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OPERATING LEASES | 9 Months Ended
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Sep. 30, 2021
OPERATING LEASES |
NOTE 5 - OPERATING LEASES | NOTE 5 - 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 active operating leases: an office space lease with a remaining lease term of 33 months and a facility lease with a remaining term of 11 months as of September 30, 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. Effective July 1, 2021, the Company assumed an office lease pursuant to the Rochal asset purchase agreement. This lease expires August 31, 2022. The base monthly rent was $8,504 through August 31, 2021, then increased to $8,808 for the remainder of the lease. As the implicit rate in the leases was not determinable, the discount rate applied to determine the present value of lease payments was the 4% borrowing rate on the Company’s line of credit as of the assumption date. The office space lease agreement contains no renewal terms; therefore, no lease liability was recorded beyond the termination date. Additionally, the Company assumed the subleasing of a portion of the office space to a subtenant at a monthly rate of $975. Sublease income is recognized on a straight-line basis over the term of the sublease agreement, whose expiration corresponds to that of the master lease agreement, and is presented as a reduction of general and administrative expense in the Company’s consolidated statements of operations. Sublease income totaled $2,925 during the fiscal year ended September 30, 2021. In accordance with ASC Topic 842, the Company has recorded lease assets of $469,702 and a related lease liability of $482,856 as of September 30, 2021. The Company recorded amortization expense of $ 118,022 for the nine months ended September 30, 2021 for its leased assets. Cash paid for amounts included in the measurement of operating lease liabilities as of September 30, 2021 was $139,667. The present value of our operating lease liabilities is shown below. Maturity of Operating Lease Liabilities
|  | September 30, 2021 |
Remainder of 2021 |  | $ | 63,889 |
2022 |  |  | 221,793 |
2023 |  |  | 154,271 |
2024 |  |  | 77,870 |
2025 |  |  | - |
Thereafter |  |  | - |
Total lease payments |  |  | 517,823 |
Less imputed interest |  |  | (34,967 | )
Present Value of Lease Liabilities |  | $ | 482,856 |
Operating lease liability – current |  |  | 226,138 |
Operating lease liability – long term |  |  | 256,718 |
As of September 30, 2021, the Company’s operating leases have a weighted average remaining lease term of 2.4 years and a weighted average discount rate of 5.83%.

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- Definition Tabular disclosure for lessee's operating leases. Includes, but is not limited to, description of lessee's operating lease, existence and terms of renewal or purchase options and escalation clauses, restrictions imposed by lease, such as those concerning dividends, additional debt, and further leasing, rent holidays, rent concessions, or leasehold improvement incentives and unusual provisions or conditions. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -SubTopic 10 -Section 55 -Paragraph 40 -Subparagraph (Note 1,3) -URI http://asc.fasb.org/extlink&oid=121580752&loc=d3e38371-112697 Reference 2: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=121573735&loc=d3e41499-112717 Reference 3: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 460 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=121555522&loc=d3e12069-110248 Reference 4: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=121573735&loc=d3e41502-112717 Reference 5: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=121549808&loc=d3e36991-112694 + Details
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