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Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies.

Commitments and Contingencies

Note 13 – Commitments and Contingencies

Operating Leases

The Company leases office space in Cambridge, Massachusetts, New York, New York and as of July 2021, San Francisco, California, pursuant to short-term arrangements. The Cambridge and San Francisco leases are on a month-to-month basis, requiring one month’s notice before termination. The New York lease is renewable on a quarterly basis and the last renewal extended the lease term until March 31, 2022. These lease agreements include payments for lease and non-lease components and the Company has elected to not separate such components and these payments were recognized as rent expense.

As of December 31, 2021, total future minimum lease payments for its short-term leases in Cambridge, Massachusetts, New York, New York and San Francisco, California was $30,840 due in 2022. The Company leases storage space for its electronic data equipment in Somerville, Massachusetts. This lease is renewable on an annual basis effective every March 1st. Prior to December 31, 2021, the Company renewed the lease through March 31, 2022. As of December 31, 2021, total future minimum lease payments for this lease were $3,569 due in 2022.

In October 2020, the Company entered into an office lease in San Diego, California with a lease term of 67 months. At the lease commencement date, a right-to-use asset and lease liability was recognized by the Company for $637,863.

As part of the BioArkive acquisition, the Company assumed the obligations of three leases in San Diego, California, one is for 38,613 square feet of office and laboratory space, under a lease that terminates on April 30, 2032, a second is a 6,100 square feet of office and laboratory space under a lease that terminates on December 31, 2022, and third is a lease for 4,760 square feet of office and laboratory space under a lease that terminates on March 31, 2024. As a result, we recorded right-to-use assets and lease liabilities of $4,824,700 on the acquisition date of December 22, 2021.

Future minimum lease payments for operating leases with initial or remaining terms in excess of one year at December 31, 2021 were as follows


		Amount
2022		$	659,990
2023			880,121
2024			894,044
2025			906,839
2026			819,210
Thereafter			4,467,246
Total future lease payments			8,627,450
Less: Imputed interest			3,262,514
Total lease liabilities		$	5,364,936
Current portion lease liabilities			274,039
Lease liabilities, noncurrent			5,090,897
Total lease liabilities		$	5,364,936

Quantitative information regarding the Company’s leases for the year ended December 31, 2021 and 2020 is as follows:


		December 31,			December 31,
		2021			2020
Lease costs:
Operating lease cost		$	160,872		$	66,652
Short-term lease cost			258,357			252,796
Variable lease cost			—			14,700
Total lease costs		$	419,229		$	334,148
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		$	111,527		$	58,666
Operating cash flows from short-term leases			236,700			252,796
		$	348,227		$	311,462
Weighted-average remaining lease term - operating leases			9.62 years			5.33 years
Weighted-average discount rate - operating leases			9.7%			6.0%

As the Company’s leases typically do not provide an implicit rate, the Company uses an estimate of its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

Litigation

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities and may be exposed to litigation in connection with its products and operations. The Company’s policy is to assess the likelihood of any adverse judgments or outcomes related to legal matters, as well as ranges of probable losses. When it is probable that future expenditures will be made and can be reasonably estimated the Company will accrue a liability for such matters. Significant judgement is required to determine both probability and estimated amount. The Company is not aware of any material legal matters.

Clinical Research Contracts

The Company may enter into contracts in the normal course of business with clinical research organizations for clinical trials, with contract manufacturing organizations for clinical supplies, and with other vendors for preclinical studies, supplies and other services for our operating purposes. These contracts generally provide for termination with a 30-day notice.