Commitments

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

8. Commitments

Operating Leases

The Company leases its corporate space in Minneapolis, Minnesota. At June 30, 2018, the Company had the following minimum commitments for payment of rentals which at inception had a non-cancellable term of more than one year:

	Amount
2018	$	77,419
2019		188,850
2020		193,338
2021		64,940
Total	$	524,547

Rent expense for operating leases was $43,198 and $25,077 for the six months ended June 30, 2018 and 2017, respectively, and $30,009 and $12,668 for the three months ended June 30, 2018 and 2017, respectively. In connection with the corporate lease, the Company is required to maintain a $50,000 standby letter of credit. The standby letter of credit expires on July 31, 2018.

In September 2017, the Company entered into a non-cancelable operating lease agreement for building space to accommodate expansion in research and development and general corporate office needs. The new lease commenced, and the Company moved to the facility in May 2018, in conjunction with the termination of the existing lease. The new lease contains provisions for future rent increases and leasehold improvement allowances. Rent expense is recorded on a straight-line basis over the lease term. The net difference of rent expense versus the actual cash paid is recorded as deferred rent. Additionally, the leasehold improvement allowances are deferred and recorded as a reduction of rental expense over the lease term using the straight-line method. Deferred rent is reflected in accrued expenses in the unaudited condensed financial statements. The new lease agreement extends through April 2021 and provides for monthly rent, real estate taxes and operating expenses.

Clinical Research Study

In May 2017, the Company entered into an agreement with a clinical research organization to conduct a clinical research study. The Company made a payment of $300,000 in June 2017 and $50,000 in November 2017, January 2018 and April 2018 and is obligated to make future payments of $100,000 and $50,000 in 2018 and 2019, respectively. Additional payments will be due as certain milestones are met. The maximum amount of these additional payments is estimated to be approximately $2,040,000 over the course of the agreement.

Capital Leases

In May 2018, the Company entered into a non-cancelable capital lease agreement for office equipment with a five-year term. The underlying assets are included in furniture and equipment. Assets recorded as property and equipment under capital leases and the accumulated depreciation thereon as of June 30, 2018 were as follows:

	June 30, 2018
Furniture and equipment	$	28,932
Less: Accumulated depreciation		(482	)
Net book value of property and equipment under capital lease	$	28,450

As of June 30, 2018, future minimum lease payments under capital leases were as follows:

	Amount
2018	$	4,232
2019		7,255
2020		7,255
2021		7,255
2022		7,255
2023		3,022
Total minimum capital lease payments		36,274
Less amount representing interest		512
Less amount representing services		6,830
Present value of net minimum capital lease payments	$	28,932