $1,000 payable through November 21, 2021. The lease agreements have an effective interest rate of 8.00%.

Future minimum finance lease payments, by year and in aggregate, are as follows:

Schedule of Maturities of Finance Lease

The leased lab equipment is included under property and equipment and depreciable over five years. Total assets and accumulated depreciation recognized, net, under finance leases was $194,000 and $143,000 as of December 31, 2021, respectively. Total assets and accumulated depreciation recognized, net, under finance leases was $92,000 and $119,000 as of December 31, 2020.