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Leases
3 Months Ended
Mar. 31, 2024
Leases [Abstract]  
Leases LEASES
On November 15, 2021, Cumberland entered into a lease (the "Lease"), pursuant to which the Company leases approximately 16,903 rentable square feet of space (the "Leased Premise") at Broadwest located in Nashville, Tennessee with 1600 West End Avenue Partners, LLC (the "Landlord"). The Leased Premise serves as the Company's new corporate headquarters. The initial term of the Lease is one hundred fifty-seven (157) months, with two consecutive options to renew for a period of five years each, with the commencement date of October 25, 2022. This lease currently expires in November 2035.
The Company is responsible for paying rent to the landlord under the lease beginning three months after the commencement date. The Company pays a base rent of $33.06 per square foot of rentable space with a gradual rental rate increase of 2.5% for each year thereafter of the prior year's base rental. In addition to the monthly base rent, the Company is responsible for its percentage share of the operating expenses of the building. The lease also provided for a tenant improvement allowance which we used to build out the space.
On October 24, 2022, the CET lease with The Gateway to Nashville, LLC provided the notice of exercise to extend the lease for five years. The lease is for approximately 14,200 square feet of wet laboratory and office space in Nashville, Tennessee where CET operates the CET Life Sciences Center. The wet laboratory and office space is leased through April 2028. The Company also subleases a portion of the space under this lease.
Also included within the right-of-use assets are start up expenditures related to a new supply agreement with Nephron Pharmaceuticals Corporation (“Nephron”) for our Vaprisol product. These expenditures are classified as an embedded lease resulting in a right-of-use asset to be amortized over the life of the Nephron contract. As of March 31, 2024, the value of this lease was $0.9 million.
Operating lease liabilities were recorded as the present value of remaining lease payments not yet paid for the lease term discounted using the incremental borrowing rate associated with each lease. Operating lease right-of-use assets represent operating lease liabilities adjusted for lease incentives and initial direct costs. As the Company’s leases do not contain implicit borrowing rates, the incremental borrowing rates were calculated based on information available at October 25, 2022 and May 1, 2023. Incremental borrowing rates reflect the Company’s estimated interest rates for collateralized borrowings over similar lease terms.
The weighted-average remaining lease term for the Broadwest and Gateway leases is 10.2 years and 12.6 years at March 31, 2024 and March 31, 2023, respectively. The weighted-average incremental borrowing rate used to discount the present value of the remaining lease payments is 9.40% for the Broadwest lease and 9.24% for the remaining CET lease.
Lease Position
At March 31, 2024 and December 31, 2023, the Company's lease assets and liabilities were as follows:
Right-of-Use AssetsMarch 31, 2024December 31, 2023
Operating lease right-of-use assets$6,521,088 $6,674,394 
Lease LiabilitiesMarch 31, 2024December 31, 2023
Operating lease current liabilities$362,244 $348,092 
Operating lease non-current liabilities5,200,148 5,296,247 
Total$5,562,392 $5,644,339 
As of March 31, 2024, cumulative future minimum sublease income under non-cancelable operating subleases totals approximately $0.2 million which includes the 90-day notice required for lease termination. Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) are as follows:
Maturity of Lease Liabilities at March 31, 2024
Operating Leases
2024649,494 
2025836,100 
2026909,911 
2027934,180 
2028740,791 
After 20284,847,401 
8,917,877 
Less: Interest3,355,485 
Present value of lease liabilities$5,562,392 
Rent expense is recognized over the expected term of the lease, including renewal option periods, if applicable, on a straight-line basis as a component of general and administrative expense. Rent expense and sublease income were as follows:
Three months ended March 31,
20242023
Rent expense$355,064 $234,863 
Sublease income$155,683 $115,631