XML 33 R20.htm IDEA: XBRL DOCUMENT

14. LEASES

12 Months Ended

Dec. 31, 2020

14. LEASES

The Company adopted Leases (Topic 842) as of January 1, 2019 using the effective date method. We were subleasing our manufacturing facility under an operating lease which had monthly payments during 2019 and 2020 ranging from $48,672 to $50,619 through the end of the sublease on August 31, 2020. We calculated the present value of the remaining lease payment stream using our incremental effective borrowing rate of 10%. We initially recorded a right to use asset and corresponding lease liability of $872,897 on January 1, 2019. The right-of-use asset and the corresponding lease liability were equally amortized on a straight-line basis over the remaining term of the lease. The right-of-use asset was further reduced by our deferred rent of $32,771 as of December 31, 2019. As of December 31, 2019, we reported a right-of-use asset of $316,389, and corresponding liability of $349,160 related to this sublease. The right-of-use asset and the corresponding lease liability continued to amortize until fully amortized upon expiration of the sublease on August 31, 2020.

On September 1, 2020, the Company entered into a new five year operating lease with payments ranging from $52,000 to $58,526 using the same methodology. The lease has two one-year options to extend the term of the lease. At this time, it is not reasonably certain that we will extend the term of the lease and therefore the renewal periods have been excluded from the right-of-use asset. We calculated the present value of the remaining lease payment stream using our effective borrowing rate of 10% and recorded a right-of-use asset and operating lease liability each of $2,605,032 at September 1, 2020:

	Operating right-of
	use asset
Sub-lease
Office lease initial measurement January 1, 2019	$	872,897
Less amortization of operating lease		(523,738	)
Straight-line lease expense in excess of cash payments		(32,770	)
Operating lease ROU asset December 31, 2019	$	316,389
Less amortization of operating lease		(349,159	)
Straight-line lease expense in excess of cash payments		32,770
Operating lease ROU asset August 31, 2020 - end of sublease	$	–

New lease
Office lease initial measurement September 1, 2020	$	2,605,032
Less amortization of operating lease		(173,669	)
Straight-line lease expense in excess of cash payments		(12,860	)
Operating lease ROU asset December 31, 2020	$	2,418,503

As of December 31, 2020 and 2019, the current and non-current portions of the lease liability were recorded to the Balance Sheets as follows:

	December 31,
	2020		2019
Operating lease liabilities, current	$	521,006	$	349,160
Operating lease liabilities, noncurrent		1,910,357		–
Total lease liability	$	2,431,363	$	349,160

The future minimum rental commitments for our operating leases reconciled to the lease liability as of December 31, 2020 is as follows:

	December 31, 2020
2021	$	630,240
2022		649,147
2023		668,622
2024		688,680
2025		468,212
Total undiscounted future minimum payments		3,104,901
Present value discount		(673,538	)
Total lease liability	$	2,431,363