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5. OPERATING LEASES
 3 Months Ended
Mar. 31, 2021
Leases [Abstract]  
OPERATING 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.

 

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 on 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.

 

The Company has two operating leases: an office space lease with a remaining lease term of 39 months and a copier lease with a remaining lease term of four months as of March 31, 2021. All other leases are short-term leases, which for practical expediency, the Company has elected to not recognize as lease assets and lease liabilities.

 

In accordance with ASC Topic 842, the Company has recorded lease assets of $437,081 and a related lease liability of $450,461 as of March 31, 2021. The Company recorded amortization expense of $30,572 for the three months ended March 31, 2021 for its leased assets. Cash paid for amounts included in the measurement of operating lease liabilities as of March 31, 2021 was $38,089. The present value of our operating lease liabilities is shown below.

 

Maturity of Operating Lease Liabilities

    March 31, 2021  
Remainder of 2021   $ 113,229   
2022     151,333  
2023     154,271  
2024     77,870  
2025     -  
Thereafter     -  
         
Total lease payments     496,703  
Less imputed interest     (46,242 )
Present Value of Lease Liabilities   $ 450,461  
         
Operating lease liability - current     126,933  
Operating lease liability – long term     323,528  

  

As of March 31, 2021, our operating leases have a weighted average remaining lease term of 3.2 years and a weighted average discount rate of 6.25%.