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LEASES
 12 Months Ended
Dec. 31, 2021
Leases  
LEASES

 

10. LEASES

 

The Company evaluates new leases at inception based on the criteria defined in Leases (Topic 842). On September 1, 2020, the Company entered into a five-year operating lease with payments ranging from $52,000 to $58,526. The lease has two one-year options to extend the term of the lease. At this time, it is not reasonably certain that the Company will extend the term of the lease and, therefore, the renewal periods have been excluded from the right-of-use (“ROU”) asset. The present value of the lease payment stream was calculated using an effective borrowing rate of 10% and recorded a ROU asset and operating lease liability each of $2,605,032 on September 1, 2020. The ROU asset and the corresponding lease liability are being amortized on a straight-line basis over the term of the lease which expires on August 31, 2025.

 

The tables below show the ROU assets and liabilities as of December 31, 2021 and December 31, 2020, including the changes during the periods.

     
   Operating right-of
   use asset
Sub-lease     
Office lease initial measurement January 1, 2019   $872,897 
Less amortization of operating lease   (523,738)
Straight-line lease expense in excess of cash payments   (32,770)
Operating lease ROU asset December 31, 2019  $316,389 
Less amortization of operating lease   (349,159)
Straight-line lease expense in excess of cash payments   32,770 
Operating lease ROU asset August 31, 2020 - end of sublease  $– 

 

New lease   
Office lease initial measurement September 1, 2020  $2,605,032 
Less amortization of operating lease   (173,669)
Straight-line lease expense in excess of cash payments   (12,860)
Operating lease ROU asset as of December 31, 2020   2,418,503 
Less amortization of operating lease   (388,591)
Operating lease ROU asset as of December 31, 2021  $2,029,912 

 

During the twelve months ended December 31, 2021, cash paid for amounts included in the measurement of operating lease liabilities was $405,476.

 

As of December 31, 2021 and 2020, the current and non-current portions of the lease liability were recorded to the Balance Sheet as follows:

          
   December 31, 
   2021   2020 
Operating lease liabilities, current  $467,891   $521,006 
Operating lease liabilities, noncurrent   1,607,221    1,910,357 
Total lease liability  $2,075,112   $2,431,363 

 

The future minimum rental commitments for our operating leases reconciled to the lease liability as of December 31, 2021 is as follows:

     
  

December 31,

2021

 
2022  $649,147 
2023   668,622 
2024   688,680 
2025   468,212 
Total undiscounted future minimum payments   2,474,661 
Less imputed interest   (399,549)
Total lease liability  $2,075,112