3.	Recently-Adopted Accounting Pronouncements

February 2016,

the Financial Accounting Standards Board issued ASU

2016

02,

“Leases: Topic

842,”

that requires lessees to recognize assets and liabilities on the balance sheet for most leases including operating leases, and followed it up with ASUs

No.

2018

10,

No.

2018

11,

No.

2018

20,

and

No.

2019

(collectively “Topic

842”

), which clarified certain aspects of the new leases standard and provided an optional transition method.

We adopted Topic

842

January 1, 2019,

and elected the optional transition method to initially apply the standard at the

January 1, 2019,

adoption date. As a result, we applied the new lease standard prospectively to our leases existing or commencing on or after

January 1, 2019.

Comparative periods presented were

not

restated upon adoption. Similarly, new disclosures under the standard were made for periods beginning

January 1, 2019,

and

not

for prior comparative periods. Prior periods will continue to be reported under guidance in effect prior to

January 1, 2019.

In addition, we elected the package of practical expedients permitted under the transition guidance within the standard, which among other things, allowed us to

not

reassess contracts to determine if they contain leases, lease classification and initial direct costs. The standard did

not

impact our statements of operations and had

impact on our cash flows.

We have an operating lease which is a real estate lease for our headquarters in Fairfax, Virginia. This lease has a fixed lease term of

months. We determine if an arrangement is a lease at inception. Operating leases are included in right-of-use operating lease assets, other current liabilities, and operating lease liabilities in our balance sheet as of

September 30, 2019.

As of

September 30, 2019,

we do

not

have any sales-type or direct financing leases.

Our operating lease asset represents our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since our lease does

not

provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Our lease agreement includes rental payments escalating annually for inflation at a fixed rate. These payments are included in the initial measurement of the operating lease liability and operating lease asset. We do

not

have any rental payments which are based on a change in an index or a rate that can be considered variable lease payments, which would be expensed as incurred.

We have lease agreements which

may

contain lease and non-lease components, which are accounted for as a single performance obligation to the extent that the timing and pattern of transfer are similar for the lease and non-lease components and the lease component qualifies as an operating lease. We do

not

recognize lease liabilities and operating lease assets for leases with a term of

months or less. We recognize these lease payments on a straight-line basis over the lease term.

Upon adoption of Topic

842

January 1, 2019,

the Company recorded a Right-to-use operating lease asset of

$244,877

and a lease liability of

$242,696.

Our lease agreement does

not

contain any material residual value guarantees or material restrictions or covenants.

We do

not

sublease any real estate to

third

parties.

The following table provides supplemental balance sheet information related to IAI's operating lease:

Balance Sheet
Classification	September 30, 2019

Assets:
Right-to-use operating lease asset	$	173,487

Liabilities:
Operating lease liability - current	$	101,744
Operating lease liability - non-current		72,458
Total lease liabilities	$	174,202

The following table reconciles the undiscounted cash flows to the operating lease liabilities recorded in our balance sheet.

	September 30, 2019

Remainder of 2019	$	27,048
2020		110,086
2021		46,433
Total lease payments		183,567
Less: discount		(9,365	)
Present value of lease liabilities	$	174,202

As of

September 30, 2019,

our operating lease had a weighted average lease term of approximately

1.8

years. The discount rate of our lease is equal to our incremental borrowing rate at the measurement date of the lease agreement. The weighted average discount rate of our operating lease is approximately

5.5%.

For the

nine

months ended

September 30, 2019,

we incurred

$78,365

of expense related to our operating leases. Rent expense for the

nine

months ended

September 30, 2018

was

$78,365.

For the

nine

months ended

September 30, 2019,

there were

short-term leases with a term less than

months.