Leases

9 Months Ended

Sep. 30, 2022

Leases

Leases

4. Leases

We lease office space and office copiers related primarily to the administrative activities. The Company accounts for leases under ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases.

In January 2020, the Company signed a new four-year lease which covers approximately 2,771 square feet of office and storage space. This lease is effective March 1, 2020 and extends through February 29, 2024, with a right to extend the term for an additional five-year period, subject to the terms and conditions set forth in the lease agreement. The monthly rent is $13,855, subject to annual increases of 3.5 percent. In February 2020, the Company renewed its additional storage space lease, which requires us to make monthly payments of $1,370, subject to a 2.5 percent annual increase. The Company recorded a right of use asset and lease liability obligation of $715,310 upon inception of these leases. The Company also reclassified a previously existing right-of-use asset of $66,271 from other assets to right-of-use asset.

As of September 30, 2022, the balance of right-of-use assets was approximately $262,000, and the balance of total lease liabilities was approximately $276,200.

Future minimum lease payments under non-cancelable operating leases under ASC 842 as of September 30, 2022 are as follows:

	Operating Lease Payments
October 2022 – September 2023	$	199,263
October 2023 – March 2024		84,181
Total future minimum lease payments		283,444
Less: present value adjustment		7,272
Operating lease liabilities at September 30, 2022		276,172
Less: current portion of operating lease liabilities		192,722
Operating lease liabilities, net of current portion	$	83,450

The components of rent expense and supplemental cash flow information related to leases for the period are as follows:

	Period Ended September 30, 2022
Lease Cost
Operating lease cost (included in General and administrative expenses in the Company’s condensed Consolidated Statements of Operations)	$	148,308
Other information
Cash paid for amounts included in the measurement of lease liabilities for the period ended September 30, 2022	$	136,534
Weighted average remaining lease term – operating leases (in years)		1.4
Average discount rate		3.5	%