4. LEASES

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

LEASES

The Company periodically enters into operating lease contracts for office space and equipment. Arrangements are evaluated at inception to determine whether such arrangements constitute a lease. In accordance with the transition guidance of ASC 842, such arrangements are included in our balance sheet as of January 1, 2019.

Right of use assets, which we refer to as “ROU assets,” represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities were recognized at the transition date based on the present value of lease payments over the respective lease term, with the office space ROU asset adjusted for deferred rent liability. Lease expense is recognized on a straight-line basis over the lease term.

The Company has two operating leases: an office space lease with a remaining lease term of 24 months and a copier lease with a remaining lease term of 25 months as of June 30, 2019. In accordance with the transition guidance of ASC 842, such arrangements are included in our balance sheet as of January 1, 2019. All other leases are short-term leases for which practical expediency has been elected to not recognize lease assets and lease liabilities.

As the implicit rate in the leases is not determinable, the discount rate applied to determine the present value of lease payments is the borrowing rate on our line of credit. The office space lease agreement contains no renewal terms, so no lease liability is recorded beyond the termination date. The copier lease can be automatically renewed but no lease liability is recorded beyond the initial termination date as exercising this option is not reasonably certain.

As a result of the adoption of ASC 842, the Company has recorded lease assets of $193,634 and a related lease liability of $204,651 as of June 30, 2019. Cash paid for amounts included in measurement of operating lease liabilities as of June 30, 2019 was $ 26,700 The present value of our operating lease liabilities is shown below.

Maturity of Operating Lease Liabilities

	June 30, 2019
2019	$	53,684
2020		108,591
2021		54,940
2022		-
Total lease payments		217,215
Less imputed interest		(12,564	)
Present value of lease liabilities	$	204,651

As of June 30, 2019, our operating leases have a weighted average remaining lease term of 2.0 years and a weighted average discount rate of 6.25%.