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Commitments and Contingencies

12 Months Ended

Sep. 30, 2021

Commitments and Contingencies [Abstract]

10. COMMITMENTS AND CONTINGENCIES

Operating Lease

Effective July 1, 2019, Citius entered into a 76-month lease for office space in Cranford, NJ. Citius will 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 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, 2021		Year Ended September 30, 2020
Operating lease cost	$	238,824	$	228,828
Variable lease cost		194		—
Total lease cost	$	239,018	$	228,828

Other information
Weighted-average remaining lease term - operating leases	4.1 Years		5.1 Years
Weighted-average discount rate - operating leases	8.0	%	8.0	%

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

Year Ending September 30,
2022	$	239,306
2023		244,165
2024		249,024
2025		253,883
Thereafter		21,460
Total lease payments		1,007,838
Less: interest		(152,367	)
Present value of lease liabilities	$	855,471

Leases	Classification	September 30, 2021		September 30, 2020
Assets
Lease asset	Operating	$	822,828	$	986,204
Total lease assets		$	822,828	$	986,204

Liabilities
Current	Operating	$	177,237	$	158,999
Non-current	Operating		678,234		855,471
Total lease liabilities		$	855,471	$	1,014,470

Interest expense on the lease liability was $75,448 and $87,303 for the years ended September 30, 2021 and 2020, respectively.

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.