NOTE 5: LEASES

On June 18, 2009, the Company entered into an agreement to lease a building in Irvine, California. The lease commenced September 1, 2009 and ended August 31, 2016. In November 2015, the Company signed the First Amendment to extend the lease until August 31, 2021. As of September 1, 2020, the rent was $23,637 per month. The Company has an option to renew this lease for another 5 years and intends to pursue this renewal.

In November 2016, the Company’s Mexican subsidiary, Biomerica de Mexico, entered into a 10-year lease for approximately 8,100 square feet of manufacturing space. The rent is currently $3,262 per month. The Company has one 10-year option to renew at the end of the initial lease period. Biomerica, Inc. is not a guarantor of such lease. Biomerica de Mexico also leases a smaller unit on a month-to-month basis for use in one manufacturing process. In addition, the Company leases a small office on a month-to-month basis in Lindau, Germany, as headquarters for BioEurope GmbH, its Germany subsidiary.

Components of lease expense include fixed lease expense of $257,654 for the nine months ended February 28, 2021. For purposes of determining straight-line rent expense, the lease term is calculated from the date the Company first takes possession of the facility, including any periods of free rent and any renewal option periods that the Company is reasonably certain of exercising. The Company’s office and equipment leases generally have contractually specified minimum rent and annual rent increases which are included in the measurement of the right-of-use asset and related lease liability. Additionally, under these lease arrangements, the Company may be required to pay directly, or reimburse the lessors, for some maintenance and operating costs. Such amounts are generally variable and therefore not included in the measurement of the right-of-use asset and related lease liability but are instead recognized as variable lease expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss when they are incurred.

Supplemental cash flow information related to leases for
the nine months ended February 28, 2021:

Operating cash flows from operating leases	$	239,909
Right-of-use assets obtained in exchange for new operating lease liabilities		--
Weighted average remaining lease term (in years)		5.52
Weighted average discount rate		6.5	%

The maturity of lease liabilities as of February 28, 2021 are as follows:

2021	$	54,583
2022		235,569
2023		262,698
2024		291,210
2025		321,971
Thereafter		459,072
Total	$	1,625,103