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Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

NOTE 11 — COMMITMENTS AND CONTINGENCIES

Although not a party to any proceedings or claims at December 31, 2019, the Company may be subject to legal proceedings and claims from time-to-time arising out of our operations in the ordinary course of business.

Leases:

On March 31, 2019, the Company entered into a sublease with a related party (see note 12) for its current corporate headquarters. The sublease expires in November 2022. Monthly lease payments are currently $7,078 per month and increase to $7,535 per month for the final 20 months of the lease.

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02: "Leases (Topic 842)" whereby lessees need to recognize almost all leases on their balance sheet as a right of use asset and a corresponding lease liability. The Company adopted this standard as of January 1, 2019 using the effective date method. We calculated the present value of the remaining lease payment stream using our incremental effective borrowing rate of 10%. We initially recorded a right to use asset and corresponding lease liability amounting to $269,054 on March 31, 2019. The right to use asset and the corresponding lease liability are being equally amortized on a straight-line basis over the remaining term of the lease.

For the year ended December 31, 2019, lease costs amounted to $111,689 which includes base lease costs of $63,705 and common area and other expenses of $47,984. All costs were expensed during the periods and included in general and administrative expenses on the accompanying consolidated statements of operations.

Right-of-use asset ("ROU") is summarized below:

	December 31, 2019
Operating office lease	$	269,054
Less accumulated reduction		(55,034	)
Balance of ROU asset at December 31, 2019	$	214,020

Operating lease liability related to the ROU asset is summarized below:

	December 31, 2019
Total lease liability	$	269,054
Reduction of lease liability		(55,034	)
Total		214,020
Less short term portion as of December 31, 2019		(73,378	)
Long term portion as of December 31, 2019	$	140,642

Future base lease payments under the non-cancellable operating lease at December 31, 2019 are as follows:

2020	$	86,997
2021		89,736
2022		82,885
Total minimum non-cancellable operating lease payments		259,618
Less discount to fair value		(45,598	)
Total minimum principal payments	$	214,020