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Commitments and Contingencies
 12 Months Ended
Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

10. COMMITMENTS AND CONTINGENCIES

 

Operating Lease

 

LMB leased office space from Akrimax (see Note 7) in Cranford, New Jersey at a monthly rental rate of $2,167 pursuant to an agreement which expired on April 30, 2019. Rent expense for the year ended September 30, 2019 was $56,063.

 

Effective July 1, 2019, Citius entered into a 76-month lease for office space in Cranford, NJ. Rent expense under this agreement for the year ended September 30, 2019 was $57,349.

 

Citius will also pay its proportionate share of real estate taxes and operating expenses in excess of the base year expenses. These costs are considered to be variable lease payments and are not included in the determination of the lease's right-of-use asset or lease liability.

 

The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:

 

  ● As the Company's current Cranford lease does not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments. The Company has estimated its incremental borrowing rate based on the remaining lease term as of the adoption date.

 

  ● Since the Company elected to account for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated to the combined lease component.

 

  ● The expected lease terms include noncancelable lease periods.

 

The elements of lease expense are as follows:  

 

Lease cost  Year Ended
September 30,
2020		 
Operating lease cost  $228,828 
Variable lease cost   — 
Total lease cost  $228,828 
      

Other information     
Weighted-average remaining lease term - operating leases   5.1 Years 
Weighted-average discount rate - operating leases   8.0 

 

Maturities of lease liabilities due under the Company's non-cancellable leases are as follows:

 

Year Ending September 30,    
2021  $234,447 
2022   239,306 
2023   244,165 
2024   249,024 
2025   253,883 
Thereafter   21,460 
Total lease payments   1,242,285 
Less: interest   (227,815)
Present value of lease liabilities  $1,014,470 

 

 

Leases  Classification  September 30,
2020		 
Assets        
Lease asset  Operating  $986,204 
Total lease assets     $986,204 
         
Liabilities        
Current  Operating  $158,999 
Non-current  Operating   855,471 
Total lease liabilities     $1,014,470 

 

Interest expense on the lease liability was $87,303 for the year ended September 30, 2020.

 

Legal Proceedings

 

The Company is not involved in any litigation that it believes could have a material adverse effect on its financial position or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company's executive officers, threatened against or affecting the Company or its officers or directors in their capacities as such.