16. LEASES

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Lessee

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At March 31, 2022, the Company recorded $24.3 million as a right of use asset and $24.5 million as an operating lease liability. At December 31, 2021, the Company recorded $17.8 million as a right of use asset and $17.8 million as an operating lease liability. The Company assesses its right of use asset and other lease-related assets for impairment. There were no impairments recorded related to these assets during the three months ended March 31, 2022 and the year ended December 31, 2021.

The Company reviews all supplier, vendor, and service provider contracts to determine whether any service arrangements contain a lease component. The Company identified two service agreements that contain an embedded lease. The agreements do not contain fixed or minimum payments, and the variable lease expense was immaterial during the three months ended March 31, 2022 and 2021.

Information about other lease-related balances is as follows (in thousands):

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The rate implicit in the lease is not readily determinable in most of the Company’s leases, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease.

Future minimum lease payments under noncancelable operating leases, including immaterial future minimum lease payments under finance leases, at March 31, 2022, are as follows (in thousands):

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In February 2022, the Company amended its existing facility lease for the ExOne European headquarters and operating facility in Gersthofen, Germany, extending the lease term set to expire in December 2022 through December 2027, with the option to extend for two additional five-year extension periods. The rent is fixed through December 31, 2024 for an aggregate annual rent totaling $1.7 million, plus applicable taxes and is subject to adjustment on an annual basis thereafter (in accordance with the consumer price index for Germany) through December 31, 2027.

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In March 2022, the Company entered into a lease for new office, light manufacturing and research and development space for Adaptive 3D in Richardson, Texas. The commencement date for the lease is August 1, 2022. The rent is fixed through July 31, 2030 for an aggregate annual rent totaling $0.3 million, plus taxes and operating expenses. The Company has an option to terminate the lease, for a termination fee, at the end of the fifth year of the lease. The Company also has the option to renew the lease for consecutive one-year terms, with the rent subject to adjustment for each renewal term.

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Lessor

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The Company leases machinery and equipment to customers (principally 3D printing machines and related equipment) under lease arrangements classified as either operating leases or sales-type leases. At March 31, 2022, the Company estimated that the total fair market value approximated the related net book value of the machinery and equipment held under the Company’s operating lease arrangements. The Company’s net investment in sales-type lease arrangements at March 31, 2022 is immaterial and is recorded in prepaid expense and other current assets in the consolidated balance sheets. There was no net investment in sales-type lease arrangements at March 31, 2021.

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The Company recognized the following components under operating and sales-type lease arrangements in the accompanying consolidated statements of operations and comprehensive loss for the periods indicated:

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⁽¹⁾ Interest income related to sales-type leases is recorded as a component of revenue in the consolidated statements of operations and comprehensive loss for each of the periods presented.

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The Company’s net investment in sales-type leases consisted of the following:

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The Company did not record any provisions for bad debt related to lessees during the three months ended March 31, 2022.

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Future minimum lease receipts of non-cancellable operating and sales-type lease arrangements as of March 31, 2022 were as follows:

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