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Lease

6 Months Ended

Jun. 30, 2023

7. Lease

The Company accounts for leases in accordance with ASC 842 (Note 2). The Company is party to two leases in South Africa. One is an operating lease in Pretoria, South Africa for office and laboratory space. The other is a short term operating lease in Pretoria, South Africa that includes office and laboratory space.

The operating lease commenced in October 2021 with the initial term set to expire in December 2030. The Company has applied the guidance in ASC 842 and has determined that it should be classified as an operating lease. The Company’s incremental borrowing rate is approximately 7.5% based on the remaining lease term of the applicable lease. Consequently, a ROU lease asset of approximately $952,521 with a corresponding lease liability of approximately $952,521 based on the present value of the minimum rental payments of such lease was recorded at the inception of the lease. In the consolidated balance sheet as of June 30, 2023, the Company has a ROU asset balance of $642,422 and a current and non-current lease liability of $46,565 and $648,185, respectively, relating to the ROU lease asset. The balance of both the ROU lease asset and the lease liabilities primarily consists of future payments under the Company’s lease in South Africa.

The short term operating lease commenced in April 2023 with the initial term set to expire in April 2024. The Company has applied the short-term lease practical expedient from the guidance in ASC 842 and will expense the monthly rent as incurred.

Quantitative information regarding the Company’s operating lease for the three and six months ended June 30, 2023 and 2022 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Lease Cost
Operating lease cost	$	28,069		$	34,739		$	59,229		$	70,997
Other Information
Operating cash flows paid for amounts included in the measurement of lease liabilities	$	21,572		$	24,836		$	45,520		$	50,757
Operating lease liabilities arising from obtaining right-of-use assets	$	-		$	-		$	-		$	-
Remaining lease term (years)		7.50			8.50			7.75			8.75
Discount rate		7.5	%		7.5	%		7.5	%		7.5	%

Future lease payments under noncancelable leases are as follows as of June 30, 2023:

	Operating Leases
Future Lease Payments
2023 (remaining six months)	$	48,546
2024		100,733
2025		108,288
2026		116,409
2027		125,140
Thereafter		434,602
Total lease payments	$	933,718
Less: imputed interest		(238,968	)
Total lease liabilities	$	694,750
Less current portion		(46,565	)
Lease liability - noncurrent	$	648,185

Lease expense from the short term operating lease for the three and six months ended June, 30, 2023 was $36,530. Future lease payments under the short term operating lease as of June 30, 2023 is $108,721.